• Records In Order

Disaster Loans, and Employee Scenarios

Here’s where we are and what we know from Feds, State, the SBA, and banks about disaster loan money, the Forgivable loan, and answers to typical employee scenarios.

#1. For the disaster loan, the SBA now has a streamlined process. This is electronic and takes about 10-20 minutes with limited information required about you and your business:


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


This is the longer term loan that I discussed Sunday, and is your first option to consider inasmuch as it can be helpful over a long period of time. It also contains some interest and payment deferral of existing SBA loans, and other provisions to assist in this Federal Disaster. It may provide you more options overall with your existing debt, and should be considered. You are supposed to get a fairly immediately $10,000 advance, then receive instructions via email about how to proceed on this loan application. What will be required we don’t know, and for a couple clients who submitted this on Monday; they do not yet have a reply, nor info on how to proceed.


#2. For your Paycheck Protection Program loan, we still have only sketchy information. In a nutshell, it is a Forgivable loan based on your total payroll and outside contractor payments. So far there is a contradiction on what specific info and time range of data is required to determine the amount – which should be about 2.5 times your average payroll and contractor payment. These funds can be used over the following 8 weeks to pay rent, payroll (and contractor payments), health care costs, and certain utilities. The loan must be taken out prior to June 30.


This loan is forgiven based on your business paying out it’s normal rate of payroll/contract labor over those 8 weeks.


The word from the Feds is that banks should be disseminating the details of the loan this week. I’ve heard from Bank of America, and US Bank, no one else, not even my own bank.


From B of A, we have this:


Although details are still being finalized, some documentation may be required when applying for a program when it becomes available. Based on the legislation, it may be helpful for interested business owners to gather the following information about their business:


  1. 2019 Payroll — including the last 12 months of payroll

  2. 2019 Employees — 1099's for 2019 employees and independent contractors that would otherwise be an employee of your business. (Note: Do NOT include 1099's for services)

  3. Healthcare costs — all health insurance premiums paid by the business owner under a group health plan.

  4. Retirement — your company retirement plan funding paid for by the company.

[Provided courtesy of LifeSpring Chiropractic (Newport Beach CA) and Fermentation Farm]

#3. An actual employee scenario for one small business: (business owner in black, my reply is in blue)

…… I need your advice on all this again regarding the assistants and massage therapist….

a. Billing person: comes in 1/2 time currently and is willing to continue to. Should I just have her apply for partial unemployment?


b. Assistant #1: comes in 1/2 time currently and is willing to continue to. Should I just have her apply for partial unemployment?

The Calif EDD and other States have stated that employees who are working less hours can file for partial unemployment.