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We spent the weekend getting our arms around H.R. 748, the CARES Act. Our summaries and conclusions are included herein. You might need to contact us, or whomever your advisors are, for more particulars and specifics to your situation.

This update includes information about three programs, in order of priority:

  • Payroll Protection Program
  • Economic Injury Disaster Loan (EIDL)
  • Payroll Retention Credit
  1. The big item is the Payroll Protection Program, which is probably the most immediate of the items.
    1. Call your bank now, and tell them you intend to apply.
    2. Time is of the essence here as the initial money will run out, although it is quite possible Phase IV of the Congressional COVID-19 response will expand the funding beyond $350 billion.
    3. These loans will be administered by SBA-recognized banks and possibly include other non-SBA banks. It is a Section 7(a) SBA program.
    4. Our feedback from bankers is that it might be two or more weeks before the process can get going, but some anticipate forms for applications to be produced in the next day or two.
    5. You will need to do some calculations. The maximum loan is $10 million or 2.5 times your payroll and some other costs.
      1. Several calculations might be required but, basically, determine your average monthly payroll for the 12 months preceding the date in which the loan is made.
      2. That means you calculate the payroll costs from April 1, 2019, to March 31, 2020 (assuming you get a loan in April 2020).
      3. Payroll costs include several items, so check with us or your accountant for what is included in this amount. Independent contractors you hire would also qualify.
    6. The loans will be non-recourse and will not require collateral.
    7. There are several things you can pull together now.
      1. Average monthly payroll.
      2. Number of Full Time Equivalents during that same period.
      3. Estimate percentage of your normal operations functioning now.
      4. Some idea of how much you might be requesting
      5. Financial statements as recent as you might have.
      6. Links or copies of your latest filed tax returns.
      7. Payroll Tax Returns for the last several quarters.
      8. Your Forms 1099 MISC for independent contractors you may be claiming as included in the loan amount calculations.
    8. Don’t forget about the required certification that your business needs this money because of the current health crisis and the uncertainty that puts on the business’s ability to pay its employees and continue to function normally.
    9. Some or all of the loan amount will be forgiven, depending on how you spend that loan.
      1. A long list of expenditures exists that, when documented, will permit the business that loan forgiveness.
  1. The second thing to prepare for is the EIDL, which stands for Economic Injury Disaster Loan.
    1. Provisions exist for an EIDL Grant of $10,000, which is a request for an emergency advance if you are otherwise applying for and EIDL loan.
      1. You must be an eligible entity.
      2. If used for expenses like payroll, rent, supply chain costs, and certain other expenses, the payback is not necessary.
      3. Any PPP loan would be reduced by this advance.
    2. The EIDL loans may be granted up to $2 million.
    3. They are more difficult to get and may take longer.
    4. The amounts advanced are likely to be recourse and backed up by personal guarantees of 20% owners.
    5. These loans will be collateralized.
    6. In addition to the items necessary for applying for this loan:
      1. Itemize your liabilities (they can be grouped for now).
      2. Prepare yourself to submit personal financial statement details. You might refer to your latest bank form for your most recent loan and update it.
      3. Include your monthly sales report.
      4. Prepare some projection of what you expected in revenue and expenses.
        1. Do one for before the health crisis and one after.
        2. This is not required but might smooth the acceptance process.
      5. There will be forms and other items to fill out and sign. We or your advisors can help guide you on this.
  1. The Payroll Retention Credit is also available, but it is the third thing to consider now.
    1. This benefit is available where you can document operations suspension or severe reduction.
    2. It is a refundable credit against your employment taxes and is refundable.
    3. It cannot be claimed if you have a forgivable SBA loan. The forgivable loan probably works better.
    4. We recommend that you focus on this after you prepare for items 1 (PPP) and 2 (EIDL).

Please talk to your contact here at RSJ, or email inquiries or questions to

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