March 30, 2020 @ 7:55 PM

The Small Business Owners Guide to the CARES Act

March 30, 2020

This is to help jewelers find important information during this tough time in America. The title just above above a link to an 11 page document on the relief package and what you get. For a government (SBA) document it's actually very easy to read and I will summarize here below.

Again the link to the 11 page SBA document can be opened by clicking this line

 

APRIL 1st, 2020 Updated:

Received this as an easy to understand documentation on the payroll Protection program (PPL) Click this line to open PDF file.

 

This is what I believe to be the application plus documentation to give your bank after Friday April 3rd.

>>>>I asked my CPA and when you get the PPL loan and it is forgiven IT WILL NOT BE COUNTED AS TAXABLE INCOME TO YOUR STORE .

 
If you get the $10k (easy to apply) that money can't be used for payroll as the PPL is for payroll. use it to pay vendors or advertising.
 
the PPL Loan is Average of 2 months payroll, then multiply THAT by 2.5. Thats the loan amount. use this money to pay people for 2 months and extra money is for utilities and rent.

 

Here's some highlights I got from reading the brochure. There are two types of loans and "grants" (my words). The US Government is giving away money to companies to keep employees on the payroll. It's called

Paycheck Protection Program Loan.

  • You apply if this Covid-19 has affected your business (It has affected everyone)
  • It's designed to help you pay employees their full paychecks for 8 weeks, including health insurance premiums and if you have a retirement plan, plus matching taxes the store pays. 
  • Although I get the impression that you can get a larger loan, if you keep employees on and pay them then the first 8 weeks of payroll you pay out will be forgiven, you won't have to pay those 8 weeks back.
  • No SBA loan fees.
  • Don't have to start repaying the loan for 6 months (can be in some cases deferred up to 12 months later)
  • Size of Loan: If your store was in business after February 15, 2019 your max loan is equal to 2.5 times your "average monthly payroll costs" during the period from February 1, 2019 (last year) through June 30, 2019. If you started your store after June 30, 2019 your maximum loan is again 2.5 times your average payroll costs from January 1, 2020 through June 30th, 2020. (Average payroll this year).

What is considered as "PAYROLL"?

  • All employees wages/salaries/commission. In other words-what would be on their W-2. 
  • Includes medical leave pay, vacation pay, an allowance for dismissal or separation (I think of this as "termination pay-your last paycheck; good bye).
  • Payment for health insurance.
  • Payment of matching retirements.
  • Payment of state or local tax assessed on compensation of employees.
  • Owners pay as long as not over $100,000.00

What can you use this money for?

  • All payroll costs as explained.
  • All costs to continue the health insurance you provide.
  • Employee salaries/commissions, etc.
  • Rent
  • Utilities
  • If you own a building, to pay the mortgage monthly payment.
  • Interest on debt incurred BEFORE the covered period.

Length of loan/interest rate/fees:

  • For loans not forgiven (that's the other type  of loan) 
  • Maximum term: 10 years
  • Maximum interest rate 4%.
  • Zero loan fees and zero prepayment penalty.

Loans That are forgiven (yeah!)

  • Again this is the payroll forgiveness loan, keep employees on payroll for at least 8 weeks, plus pay rent and utilities.
  • You get these loans through an SBA approved bank, your bank is probably one. You have to apply through your lender for forgiveness.
  • If you have payroll/rent/utilities and other items that you've borrowed money for exceeding the 8 weeks SBA will allow you to have a loan up to 10 years at a 4% interest rate.

=================I NEED $10,000 RIGHT NOW, HELP!=====================

  • The SBA and US government has made the "Economic Injury Disaster Loans & Emergency Economic Injury Grants
  • You can get up to $10,000.00 within 3 days of applying and you are not required to repay this $10,000. (Page 7 of the document)
  • You apply for "EIDL" and request an advance.
  • It can be used for payroll, debt, rent.
  • See page 7 for more in depth information.

I have tried to summarize this information for you. Disclaimer: I'm not the authority and things change. Seems as though most of this will start with your local bank. Your should start immediately as I think SBA and banks will be swamped. To get payroll relief you just have to show some real payroll records to prove the amounts.

I bank with Bank of America and they just sent out this easy to understand email as well about this program:

Again the link to the 11 page SBA document can be opened by clicking this line

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Stay safe and in addition to getting this financial help go below in my blog and read this titled blog I wrote last week

Can your jewelry store survive a downturn in sales now?