COVID-19 Relief Aid Package: 8 Ways to Access Funding

85% of business owners need financial assistance to get through the COVID crisis. And we hope this post helps you understand the paths you can take to access the funding you deserve.  We’re hopeful you’ll find some changes you can take advantage of here today in this post.  Below, we’ve summarized the U.S. Government’s 8-part COVID-19 relief package for small businesses. Before you read on, it goes without saying step one is talking to your accountant, local banker, and lawyer to know what applies for you and how best to get after it. Part 1: Extending and Improving the Paycheck Protection Program (PPP) The legislation includes $284 billion for the Paycheck Protection Program and extends the program through March 31, 2021. Here are some of the key provisions along with questions you may be looking to answer:   Q. If I already got a PPP loan, can I apply again?  Yes: Under the new COVID relief package, the new program provides for a second PPP loan of up to $2 million for smaller, harder-hit businesses that: Have no more than 300 employees. Demonstrate a loss of 25 percent of gross receipts in any quarter during 2020 when compared to the same quarter in 2019. Have used the full amount of their first PPP before a second loan is disbursed. Q. Are more businesses eligible this time?  Yes – But before we go there… if you are a solopreneur or independent contractor, you ARE eligible for PPP loans despite what the name of the program might convey.   In the COVID-19 relief package updates, eligibility was expanded to also include: certain local newspapers, TV and radio stations, public broadcasters, housing cooperatives, and 501(c)(6) nonprofits. Q. How much money am I entitled to? In general, borrowers may receive a loan amount of up to 2.5X the average monthly payroll costs in the one year prior to the loan or the calendar year. No loan can be greater than $2 million. Here are some of the details:   Seasonal employers may calculate their maximum loan amount based on 12 weeks beginning February 15, 2019, through February 15, 2020. New entities may receive loans of up to 2.5X of average monthly payroll costs. Entities in industries assigned to NAICS code 72 (Accommodation and Food Services) may receive loans of up to 3.5X average monthly payroll costs. Businesses with multiple locations that are eligible entities under the initial PPP requirements may employ not more than 300 employees per physical location. Waivers of affiliation rules that applied during initial PPP loans apply to a second loan. An eligible entity may only receive one PPP second draw loan. Fees are waived for both borrowers and lenders to encourage participation. For loans of not more than $150,000, the entity may submit a certification attesting that the entity meets the revenue loss requirements on or before the date the entity submits their loan forgiveness application, and non-profit and veterans organizations may utilize gross receipts to calculate their revenue loss standard. Q. Did they simplify the forgiveness process?  Yes –  for loans of up to $150,000 and they revised the loan processing fee tiers to incentivize lenders to make loans to underserved and underbanked businesses. Q. Did they do anything to get money to businesses they missed last time?  Yes – they added several carve-outs and special programs designed to get money to businesses who were underserved last time, including:  Directing the Small Business Administration (SBA) to issue guidance that prioritizes underserved communities (Including Black-, Latino-, Asian-, Native American- and women-owned firms), have been disproportionately impacted by the economic consequences of this pandemic, worsening already existing disparities. And to add a voluntary demographic information section on the applications for initial and second PPP loans, as suggested by the SBA Inspector General. You can find a map of communities meeting these requirements found here.   Dedicates a $15 billion set-aside for loans issued by mission-lenders, including community development financial institutions (CDFIs), minority-depository institutions (MDIs), and SBA 504 and Microlenders, as well as another $15 billion set-aside for certain smaller depository institutions, such as credit unions and farm credit institutions. Creates $60 billion in borrower set-asides: $35 billion for borrowers who were unable to apply for an initial PPP loan, of which $15 billion is for smaller borrowers with up to 10 employees or loans of up to $250,000 in low-income areas; and $25 billion for second PPP loans for the same small borrower category. Repeals the requirement for PPP borrowers to deduct from forgiveness the amount of their EIDL grant advance. Eligible small businesses and nonprofits seeking initial PPP and second draw loans should contact an eligible PPP lender. A list of approved lenders listed by state is available on SBA’s website here.   Based on our research, business owners got faster turnaround and much better service by avoiding the major money center banks (Chase, BofA, Citi, Wells Fargo, etc) and going with regional / local banks, credit unions, and online providers.   Part 2: Economic Injury Disaster Loans (EIDL) from the SBA $20 Billion in additional targeting funding is being made available through the EIDL Advance program. The bill makes entities in low-income communities, as defined in section 45D(e) of the Internal Revenue Code (see map to determine if you are in one of these areas), that received an EIDL Advance to receive an amount equal to the difference of what the entity received under the CARES Act and $10,000. It also provides $10,000 grants to eligible applicants in low-income communities that did not secure grants because funding had run out. Eligible small businesses and nonprofits seeking to participate in the EIDL Advance program should contact the SBA. Part 3: New Grant Program for Shuttered Industries $15 Billion was set aside for the SBA to make grants to eligible live venues, independent movie theaters, and other cultural institutions that can demonstrate a revenue loss of 25 percent to address the economic effects of the COVID-19 pandemic.  The SBA may make an initial grant of up to $10 million dollars to an eligible person or entity and a supplemental grant that is equal to 50 percent of the initial grant....