SPECIAL EDITION - COVID-19 Resources for Small Businesses

The Small Business show special edition for Tuesday, March 31, 2020. Greetings, folks, and welcome to the Small Business Show, a little special edition short episode here for you. I am, as always and as expected here in Durham, New Hampshire.

I'm Dave Hamilton and out in Lafayette, California, I'm Shannon Jean. And happy to come to you on this special edition. Wanted to talk about what's going on with small business and the COVID 19 shutdown. You know, everything. Things are changing daily. And you know, right now the focus is on stopping the spread of this virus, which is where we have to focus on right now, you know, but I know that all of us small business owners are also trying to keep our businesses afloat, keep your team employed, figure out what's going on. So, you know, we, we get a lot of questions on the show. We got a great question today about two major government relief programs that came out as part of this CARES package that was approved. Was it last week? Last week?

Friday, I think it was Friday, yeah.

Funding law. And so we, we want to dive into the details.

Yeah. Because it. Talk about has some things for small business owners. Like it does real things that you can do and probably should do. I mean you gotta, right now, you got like right now. Yeah, you can, you should talk to your accountant and any of the things that we're about to tell you to do here, you know, obviously you gotta run them through your, your, your own little system because we don't know your business. But, but yeah, this thing's pretty, I'm just shocked that it, like, I've never seen things that are as easy. And, and, and I would agree. Yeah. I'm, I've been.

Usually there is, yeah, usually there's a ton of red tape and it's a pain, you know, to get everything. But this time there's actually some, some, you know, relatively simple steps you can take. And there's kind of three major parts, two of them that affect your business and business owners and then, you know, their employees. And then there's a third one for self employed that I want to, that I want to talk about. And so we got a question from, you know, Riley L. He wrote in and asked us, he said, can you guys take some time on your next episode to talk about this new government programs that were just announced? With so much going on, I'm not sure if my business would qualify for any of them. So I was mentioning it to you early, Dave, before we started recording, I sat in on a call this morning with Senator Glaser here in our area and they had some folks from the SBA on as well as local chamber of commerce. It was very, very informative. And so I thought we would jump in today. That's why I thought we'd do this special edition and give you our take on it and what we think is happening as well as we can give you some links to, to dig deeper for your business.

Yeah, for sure, for sure.

Yeah. So let jump in anytime, Dave too, because I start talking everything. But, but there really is two main programs announced for small business relief. The, the first one is one related to payroll and one kind of related, you know, just your business. And we'll go into economic injury disaster loan, the Eidl. Eidl they're calling it, and there's a few parts.

That's the one that's not related to payroll. You don't have to have employees to qualify for this first one that we're going to talk about here. The Eidl thing.

Yeah, yeah. And it's unique in the sense that most SBA Small Business Administration programs, they don't do it direct. You have to go through a bank, through your lender, you know, or they'll give you the name of a bank to go through and then they guarantee everything. Right. But this is different. So this, you can apply right. On the SBA website. We'll put a link in the show notes at businessshow Co. It's a low interest loan that you can use for most business obligations. I mean, there's a huge list, everything you could imagine you can, you know, paying your bills, buying, you know, buying goods, all this kind of stuff. And one of the things you can, you can look at is when you're applying for it, there is a checkbox you can check and part of the program is a $10,000 advance to get that you will get before your application is, you know, looked at to whether you're approved or declined. You need to be have been in operation as of January 31st. It can't be a business you just started this week.

Right. You know, okay, fair.

And yeah. And you can borrow up to $2 million. It's based on some. What you're doing here is you're borrowing to focus on, you know, whatever obligations you have, interest, you've got, your other lines of credit you got to pay back, all that kind of stuff. And when you apply, you're going to list your previous year's revenue and your cost of goods sold because they're trying to get a feel for how much cash Are you. Do you need.

Yeah. How profitable? What's your profit picture look like? That's right. Yeah.

Yeah. And the interesting thing about Eidl package is that when you make that $10,000, when you click that checkbox and you request that advance, that is a grant and it does not have to be repaid, even if your application is turned down. If they say, yeah, we're not, you don't qualify, that $10,000 grant is yours to keep, to keep yourself going. Right now, all they want to know is that you are in business. You have a business. You have to give them your tax ID or your Social Security, depending upon how you str. You know your business.

And that idol is open. Again, we're not accountants, but I'm going to ask you this anyway. That idol is open whether you have a LLC or a C Corp or an S Corp, or even if you are sole proprietor. Correct.

Proprietor. Correct. It's very broad. You can just see they thrown this up because on the, on the call.

This is too good to be true. Right? Yeah. I mean, we'll pay for this in the end, by the way.

