Many small businesses are at a virtual standstill or severely impacted by the impact of ‘social distancing’. We’re writing this, principally for our New Hampshire clients, to share the strategy that we are recommending to help survive.
1) If your business is negatively impacted by the coronavirus crisis and you are unable to pay employees, we still are recommending termination of non-critical staff. The fastest way to get money into the hands of idled employees you can’t pay is to terminate them and have them apply for unemployment. NH unemployment is already up and running with a maximum payment of $432 per week, and this will shortly be supplemented by an additional maximum of $600 per week by the new federal program for 39 weeks.
2) Critical employee(s) should be retained as you will need these employees to help in the startup…
3) Please also note that your employees will be able to take Emergency Paid Sick Leave for 10 days and Emergency Paid Family Medical Leave for 10 weeks that will be reimbursed by the Federal government. However, our research seems to indicate that you may not be able to use this credit if you have applied for a PPP loan (below). See 5 below for more info. We are not a big fan of this particular relief (the Paid Leave) because of how complicated it is to comply.
4) Apply for the SBA Economic Injury Disaster Loan (EIDL) loans today if you MUST have cash in a few days. This is the fastest way to get cash if you cannot wait for the PPP loan. If you need and/or want funds to get through the next few months, please apply for this. If you apply, you will receive a $10,000 grant immediately to help you get through this time. You can apply regardless of whether you have any other SBA Loan.
The SBA has really simplified this process, even since it was first announced. In fact, if you did successfully submit an application (like myself) and were NOT asked if you wanted the $10,000 grant, the SBA wants you to come back and apply again. This is a 5 minute process. You’ll need to know your sales and cost of sales for the 12 months ending January 31, and you’ll need to provide the bank account information where you want the $10,000 to be deposited.
Even if you do NOT actually acccept the EIDL loan (later), there does not appear to be ANY repayment requirements to the $10,000 grant, although this would reduce the amount that can be forgiven if you get money via the Paycheck Protection Plan (PPP).
There is some question whether accepting the $10,000 and/or the EIDL loan would jam up approval for the PPP loan. I’ve spoken with 3 bankers about this, and the general consensus is not to worry about this, believing that as long as you haven’t ACCEPTED the EIDL loan you should be fine.
Here is some more information that explains the EIDL Loan
Here is the link to go get the $10,000 to apply for the Covid-19 Economic Injury Disaster Loan (EIDL) SBA Loan Application
Apply Here: https://covid19relief.sba.gov
5) Everyone should be applying for the Payroll Protection Plan (PPP) including sole proprietors and partnerships with profits even if you have NO employees. It is NOT necessarily a LOAN. You can receive 250% of your average monthly payroll (including what you make as an owner, sole proprietor, or partner). As long as the money is used for payroll, rent, utilities, group health insurance within 8 weeks of getting the loan, the amounts are forgiven and tax free. There is no personal guarantee or collateral required. This is a no brainer, since if you decide you can’t spend it on your employees for whatever reason, just pay them back or use it with payments on any loan balance that would start in 2021 at 4% interest over 10 years.
The PPP loan is first come first served and will run out unless congress does another appropriation. This will enable you to rehire and pay terminated employees, but will probably take at least a few weeks to get going.
The PPP loans must be done with YOUR banker. Most banks we’ve talked with are limiting themselves to their depositors. Don’t waste your time talking to other banks unless you want to wait at least 60 days…, and that’s where your homework is…You need to contact your bank and tell them you want to apply for a PPP loan with the SBA. The bank should be able to put you on their list and provide you with their list of what’s needed.
Here is a link that describes the PPP program
Here is a link to the actual PPP application
As a service to all our existing and new monthly Business Owner Package clients, we are offering a package fee starting at $2,400 (0 to 15 employees) for our monthly clients only that involves our helping determine your eligibilty and what your Average Monthly Payroll costs are, along with helping you comply with the necessary documentation later to get the loan forgiveness.
Thank you and stay safe,