Updated: Oct 13, 2020
**Note - I am updating this blog regularly, as details of the CARES Act in practice are shared with me or I learn of them. I am striving to keep this resource as up-to-date as possible to serve you best.
With the passing of the CARES Act, small business owners are eligible to receive some of the $376 billion earmarked to keep our business running and our employees and contractors paid (yes, including us business owners too!)
There is a TON of information out there about financial relief, and it can be incredibly overwhelming to know where to even start, let alone which option is best for you. Below I’m breaking down some of the most accessible and common relief options available to small business owners and 1099s contractors.
I encourage every one of us to take advantage of the opportunity to apply for these financial relief packages. Give your bank the chance to say YES to giving you the money you deserve! We cannot control what happened to our studios and gyms, but we absolutely CAN start doing damage control on our finances and get some of the relief we are entitled to:
What is it? Almost 2,000 lenders are incentivizing small business employers to maintain payroll during the crisis.
How Can It Be Used? These federally-backed loans cover payroll costs up to 2.5x your total average monthly payroll (including yours and 1099 contractors!). 75% of the loaned money must be used to cover payroll costs, and the other 25% can be used for rent, utilities and mortgage interest.
Do I Have to Repay It? If after 8 weeks from the time of the loan you haven’t laid off any employees, kept employees at a comparable salary, AND used the loan for the above expenses - your loan is eligible to be forgiven, though you will have to apply for loan forgiveness. The loan has a maturity date of 2 years, and 1% interest rate.
How Can I Apply? This loan is currently available to existing business entities. Priority is given to those businesses with existing relationships with lending institutions. I *strongly* recommend you go to the bank you have a business bank account with, and work with them directly on the application.
For example - I do my business banking with Chase, so I filled out my PPP Application through my Chase account.
If you do not have a business bank, or existing relationship with a bank for your business finances as of February 15, 2020, you will be directed to the SBA website to fill out the general application, and the SBA will pair you with a lender.
Update: as of Tuesday, April 7 Wells Fargo is no longer accepting applications from small business owners . All small businesses that bank with WF and have not yet submitted an application are being pushed to the SBA’s general application. From here SBA is working with lenders who are willing to accept applications from non-relationship businesses. This is tremendously frustrating and will likely increase the wait time for loan approval substantially.
What Do I Need For My Application? The application took me 5 minutes max (once I got through the site crashing a handful of times). You’ll need:
Tax ID number
Avg monthly payroll
Proof of average monthly payroll - report from payroll processor, 2019 Business Tax Return
The loan approval takes about one week, and the money should be delivered 1-2 days after loan approval.
*update: according to a Chase representative on April 7, loan applications may take up to 2 weeks for approval. Once approved the money should still be delivered within 1-2 business days. The same representative was adamant that it’s NOT a money issue, it’s an infrastructure issue and the websites cannot handle the traffic they’ve been receiving.
If you do not have a payroll report, you can provide supporting documentation - copies of bank statements (business and personal) showing the money being ‘paid’; copies of paychecks or deposit statements; business tax returns showing annual income. It is my understanding that you need to provide sufficient proof of payroll amount, but there is no exact guideline as to how many supporting documents you will need in absence of a payroll report.
PS - Shoutout to GUSTO, my payroll processor, who had my “Covid-19 Payroll Reports” ready to go in my account!! Your best best is providing your annual average payroll, so I ran the report April 1, 2019 to March 31, 2020. I always talked about how important and integral a payroll processor is for your business (who has time to calculate payroll taxes? File quarterly reports and estimated taxes? No thank you!), but Gusto blew my mind with how professional and seamless they made my PPP application process. Without it, I probably would’ve spent hours running payroll reports. And I only pay $45/quarter for this service.
If this perked your ears - go give them a try and get $100 Amazon gift card for signing up - no strings attached!
What Is It? The Small Business Administration (SBA) is offering small businesses up to $10,000 to meet working capital needs. Note that your business must reside in an area that’s been deemed a “disaster zone” to qualify for a disaster loan. You can check here.
How Can It Be Used? Your EIDL must be used to cover the cost of payroll, rent, loans and operational expenses.
Do I Have to Repay It? No, the EIDL is an advance that does not have to be repaid.
How Can I Apply? You can apply directly through the SBA’s website HERE. Businesses can expect to receive their loan advance within 3 days of a successful application, though it might take longer.
Update: as of April 7, it is being estimated that EIDL loans will also take 1-2 weeks for approval, similar to PPP.
What Do I Need For My Application? The application takes about 20-30 minutes, and you’ll need:
business license information
total gross revenue
total cost of goods (services) sold
“Give your bank the chance to say YES to giving you the money you deserve! We cannot control what happened to our studios and gyms, but we absolutely CAN start doing damage control on our finances and get some of the relief we are entitled to!”
UNEMPLOYMENT INSURANCE (UI) and the UNEMPLOYMENT INSURANCE PROGRAM LETTER 14-20 (UIPL)
What Is It? Pandemic Unemployment Assistance (PUA) for those self-employed, like fitness instructors and wellness professionals (!) who can demonstrate that they are otherwise able to work and available for work, except they are unemployed, partially unemployed, or unable to work because of COVID -19 related reasons.
SOUND LIKE SOMEONE YOU KNOW!?!?
In addition to unemployment benefits ($$) you are eligible to receive up to an additional $600/week for the next 13 weeks. Furthermore, states like CA and NY are offering additional UI benefits so check with your local governments (both city and state).
How Can It Be Used? Like normal money from your paycheck.
Do I Have to Repay It? Nope, it is a benefit, not a loan.
How Can I Apply? - Head to your state’s Employment Division website (here in California we call ours the Employment Development Department, or EDD) and file for Unemployment Insurance. Note that it takes at least 3-weeks to process an unemployment claim and issue funds to those who are eligible.
What Do I Need For My Application?
Your personal information, including SSN
Possibly your W2 or 2019 Tax returns
TAX EXTENSION Shoutout to my friend Brad for this reminder - the federal tax deadline for personal and business returns is pushed back to July 15, 2020. You get three extra months to get your finances organized and filed, BUT if you’re entitled to a tax deduction (especially if you were savvy and you used this tax deduction guide) then you want to file those business taxes ASAP and get the refund you are owed!
Now more than ever it’s important to know your financial rights as a worker and business owner. Loans are overwhelmingly granted to small business owners, even those single-member business owners. If this is you, you are in a good position and be patient. This is one of the most fringe benefits of forming a business entity.
For those 1099 contractor instructors - I urge you to take advantage of Unemployment Insurance and filing for extra weekly income.
Laid off or furloughed employees - Speak with your studio owners to see if they are applying for financial relief and offer resources, like this one, if they need it. Only business owners can file for this relief, but if granted, it will be used to pay for your salary. It’s worth the nudge. Questions, comments, concerns? Let me have them!
To getting what’s yours, fam!
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