Help Businesses And Families Now – COVID-19 Responses

Standing by on the sidelines as an observer is not my thing in life, business, or sports. Watching the personal and economic turmoil caused by the global response to the COVID-19 coronavirus was unacceptable, and a call to action came out of the UK. What can we do to save our clients? While these resources are US-centric, perhaps one of the items will give you an idea that you can action. (John’s Hopkins current global cases dashboard) (coronavirus.gov)

For business:

1. Remember cash flow is king
   • Speak with critical creditors to assure them you’ll do your best to pay
   • Ask for payment deferrals where appropriate
   • Cut optional expenses
2. Apply for government-supported loans, if interested (more below) – SBA Disaster Loan https://disasterloan.sba.gov/ela/
3. Check bank lines to have cash in place for any shortfalls (payroll, unexpected)
4. Anything needed for team members ability to function/personal productivity
5. Clear communications internal and external

For family and individuals:

1. Food supplies OK/stable?
2. Health care supplies/needs met?
3. Family communication established?
4. Items needed to resume/maintain a normal lifestyle
5. Conserve cash, eliminate optional expenses short term, defer payments
6. What to do during quarantine

SBA Loans (Trust the Federal sites for correct information, but this a current summary as of this writing on March 22, 2020

• Up to $2MM for Working Capital purposes/business overhead expenses (includes payroll, lease and loan payments, other G&A, etc.)
• Businesses under 500 employees
• Profits & Some Non-Profits (but not churches, houses of worship)
• No refinance of existing debts
• The first payment of the term WC loan would be one year from note date
• Credit be flexible, but Pre-coronavirus performance to show viability may be required
• Low interest not to exceed 4%
• Resources:
  • EIDL Eligibility
  • Webinar material-Coronavirus 03.14.20
  • Successfully Starting Disaster Application (expect nine to ten hours)
  • Three Step Process SBA Disaster Loans
  • COVID SBA Fact Sheet
  • COVID SBA Business Resources

Official Program Links or News Releases

• Board Leadership and Performance in Crisis – 3-22 from Russell Reynolds Associates
• SEC relief for companies affected by COVID-19
  • For transfer agents
  • For registered investment companies
  • PCAOB 45-Day relief period for inspections

AVAILABLE SBA PROGRAMS

SBA Economic Injury Disaster Loan (EIDL):

• SBA is directly offering low‐interest federal disaster working capital term loans to small businesses suffering substantial economic injury as a result of COVID‐19
• The SBA Disaster program has been authorized and the SBA is actively taking applications at www.sba.gov/disaster
• Loans up to $2 million are to be repaid over 30 years at 3.75% fixed rate; payments deferred over first 12 months
• Must be small business per SBA size standards
• Loans > $25,000 require collateral

SBA Payroll Protection Program (PPP) under CARES Act: 

• Authorizes $350 billion for three months of 100% guaranteed 7(a) loans to cover payroll costs, interest on mortgage payments, rent obligations, and utilities
• Applies to businesses with fewer than 500 employees or those that meet SBA’s current size standards for 7(a) loans
• Applies to self‐employed or individual contractors
• Applies to certain non‐profits
• The maximum loan size for borrowers is capped at the lesser of 250% of the average monthly “eligible” payroll costs (with a lookback of one year or relevant period for seasonal businesses), or $10 million
• Interest rate capped at 4%
• A portion of any loan issued as part of the PPP, up to or equal to 8 weeks of covered expenses, will be forgiven by SBA and paid to the lender, plus interest

SBA Express Bridge Loan (EBL): 

• Authorizes SBA Express Lenders to provide expedited SBA‐guaranteed bridge loan financing on an emergency basis in amounts up to $25,000 for disaster‐related purposes to small businesses in declared areas while those small businesses apply for and await long‐term financing (including  through SBA’s direct Disaster Loan Program, if eligible)
• SBA Guaranty is 50%
• Terms loans up to 7 years
• Lender can require repayment if Disaster Loan is approved
• No collateral required
• Use of proceeds: to support the survival and/or reopening of small business
• EBL loans can only be made to borrowers “with which the Lender had an existing banking relationship on or before the date of disaster”

SBA Regular 7(a) Loan Program: 

• The regular 7(a) Loan Program is still in effect with $18 billion remaining in FY20 budget
• The limit for express loans with 50.00% SBA Guaranty has been temporarily raised to $1 million through 12/31/2020
• A provision in the CARES Act Authorizes $17 billion to pay six months of principal and interest payments for all existing regular SBA 7(a) borrowers, plus new SBA loans that are booked over next 6 months after date of enactment. This provision provides relief on existing obligations.

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