Last night the Senate and White House agreed to a COVID-19 Stimulus package Bill, but it has not yet been passed by the Senate. The Senate should vote this afternoon and then the Bill goes to the House for consideration.
We don’t know all of the details, and this is still fluid, but in summary the Stimulus may provide the following:
1. Direct payments to individuals
2. Expanded unemployment benefits
3. Working capital loans for businesses with less than 500 employees (these loans will have incentives to not layoff any employees (not sure how contractors fit in) for the next 90 days)
Example of how we think the Working Capital Loan will work:
Your business needs $100,000 per month to operate under normal circumstances and $40,000 relates to payroll. Your business would apply for a $300,000 ($100,000 x 3 months) loan to keep your doors open for the next 3 months while the economy gets started again. If you keep everyone employed and spend $120,000 on payroll over the next 3 months, the $120,000 will be converted into a Federal Grant and will not have to be paid back. Only $180,000 will be paid back.
As you read this, you will have a lot of questions about specifics to your business, but we don’t enough details to answer all of your questions at the moment.
Register for our Covid-19 update webinar this Friday and we will address as many questions as possible based on what we know.
If you're interested in applying for an SBA loan, assume that you need to have the following items available to apply:
o Personal financial statement for all owners greater than 20%
o 2018 personal and business tax returns
o 2019 financial statements (or tax returns)
o YTD 2020 financial statements
o Projected working capital needs for next 90 days
o Personal guarantee required
o Last place security interest on collateral
Once the stimulus is passed and the regulations are published, we will provide updates to guide you through the process so that you can make informed decisions for your business related to the stimulus package options.