So you should go get our money. They're just giving our money back to us. They're giving it, Government has, I have to remind my kids this all the time. The government has no money. They only have the money that they take from us.

Right.

So in essence, you know, you're, you're getting some of your money back. And it, it's an interesting way to do it. And, and I, you really see how they understand, look, the economy is shut down. We have to really jump start it. And so all the things that you normally, all the hoops that you normally have to jump through, they're just gone. The application only takes a few minutes.

Yeah.

And then they'll follow up information when they request, you know, document stuff, your loss of revenue, what's going on, because then that'll also, you get an SBA agent that'll contact you and they're going to help you figure out what's the amount to borrow because you don't want to borrow. You know, the amount that you borrow other than that $10,000 you're going to have to pay back. So you got to factor that in Those, this part, this loan is not forgiven. Just you can get that access to that $10,000 grant, which could help you through the next, you know, week or so or whatever you have going on, you know, maybe helps pay your rent, you know, that kind of thing. Yeah. So we'll put A link at the show notes at. Again at businessshow co highly recommend you apply. You know, if you have to have a business that has less than 500 employees, I imagine most people listening to us, that's applicable and I would recommend you do it. Talk to your accountant, but I, I just don't see a lot of reasoning for not applying.

Yeah, I'm trying to figure out if I should apply for only one of my businesses or multiple businesses.

Yeah. So that's one thing that the folks on this call this morning pointed out from the sba. The loan is to your. To the business.

Right.

Not to you.

Right.

So if you own multiple businesses, multiple companies, and you have taxpayer ID number for each of those, I don't. Again, you might want to talk to your accountant, but I don't see any reasoning why you could not do that.

Right.

At that point. Yeah. So it's interesting. So the second one, it's a little more structured. And this one is the payroll protection program. This ppp. And this is made up of loans for businesses.

The.

Yes, we should. I'm answering your question, Dave, in the notes. This is a casual show, folks.

This business too. Yeah. I wasn't sure if we wanted to talk about that here, but it just hit me. I was like, wait a minute, We, Shannon and I, we have a business entity. We should do this. Absolutely.

Another one. Different one. Yeah, yeah. So this PPP is same kind of thing. You have to have less than 500 employees. The unique part of this is again, you can be self employed, you can be a sole proprietor, you can even be an independent contractor, meaning you got paid. You know, there's some really interesting nuances.

Yeah, they're opening a lot up. There were, there were some things that basically said if you either are an independent contractor or are paying people as independent contractors, but really they're people. So you could treat them as an employee. They're not. It doesn't sound like they're going to use this to come after you for not having treated them like an employee. This is truly a help. Not, you know, they're trying to get.

Cash into people's hands.

Right. Yeah.

Which is great. So like, like traditional SBA loans, these will go through banks. The, these, the PPP program.

Paycheck protection. Okay.

Yeah, Paycheck protect. They're going to go through banks. It. And as of today, you know, lenders don't have all the details to start it, but they're supposed to have it. They're hoping by the end of this week, you know, they just got the, the bill just passed on Friday. But I would suggest you contact your banker and, and start talking to him about it because there is some unique aspects that I, I want to talk about next that I know you're going to want to take advantage of and that are going to help your small business. The first, there's no personal guarantee required and there's no collateral required. This is not a loan that's based on your credit rating, based on you signing a personal guarantee, based on how much equity you have in your building or your house or anything like that. The payments are deferred for at least six months and not more than a year. So you have some time to get in your feet. They're going to make loans up to $10 million and basically two and a half times your average payroll from the previous year, plus other expenses that you can add back in like healthcare, vacation, anything. It's a huge basket of things related to what it costs you to have employees. Right?

Wow.

Now here's the very, the interesting part is these loans have the option to be forgiven and the more of your employees you retain, the more or the larger percentage of your loan will be forgiven. Even if you've already furloughed or let go employees, you can bring them back. It counts if you bring them back on. So if you've been like, look, you know, I'm already in the tank here and I can't keep 20 employees here, I'm down to two and we're making, you know, doing things ourselves or whatever. Once you get the loan, if you bring them back on you, you're going to qualify for that forgiveness. And, and it's prorated. So if, if your business, if you bring 70% of your employees back, you're going to get a 70% a loan forgiveness and it's going to be based on this two month period after you receive the loan. This is supposed to be short term stuff.

Got it.

Keep your business going for the next, you know, couple months as we get the economy back.

So this essentially becomes a grant just like the other one, as long as you're following the guidelines of keeping people employed, which is obviously the point of this. Yeah. Okay. Wow.

