Carnival & Fair News

• Businesses with less than 500 employees
• Individuals who operate as a sole proprietor
• 501c(3)s with less than 500 employees
• Independent contractors
• The self-employed
• Businesses are required to have been in operation as of Feb. 15, 2020
• No personal guarantees are needed
• The SBA has waived the “credit elsewhere” requirement so you do not have to use the SBA as a last resort

• Contact your approved lender — A list can be found at SBA.gov
• Gather the required documents required by the lender — Payroll information, 1099 MISC Forms, tax filings etc. 
• Businesses are allowed to apply beginning April 3rd, and sole proprietors, independent contractors and the self-employed are allowed to apply beginning April 10th

• The amount you can borrow is based upon a formula, taking 2.5 x your average monthly payroll during a defined period of time, excluding portions of compensation above $100,000 for those earning more than that amount.
   
• For Seasonal Employers: 2.5 x average total monthly payments for payroll costs for the 12-week period beginning February 15, 2019 or March 1, 2019 and ending June 30, 2019
   
• The total amount requested cannot exceed $10,000,000
   
• Initial reports said that payroll to H2B workers was excluded from the forgiveness because their principle place of residence was outside the US, but industry organizations are working to include the workers since they pay taxes in the US.  No final directive has been given from the government yet.

• Payroll costs for the eight weeks following the origination of the loan
  
  
• Rent on lease agreements
  
  
• Mortgage Interest
  
  
• Payments on utilities
  
  
• The loan forgiveness can be reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees.
  
  
• If your average number of Full Time Equivalent Employees (FTE) is less than the average you had from Feb. 15, 2019 to June 30, 2019 OR if the average number per month is less than Jan. 1 , 2020 to Feb. 29, 2020
  
  
• For seasonal employers, it is compared to the average number of FTEs from Feb. 15, 2019 to June 30, 2019.
  
  
  • For example, if you had 10 FTE equivalent employees during the comparison period and only employed 5 FTE employees during the eight weeks following the loan, your forgiveness will be reduced by 5 / 10 = .5 x Payroll Cost of loan amount.
    
    
• If you pay an employee more than 25% less than he received in the most recent full quarter, then that deficit will be deducted from the loan forgiveness portion.
  
  
• Reductions in number of employees or wages shall not reduce the amount of loan forgiveness IF by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages.  If the reductions are remedied by June 30, 2020 the reductions can be eliminated.

What Happens If I Borrow More Than I Pay Out For Employees And Approved Expenses?

• You can apply for loan forgiveness through your lender using payroll forms and approved documents
  
  
• If the amount of your loan forgiveness and approved expenses does not equal the full loan amount requested, the amount due becomes a loan.  The loan carries an interest rate of only 1% and is payable over 2 years.  Payments on the loan are automatically deferred for 6 months from the date of origination but interest will continue to accrue.

• Small businesses, non-profits, independent contractors, sole proprietors and self-employed that have suffered substantial economic injury as a result of COVID-19

What are the program Details?

• Low interest loans of up to $2,000,000
  
  
• Personal guarantees are waived on loans up to $200,000
  
  
• “Credit elsewhere” provision is waived
  
  
• Principle and interest deferment for up to 4 years
  
  
• Up to $10,000 of the loan may be requested in advance, which the SBA must decide upon within three days
  
  
  • Whether or not the loan is approved, the $10,000 grant is not required to be repaid.
    
    
  • Grants may be used to provide paid sick leave to employees, fund payroll, or pay business obligations, including debts, rent and mortgage payments.
    
    
• Businesses applying for the grant must have been in operation on January 31, 2020.

How do I apply?

• You can apply online at: https://covid19relief.sba.gov/#/
  
  
• There is no double dipping on the options, you can either take the Paycheck Protection Plan option OR the EIDL option.  EIDL loans can be converted to the PPP program but the grant under those circumstances, must be repaid.