CARES Act Fact Sheet: Find the support you need.

To Our Community,

After 20 years in the interior design industry working in each sector, I’ve seen my fair share of turbulence. In 2001, as I embarked on my 2nd year as a junior designer the dot-com bubble burst and I was laid off. When the 2008 recession hit, I was managing a showroom at the SFDC and worked tirelessly to help designers, manufactures and staff as the showroom faltered and then closed. Through both events the design industry shifted dramatically and it was a long road to recovery for many in the design community. As we look back at where we have been and plan for what may come, I want to share important information about the CARES Act.

The CARES Act, a $2 trillion stimulus program, will significantly help small businesses keep valued employees and cover expenses so we won’t have to experience the economic loss and hardship the design community encountered in the past.

Below are links and information for the 2 major programs that can help you, your business and your employees right now. 

APPLICATION: https://covid19relief.sba.gov/#/

EIDL Key Elements:

$10,000 LOAN ADVANCE  (New feature as of 3/30) 
The opportunity for a $10,000 advance on the EIDL loan which will not have to be repaid. The EIDL Advance may be available even if your EIDL application was declined or is still pending.  The opportunity to apply for an EIDL Advance is part of the online application process.

LENDER
This is an SBA direct loan. Apply on the SBA website, not to a bank.  SBA processes the loan and disburses payment. 

ELIGIBLE BORROWER:
Small business that are unable to obtain credit elsewhere

LOAN SIZE:
Up to one half of the prior year’s gross profit, usually not more than $500,000 but up to a maximum of $2 million.

USE OF LOAN PROCEEDS:
Six months of working capital, fixed debt payments, payroll, accounts payable, other bills that can’t be paid due to coronavirus impact. 

LOAN STRUCTURE:
3.75% for up to 30 years.Terms are determined on a case-by-case basis based on borrower’s ability to pay

COLLATERAL:
Loans over $25,000 will require collateral, if collateral is available

PERSONAL GUARANTEES:
Yes, for owners of 20%+

DEMONSTRATED FINANCIAL NEED/CREDIT ELSEWHERE TEST
Must demonstrate ineligible to obtain a loan elsewhere.

DEFERRAL
Yes, the first year of principal and interest payments may be deferred.

NOTE:
An interesting provision is that applicants may receive an emergency advance of $10,000 even if the EIDL loan application was denied or the applicant decided not take the loan. As of right now, I’m told that this $10,000 loan advance will not have to be repaid. 

You may consider applying for the EIDL loan simply to obtain the $10,000 advance.

APPLICATION: https://covid19relief.sba.gov/#/

PPP Key Elements:

LENDER
PPP loans will be made by banks, credit unions, and other regulated lenders, not by SBA.  PPP loans will be backed by 100% SBA loan guarantees. SBA may approve additional lenders.  Check with your local business banker to see if they are in the process of getting on board to deliver PPP loans, but realize that banks are still learning about their important role in delivering this program.

ELIGIBLE BORROWER:
Businesses (including nonprofits, sole proprietorships, independent contractors, and the self-employed) of all industry sectors.

1. Individuals who operate a sole proprietorship or independent contractor, and eligible self-employed individuals. 1099 workers are included.

2. Businesses and entities in operation on February 15, 2020 and harmed by COVID-19 between February 15, 2020 and June 30, 2020

3. Businesses with 500 or fewer employees or businesses with more than 500 employees who nevertheless meet the SBA size standard for their industry sector

LOAN SIZE:
PPP loan size is set by the business’s typical pre-coronavirus monthly payroll times 2.5, but not to exceed $10 million.  Monthly payroll is calculated based on the business’s typical cumulative wages/salaries/commissions/tips paid (not to exceed $100,000 per worker) plus benefits and payroll taxes paid.

USE OF LOAN PROCEEDS:
The loan is to be used to pay payroll (including to re-hire recently laid-off employees) through 6/30/2020, interest due on mortgages incurred before 2/15/2020; rent due on leases in place before 2/15/2020, and utility services in place before 2/15/2020,

LOAN STRUCTURE:
0.5%, 2-year term loan – first payment deferred for 6 months; no prepayment penalty. Loan Fees: The business pays no fees. 

COLLATERAL: None Required

PERSONAL GUARANTEES: None Required

DEMONSTRATED FINANCIAL NEED/CREDIT ELSEWHERE TEST: None Required

LOAN FORGIVENESS:
All or part of the loan may be forgiven.  The amount will depend on how the PPP loan funds are used, with payroll being the primary use that leads to debt forgiveness

NOTE:
The information in this email may not be 100% correct as there is still a lot of uncertainty and incomplete information due to the fact that processes are still being defined.

I strongly recommend you rely on the governmental websites for the SBA and the Treasury Department for the latest and most accurate information.

SBA: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

TREASURY DEPARTMENT: https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses

Please reach out to me if you would like to talk about the above information, business trends, tech solutions or connect with me personally as someone who’s hustled through layoffs, career shifts and kiddos.

As you care for those around you, remember to be kind to yourself.

Be Well,

Founder & CEO

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