What You Should Be Doing Now – Tips from LSWG

The following message was emailed to clients and friends of LSWG on Wednesday, April 1, 2020.

We’re going to be okay.

The past several weeks have been a bit over-whelming–and to use a word that has received a lot of press lately, “unprecedented.”  Also unprecedented is the amount of information we all have been receiving about relief efforts.  So much so, it’s difficult to know what to do next.

We understand.  We have been following all of the information that has been coming out of the Treasury Department, SBA, and state and local governments, and recommend the following steps you should take now.

Contact Your Lenders

You need your banker now, and banks are being very responsive to customer needs. If you haven’t already, reach out and ask for a deferral on your loans/mortgage.  Conserve your cash.

Apply For Relief NOW

Among the many relief efforts that have been announced are two that we highly encourage our business clients to consider–as soon as possible since these programs are subject to funding availability (i.e., relief is available only until the money runs out).

Paycheck Protection Program

Included within the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that was signed into law on Friday, March 27, 2020, is a provision to provide cash-flow assistance through 100 percent federally-guaranteed loans to employers who maintain their payroll during the COVID-19 crisis. What you need to know about the program:

  • Who can apply?  All businesses–including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors–with 500 or fewer employees can apply.
  • Loan amounts will be forgiven as long as:
    • Loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and
    • Employee and compensation levels are maintained.
  • When can you apply?  Small businesses and sole proprietorships can apply starting April 3, 2020; independent contractors and self-employed individuals can apply starting April 10, 2020.  Eligible recipients may qualify for a loan up to $10 million (determined by 8 weeks of prior average payroll plus an additional 25% of that amount).  Begin now to compile payroll records, including Forms W-2, 941, and 1099 to support your loan request.
  • Where can you apply?  You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.  (Your lending institution is most likely a participant.  We recommend you contact them directly.)
  • The U.S. Chamber of Commerce has prepared an informative Guide that does a great job of explaining eligibility and benefits of the program.  Click here for the U.S. Chamber of Commerce’s Coronavirus Emergency Loans – Small Business Guide and Checklist.

SBA Disaster Relief Loan

While the PPP program is the most desirable because of the loan forgiveness, the U.S. Small Business Administration Economic Injury Disaster Loan program is providing low-interest federal disaster loans for small businesses impacted by the COVID-19 pandemic.  Highlights of the program:

  • Lower interest loans of up to $2 million, with principal and interest deferment available for up to 4 years.
  • Available to pay expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.
  • Small businesses with fewer than 500 employees, sole proprietorships (with or without employees), independent contractors, cooperatives and employee-owned businesses are eligible.
  • Plan to spend some time completing the application.  The SBA estimates the time to complete the entire application is over 2 hours.
  • Click here for an overview of the application process.  Click here to access the application.

We have been inundated here at LSWG with the “latest breaking news” on COVID-19–from all sources.  We can imagine you are receiving an equal amount of information.  So much information can make the current crisis even more overwhelming.  For that reason, we will keep our email alerts to you at a minimum–emailing you only with items that are time-sensitive and actionable.  Additional information and updates will be posted to our website blog and on our social media platforms (LinkedIn, Twitter, and Facebook).  We invite you to connect with us there.

Helpful Resources