Interesting SBA disaster relief loan for business w/ less than 500 employees

[cabmandone]

A friend told me about this loan. Its a loan through the SBA with a 10K advance that apparently does not have to be repaid.
"This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid."

I can't help but wonder what prevents a business like mine that really hasn't been affected from applying and receiving the 10K. I'm considering making an application and if I receive the 10K identifying a few local businesses that need the money and giving it to the owners. OTOH I feel like I shouldn't apply and keep the funds available for those who actually need it.

If you know any small business owners that have been affected you might direct them to: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance

[peppy]

I was up late last night getting everything ready to file the Paycheck Protection Program SBA loan. Not sure we will need it, but if we are forced to shut down we could keep our staff paid for several months. If our business can stay open and generate some income then after the 2 months we should still be okay for maybe another 2 months.

I think the PPP loans cap at $10 million and have a .5% interest rate if you use the money for something other than payroll, rent and utilities. If you use it correctly it will be forgiven.

[Brando]

I have been wondering about the same for my company. We definitely are under the 500 employee limit, under the income limit, but still trying to understand all the details and requirements. Still not sure if it's worth it.

[cabmandone]

The thing that gets me is "economic distress". How is it defined? How do they determine if my or any business has suffered? I could show my Q1 sales for the last two years versus this year and show that the numbers are off. Is is because of the virus or is it due to my pricing?
I'm tempted to apply just to see what criteria have to be met.

[wdfifteen]

https://taxfoundation.org/sba-paycheck-protection-program-cares-act/

The loans turn into a grant if you use the money to keep your employees.

[cabmandone]

Originally Posted by wdfifteen

https://taxfoundation.org/sba-paycheck-protection-program-cares-act/

The loans turn into a grant if you use the money to keep your employees.

Right! But that's a different program than the one I'm talking about. The initial 10K you receive under the program I'm talking about is automatically a grant. The loan you receive beyond the 10K has an interest rate tied to it and has to be repaid.

[gr8fl4porsche]

Yes, 2 different programs.

The 10,000 grant starts out as a loan advance on a SBA EIDL disaster loan.
One can then borrow more funds or simply keep the 10,000 advance and it is not required to be repaid.

The PPP loan is even better. SBA backs the loans based on 2.5 times your average monthly payroll costs.

Once funds are received, your next 8 weeks of payroll, rent and utilities are forgiven.
Balance can be returned to the bank or kept as a 1% 2-year note.

Of course there are specific conditions to be met.

If interested, hurry. 1st come / 1st served and it started yesterday.

[Brando]

I'm looking over the application site here - that $10k grant is REALLY tempting. Here's the application site, but not seeing a list of what's required until you go through the application process.

https://covid19relief.sba.gov/

[cabmandone]

Originally Posted by Brando

I'm looking over the application site here - that $10k grant is REALLY tempting. Here's the application site, but not seeing a list of what's required until you go through the application process.

https://covid19relief.sba.gov/

Yeah.. I was going into the application process then stopped at the second page. Nothing big, just some income info from last year. I'll probably do the application just to see what happens.

[pmax]

How are the small business grants going ?

[Arizona_928]

Farms aren't eligible. lol

[gacook]

They're doing something else for farmers.

[tadd]

Hey look! Free money! Lets go get some!

[red-beard]

Originally Posted by Brando

I'm looking over the application site here - that $10k grant is REALLY tempting. Here's the application site, but not seeing a list of what's required until you go through the application process.

https://covid19relief.sba.gov/

I've already applied

You need your Revenues and COGS. You'll need your EIN or SS# (if a sole proprietor). Basic information on your company (S corp, C corp, Sole P, etc.), who owns the company, location, contact information.

If you apply for the $10K, they also need your bank name, routing and account number.

[red-beard]

The PPP and the EIDL are not mutually exclusive. You can do both, you just can't use the EIDL money for payroll and still apply for PPP.

At the end of the year, if you keep a PPP loan, the EIDL can be rolled in. The interest for PPP is 0.5% but has to be paid back in 2 years. EIDL is 3.75% and the loan terms can be extended out to 30 years.

EIDL can be used for Accounts Payable, Purchase of Inventory, consolidating other business loans, etc. If you don't do PPP, it can also be used to pay payroll.

[red-beard]

If you bank with Wells Fargo, don't even bother with the PPP from them. They decided internally to only do $10B in PPP. The window for acceptance was open for about 6 hours.

https://www.businessinsider.com/wells-fargo-asset-cap-limits-sba-loan-capacity-2020-4

[Pazuzu]

Originally Posted by red-beard

I've already applied

You need your Revenues and COGS. .

We're trying to figure out how that works with a business that is mostly or all service based like ours. No real inventory of good sold, but there is obviously expenses, and the income is service driven.

I personally think that the revenue/COGS numbers are just an easy, first order approximation of "my company makes $XYZ per month, spends $ABC per month, so I would need $KJL to keep everything moving per month". Therefore, our COGS would include payroll, rent, insurance, etc, all of the expenses but not include any actual good sold.

[red-beard]

Originally Posted by Pazuzu

We're trying to figure out how that works with a business that is mostly or all service based like ours. No real inventory of good sold, but there is obviously expenses, and the income is service driven.

I personally think that the revenue/COGS numbers are just an easy, first order approximation of "my company makes $XYZ per month, spends $ABC per month, so I would need $KJL to keep everything moving per month". Therefore, our COGS would include payroll, rent, insurance, etc, all of the expenses but not include any actual good sold.

In My business revenue is the sold electricity plus renewable energy credits

These are COGS

Gas Purchases
Renewable Energy Credit Royalties
Planned Maintenance
Unplanned Maintenance
Overhauls
Plant Office
Site Maintenance
Safety
Environmental Compliance
Tools
Waste Disposal
Plant Expense other
Plant Expenses - Other
Salaries and Wages
Bonus Pay
Payroll Tax Expense
Payroll Fees
Employee Benefits
401K Expense
Contract Labor
Direct Labor Costs

These are not in COGS

General & Administrative:

Rent Expense
Facility and Telecom
Telephone & Internet
Utilities
Facility Costs
Advertising
Promotions
Sales & Marketing
Insurance Expense
Professional Fees
Other Professional Fees
Professional Fees
Accounting and Tax Fees
Legal Fees
Management Fees
Property Taxes
Office Supplies
Postage and Delivery
Bank Service Charges
Dues and Subscriptions
Fees & Finance Charges
Printing and Reproduction
Licenses and Permits
Training and Seminars
IT Consulting Fees
Travel and Entertainment
Meals and Entertainment
Travel
Auto
Fuel
Miscellaneous Expenses
Fines and Penalties
Bad Debt

[Pazuzu]

Originally Posted by red-beard

In My business revenue is the sold electricity plus renewable energy credits

These are COGS
...list of things that we don't have...

These are not in COGS
...list of things that we do have...

Very helpful, thank you. In this case we would list a revenue of $XYZ and a COGS as $0.

Up to the feds to then decide how they want to help. This scenario will be the same for every medical office, uber driver, personal trainer, yadda yadda yadda.

[tdw28210]

Originally Posted by red-beard

If you bank with Wells Fargo, don't even bother with the PPP from them. They decided internally to only do $10B in PPP. The window for acceptance was open for about 6 hours.

https://www.businessinsider.com/wells-fargo-asset-cap-limits-sba-loan-capacity-2020-4

Apparently Wells wants to remain in the doghouse. They should be removed from the "too big to fail" list.