And the guy from the SBA this morning, and you know, he couldn't confirm it, but he said, look, we, that our suspicion is that banks are. There's going to be a big volume of businesses applying for these things, right. Especially this ppp. So they suggested you reach out to your bank first, wherever you have your accounts, because they are going to, you know, the SBA believes they're going to focus on their existing customers first.

That makes sense. Of course they should.

Yeah, yeah, that's right. Now, if you don't have a bank to work with again, we'll put a link in, in the, in the show notes of the, the most active SBA lenders up there. There's like the hundred most and you know that, that are easier to, maybe easier to work with. So that, that's the main two parts of this. There's a, a lot of details to, you know, dive into. I have a couple of other links. There's some great articles up on LinkedIn that I will or that I would suggest you read that can dive into this. Talk to your accountant. I know, Dave, you posted an article up on Linked Journey.

Yeah.

That had some tips. So, you know, you definitely want to get some advice, but I would say you want to act quickly because the sooner you get in line, if you will, the sooner you're going to get some relief.

Yeah, it's gonna, it's gonna slow, the system will slow down a little bit, I would think. Yeah, that makes sense.

Yeah, the, the SBA rep on the phone or on this call was, was saying that, you know, loans of 25,000 and less were being approved very quickly. Some people that applied last week had already gotten. Wow. Check.

Wow.

So, yeah, so they're really trying last week.

That's amazing. Yeah, yeah.

He said these guys are like, people are, you know, getting this stuff, you know, done very, very quick. The speed is of the essence, I guess, because they're, they're worried.

No, that's the thing, you know, and it, it, I was, I, I had a doctor's appointment, it was with a dermatologist and it's all, everything's fine. But I was talking to him this morning and, and he really seems to think that we're going to see this in multiple waves and this is not the only stimulus package that we're going to see.

I agree. Yes. Yeah, I agree. I agree. And you know, I don't think there's any harm in applying for especially the EIDL one, the idle one. Yeah, look at that and see if you need some short term assistance. You know, again, get some advice. The other thing is you can apply for both of these. The only thing you need to be aware of is when, if you go to your banker and apply for the paycheck protection program, be sure to let them know if you got that $10,000 grant part of the EIDL program because they're going to deduct that from whatever they loan you.

Okay. So you can't double dip. Got it?

That's correct.

Okay.

Yeah. So you don't want to get, get in there, in there backwards and you know, you don't want to take out that loan if you're not going to keep your people on for this paycheck protection program because then you're just going to have to have another loan, whatever's left over after that two month period. You know, once you get your, this, this PPP loan, they convert to a 10 year note to pay off at 4%.

Oh, that's not bad.

Yeah, that's not bad.

That's not bad.

So, yeah, so dig a little deeper in these. I would again urge you to do some, some quick action. And then lastly, the, another new aspect of this cares package is that if you're self employed or you're a contractor gig worker, you can now file an unemployment claim and you have not been able to do that before. And this includes things like real estate agents, you know, all kinds of different classifications that never qualified. If you're, you know, an independent contractor, if you're a podcast producer, if you're whatever, whatever you could think of.

Musicians.

Yeah, musicians. If you have lost your earning power here during this, you know, this crisis that we're dealing with, you have an opportunity to put a claim in for unemployment. And it's not just regular unemployment. It's there, it's like unemployment plus, you know.

Right.

There's a, there's some additional funding that come and play to help you get through this stuff. And it's another thing that I would encourage you, again, I don't know that you need to check with your state unemployment office and see whether they have that up and running, but there's a lot of opportunities to help you out here. And we just, we wanted to do this special edition of the Small Business show to be sure that we could get the word out and you were able to take advantage of those things when you need it.

All right, well, you've got some work to do, folks. And it's, it's work that's almost guaranteed to be, to be cash flow positive. I don't want to say profitable or lucrative, but cash flow positive work. Yeah, that's right. And that's the point of this.

Yeah, yeah, yeah. And let us know if you have, you know, questions or comments if you think we didn't present something correctly. This is as much as we know right now. It's a very fluid situation.

Yeah. Please let us know.

Yeah, yeah. We'd love to hear from you. Feedbackusinessshow Co. Or come over to the small business support group, BusinessShow Co Facebook, and you can talk more about it with us there. As always, we appreciate your support and we hope this information helps you out.

Yeah. And, you know, go to BusinessShow Co Guides and buy our book about mistakes and don't make the mistake of ignoring this stuff. So there you go.

Absolutely.

All right, folks, we'll see you. We'll see you the next time. We see you next week. Tomorrow. I don't know. One of those things. It'll definitely be one of those. If not, follow.