Small Business Administration Loans

If you are a small business owner (meaning you have fewer than 500 employees) and would like to take advantage of the new federal funding available to bridge-the-gap to pay employee wages, rent/mortgage of your business location, and/or utility bills, here is how to do it:

(1) Go to the Small Business Administration’s website: www.sba.gov;

(2) Click on “Coronavirus (COVID-19): Apply for an Economic Injury Disaster Loan CLICK HERE” at the top of the page;

(3) Move the map around to find the SBA location closest to you and then click on that location’s website;

(4) Walk through the “Eligible Entity Verification” prompts (be sure to have your business’s Profit and Loss and Balance Sheets available for the 12-month period preceding 1/31/2020), which includes questions about the ownership of the business and verification questions about the business owners; and

(5) Enter your business’s bank account information and download a copy of the confirmation screen.

If you are looking to take advantage of the Paycheck Protection Program aspect of the new law, you will need to go through an FDIC insured bank to do so.

Eligibility:       

• Businesses fewer than 500 Employees

• Self Employed Individuals

• ‘Gig’ economy individuals

• Certain Non-Profits, including 501(c)(3) and 501(c)(19) and Tribal Entities with less than 500 employees

Size of Loan: 

• 250% of Employer’s Average Monthly Payroll Costs

• Payroll costs include Salary, Wages, and Payment of Cash Tips (up to annual pay of $100,000).  Employee Group Health Care Benefits, Retirement Contributions, and Covered Leave will also be covered.

• Maximum loan amount is $10 million

Use of Funds:

• Eligible use of funds to include Payroll Support, Mortgage Interest, rent, and Utility Payments

Fees:

• SBA Guaranty Fee is waived

• No Prepayment Penalties

Underwriting Guidelines

• In lieu of traditional underwriting guidelines, lenders are tasked with verifying that the Business was 1) Operational as of February 15th, 2020 and 2) had employees for whom it paid salaries and payroll taxes, or a paid independent contractor. 

Loan Forgiveness

• Borrowers will be eligible for loan forgiveness equal to the amount spent by the borrower during an 8 week period after the origination date of the loan on payroll costs, interest payment on any mortgage incurred prior to 2/15/2020, and payment on any utility for which service began before 2/15/2020

• Amount forgiven must not exceed principal amount of the loan 

• Amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employees salary beyond 25% of the previous year’s compensation

• Borrowers that rehire workers laid off due to COVID-19 will not be penalized in an effort to encourage the rehiring of laid off workers

• Amount not forgiven at the end of 1 year is carried forward as an ongoing loan-maximum term is 10 years, interest rate set at 4%. 

Deferment:

• Automatic deferments for 6 months, available up to one year

Student Loan Forbearance

Federally serviced student loans can be held in forbearance and for the foreseeable future. But, even if you do not want to completely forego payments on eligible loans at this time, your interest rate will be reduced to 0% for the period beginning March 13, 2020. Please note: these interest and payment waivers only apply to federally serviced loans and not to privately held ones. Click here for more information on loan eligibility.

If you have federally serviced loans, you are most likely using Navient. I went there to find guidance on the programs. First, I noticed that the Navient website says this:

“As part of the new federal legislation passed on Friday, March 27, 2020, we are working to suspend payments on all U.S. Department of Education (ED) owned loans by 4/11/2020 – the suspension will be in place until 9/30/2020. Once your eligible loans have been updated, Navient will notify you in writing, or you can always check back to this page for any related COVID-19 updates on your Navient serviced loans.”

But then, under “How do I request this forbearance?” the website says the following:

“If you are 31+ days past due, we'll process this forbearance automatically on your ED-owned loans and postpone your payments until 9/30/20. There's no action needed from you.

Note: ED recently announced you can postpone payment for at least 60 days from March 13, but based on ED direction, we will be processing this forbearance initially through 9/30/20 for past due loans. This forbearance end date may be shortened or extended based on ED direction. You can also request to have this forbearance shortened at any time.

If you are not 31+ days past due, you will need to contact us to request this forbearance. Alternatively, you can explore your repayment and deferment options online by logging in to your account – go to Repayment Options.”

Given the potential for confusion and the fact that many loans are on auto-pay, you may want to consider contacting Navient to request the forbearance. The good news is the system for doing so is automated and only takes a few minutes to use.

Here’s how:

(1) Call 1-800-722-1300 (Monday – Thursday 8 am – 9 pm and Friday 8 am – 8 pm ET);

(2) Listen to the prompt and press 1 for the forbearance program; and

(3) Enter your social security number, phone number, and date of birth at the prompts.

That’s it. According to the phone system, the requests will be processed within 10 business days.

Unemployment (Reemployment Assistance) Benefits

As I discussed in previous blogs, the federal government is providing aid in the form of unemployment benefits to assist during the COVID-19 crisis. The Department of Labor has put together a quick fact sheet you can check out by clicking here. But, more importantly, if you find yourself in need of financial assistance in the state of Florida, here is what you would do to:

(1) Go to the Florida Department of Economic Opportunity website (click here!);

(2) Click on “Login Here Connect” at the top right of the page; and

(3) Follow the prompts to file a claim.

If you are currently receiving reemployment assistance benefits or do receive them, upon application now, note the following:

“The Department of Economic Opportunity has suspended the requirement to provide work search contacts beginning the week of March 15, 2020 through the week ending May 2, 2020.

The Department of Economic Opportunity has suspended the requirement to complete the full work registration through Employ Florida for any claims filed with an effective date of March 15, 2020, through the week ending May 2, 2020.”

I plan on posting another blog soon about how to take advantage of the CARES Act’s tax credit (with immediate payment). Until then, I hope you found this information helpful! Best wishes to you and your families!