If you own a business with 500 or less employees, go apply for an SBA 7(a) loan under the new Coronavirus Act signed into law yesterday by Santa Trumpy. It is a phenomenal deal.
Santa shuts your business down. Then he gives you scraps. Any money not backed up by production is worthless.
Look around. There is no assumption. It's observation. "The people" have been shut down. Those small businesses didn't decide on their own to go out of business. They were forced.
You aren't wrong, but I think he's just making the point that if you need a loan, the terms are favorable. He's not saying the government is doing the right thing in every respect. Personally, I think the $1200 bribe is stupid policy. However, am I going to give up the $2,900 I'm going to get? Hell no. I'll probably use it to help pay the tax bill I'm going to get butt-slammed with when we move to the United Kingdom thanks to the Trump tax cut. Overall, it was a tax cut, but if you're a civilian government employee getting moved on government orders, you get the 10-incher with no KY jelly in the year that you move.
The way I understand it, interest free loan to keep employees employed. If you keep them employed through the year, loan forgiven. We applied.
Here's a quick summary: Businesses qualify for an SBA 7(a) loan if: -They have 500 or less employees -Were in business 2-15-20, and have payroll There are some revenue limitations (determined by taking average tax return revenue for 3 years) by NAIC code, but the vast majority of businesses will qualify Amount of loan is 2.5 times your company's average gross payroll for the 12 months before loan origination, subject to a $10mm max. At origination, ask the bank to defer the principal and interest for 6 months, which they have to do. The SBA will pay them the interest during the deferral period. You have 8 weeks to spend the loan proceeds on payroll, and if in place before 2-15-20, obligations for rent, interest on debt, and utilities during the eight week period. Then you apply to have the loan forgiven, and it will be done. The income is tax free. The Feds will pay the banks back in 90 days. You should keep the same number of employees on average, and not to cut their pay more than 25% of their average pay for the last quarter before the loan. Otherwise, the amount forgiven is reduced. The key is to not layoff employees, or hire them back if you did. If you did not shut down, you, in essence, receive 2.5 months of payroll tax free. That is incentive to not layoff employees.
So I have an LLC I use to flip houses, think santa might bring me some down payment money to pick up a few choice properties?
You only have to keep them from 2/15 through 6/30 to get the loan forgiven. I’ll buy Bit Coin with a lot of the forgiven loan money because eventually we’re going to see inflation. I will continue to believe the biggest issue from Covid 19 long term will be Financial not Health. We MUST find ways to let people safely get back to work. Oh and I am not laying off my employees nor advocating for business owners to do that. But it’s unavoidable for restaurants and Hospitality or Entertainment businesses. I am lucky in that regard. Let Trump get America back to work ASAP!
More info for those interested: Coronavirus (COVID-19): Small Business Guidance & Loan Resources Apply here: Disaster assistance
This wouldn't be a big deal if the Fed hadn't held the Fed rate to near 0% for ten years and added trillions of dollars already as part of QE. At some point it will wreck the economy, but the Fed has been able to avoid the worst effects. Most likely economic growth for the next decade will be 0-0.5%.
Any business? Technically, my law business was not shut down, since it is “essential.” Income is low, though.
I would think so. Are courts even conducting business right now, or is everything continued indefinitely?
Quick question: is it available for small businesses whose revenue has slowed way down during the virus pandemic, or is it only for small businesses with no revenue during the pandemic?
The app is up on the SBA website which allows you to check eligibility. There are upper limits on revenue for businesses. App to be posted later! Warning, this may make you a welfare queen! edit: There is a possibility that the upper limits on revenues may not apply. Unsure at this point. edit 2: Our attorneys say that the only limitation is 500 employees or less as AC stated above.
Nothing is happening, on the civil side. I think you could get an injunction if you really had an emergency.
I just sat in on a video conference with an attorney doing a presentation on the SBA Economic Injury Disaster Loans (EIDL) and the CARES Act. Here are a few notes I took. SBA Economic Injury Disaster Loans (EIDL) 3.75% interest for small business / 2.75% for nonprofits / up to 30 years Funds may be used to: Pay fixed debts Payroll Accounts payable Employee sick leave Other bills that cannot be paid due to virus impact Funds may NOT be used to: Pay dividends to owners Repair physical damage Refinance debts, pay other loans To apply: SBA - Disaster Loan Assistance (covid19relief.sba.gov) Payments in about 3 weeks, direct from US Treasury, not banks Immediate $10,000 cash grant option, “should be deposited in 3 days” No restriction on how to use this grant money CARES Act — Coronavirus Aid, Relief, and Economic Security Act SBA loans are potentially 100% forgivable on principal amount Apply through your bank beginning April 3 Loans not tied to establishing losses suffered / presumption of negative impact from COVID-19 Loans do not require collateral or guarantees Payments deferred up to 12 months Eligibility: Fewer than 500 employees, businesses and nonprofits, sole proprietors, self-employed individuals, independent contractors Amount of Loan 2.5 × the average monthly payroll costs incurred in the previous one-year period i.e., 2.5 months of payroll is covered Don’t have to pay it back as long as you keep paying employees, don’t reduce staff Any employee paid more than $100,000 salary, only the amount up to $100k (prorated for the covered period) is calculated Payroll costs include salary, wages, tips, sick/family leave/PTO, severance, group health benefits (include insurance premiums), retirement benefits, state & local taxes assessed on employee compensation Does not include payroll taxes Terms of Loan Proceeds may be used for Payroll, interest on mortgage obligations, rent, utilities, salaries/commissions/similar compensation, interest on other outstanding debt Terms of repayment of any portion of the loan not forgiven will be for a term not to exceed 10 years, interest rate of no more than 4% Have the following available when talking to your bank: Recent IRS Form 941: Employer's Quarterly Federal Income Tax Return Breakdown of January 2019 through February 2020 payroll expenses Complete 2019 financials (P&L, balance sheet) All documentation must be verified to ensure SBA approval
This took less than 10 minutes to fill out Be sure to check the box asking if you want to be considered for the $10k grant To apply: SBA - Disaster Loan Assistance (covid19relief.sba.gov)
Who knows. The presenter last night said this amounts to a tax refund to keep businesses running and people working, and it would be crazy not to take what’s being offered. He said everyone that qualifies should do it now. To clarify something that I didn’t capture in the notes. I think I have this right but confirm with your lender or financial advisor: (1) The first section on EIDL is about low-interest loans. When you apply at the link you provide your gross revenues, Cost of Goods Sold, and a few other things. I think there will be a follow-up from someone about how much you can qualify for. (2) The CARES Act section provides the option to convert the EIDL loan into a payments-deferred loan that is potentially 100% forgivable if you meet a few conditions — i.e., keeping paying your employees, don’t reduce staff. I hope that is accurate. If someone can correct me here that would be appreciated. We have a call with our CPAs tomorrow to see if they can offer more guidance on this thing. I will update here if I get further clarification from them.
