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April 15, 2020 www.DesertMessenger.com 13 CARES ACT - help for businesses The Coronavirus Aid, Relief, and Economic Security (CARES) Act ex- pands the Small Business Adminis- tration's long-standing Economic Injury Disaster Loan Program (EIDL). The EIDL program was created to assist businesses, renters, and homeowners located in regions affected by declared disasters. The SBA has issued guidance that it will provide initial EIDL loan dis- bursements of up to $15,000, in addition to the advance of up the $10,000 detailed in the guide below. Who is ELIGIBLE? In general, all of the following enti- ties that have suffered substantial economic injury caused by a disaster provided they were in existence on January 31, 2020: • Businesses with fewer than 500 employees • Cooperatives, ESOPs, and tribal small businesses with fewer than 500 employees • Sole proprietors • Independent contractors • Most private nonprofits What are the LOAN PARAMETERS? The maximum EIDL is a $2 mil- lion working capital loan at a rate of 3.75% for businesses and 2.75% for non-profits with up to a 30-year term. • Payments on Coronavirus EIDL loans are deferred for one year • Up to $200,000 can be approved without a personal guarantee • Approval can be based on a credit score and no first-year tax returns are required • Borrowers do not have to prove they could not get credit elsewhere • No collateral is required for loans of $25,000 or less. For loans of more than $25,000, general security inter- est in business assets will be used for collateral instead of real estate • The borrowers must allow the SBA to review its tax records How can I access an EMER- GENCY $10,000 GRANT? • Eligible applicants for an EIDL can receive a $10,000 emergency grant within three days of applica- tion (through Dec. 31, 2020) • There is no obligation to repay the grant. To receive the $10,000 emergency grant, it is not necessary to have an approved EIDL loan. However, if you are able to secure a PPP loan, the $10,000 grant will be subtracted from the forgiveness amount How do I APPLY? Apply online at www.SBA.gov/disaster The SBA administers the EIDL pro- gram. Please contact the SBA with specific questions. • NOTE: The Paycheck Protec- tion Program (PPP) created by the CARES Act prohibits borrowers from taking out two loans for the same purpose. For more informa- tion on PPP loans, visit uschamber. com/sbloans ********************************* The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated almost $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (PPP), the initiative provides 100% federally guaranteed loans to small businesses. Importantly, these PPP loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward. The administration has released initial guidelines; they are available at www.treasury.gov. You can apply through any existing SBA 7(a) lender or through any fed- erally insured depository institu- tion, federally insured credit union, and Farm Credit System institution that is participating. Other regulat- ed lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lend- er as to whether it is participating. While the program is open until June 30, 2020, the government is advising borrowers to apply as soon as possible given the loan cap on the program. 1. Am I eligible? You are eligible to apply for a PPP loan if you are: • A small business with 500 or few- er employees • Defined as "small" by SBA Size Standard that allows for higher employee threshold or is revenue based; or • A small business with maximum tangible net worth up to $15 mil- lion and the average net income for full 2 fiscal years prior to applica- tion does not exceed $5 million • A 501(c)(3) with 500 or fewer em- ployees • A sole proprietor, independent contractor, or self-employed • A Tribal business concern that meets the SBA size standard • A 501(c)(19) Veterans Organization that meets the SBA size standard In addition, some special rules may make you eligible: • If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis • If you are operating as a franchise or receive financial assistance from an approved Small Business Invest- ment Company the normal affilia- tion rules do not apply • Small businesses that have minor- ity shareholders (private equity or venture capital) can still qualify if those stakeholders relinquish rights 2. What will lenders be looking for? Borrowers will need to complete the Treasury Department's PPP Loan Application (PDF) and pay- roll documentation. Lenders will also ask you for a good faith certification that: • The uncertainty of current eco- nomic conditions makes the loan request necessary to support ongo- ing operations • The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments • Borrower does not have an ap- plication pending for a loan dupli- cative of the purpose and amounts applied for here • From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here (Note: There is an opportunity to fold SBA Disaster Loans into a PPP loan) • If you are an independent con- tractor, sole proprietor, or self-em- ployed individual, lenders will also be looking for certain documents (fi- nal requirements will be announced by the government) such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship. What lenders will NOT look for • That the borrower sought and was unable to obtain credit elsewhere. • A personal guarantee is not re- quired for the loan. • No collateral is required for the loan. 3. How much can I borrow? • Loans can be up to 2.5 x the bor- rower's average monthly payroll costs, not to exceed $10 million. • Payments deferred for six months • 1.00% fixed interest rate • Loan is due in two year Contact your local lender for details on the Paycheck Protection Pro- gram (PPP) The administration has released initial guidelines; they are available at www.treasury.gov.

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