Have questions regarding the Paycheck Protection Program (PPP)?
We've put together this comprehensive list of frequently asked questions and answers.
Emergency Financial Relief
(Federal, New York, New Jersey Programs)
SBA Emergency Financial Assistance Programs
Through the Small Business Administration (SBA), the Federal Government is offering financial assistance programs to qualified businesses. Below is a snapshot of each and here is a full comparison of the two programs.
Paycheck Protection Program (PPP)
An additional $310 billion of funding was approved on 4/24/20 to replenish available PPP loans.
The CARES Act has put in place the Paycheck Protection Program which prioritizes millions of Americans employed by small businesses by authorizing up to $349 billion toward job retention and certain other expenses.
- This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.
- Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standardsfor those industries.
- Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.
- Loan payments will also be deferred for six months.
- No collateral or personal guarantees are required.
- Neither the government nor lenders will charge small businesses any fees.
- Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.
- Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
- This loan has a maturity of 2 years and an interest rate of 1.00%.
- You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
- Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.
- Lenders may begin processing loan applications as soon as April 3, 2020.
- The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (75% of the funds should be used to pay for payroll costs, while the remaining 25% may be used to pay for utilities, rent, and interest on indebtedness)
- Employers may reduce compensation costs up to 25% without seeing a reduction in loan forgiveness
- Borrowers may choose to calculate eligible costs using the Covered Period (CP) or Alternative Payroll Covered Period (APCP)
- Payroll costs must be incurred and paid, but the payment may fall outside of the CP or APCP and still be counted as an eligible cost for forgiveness
- Count payroll costs that were both paid and incurred only once
- Borrowers will be required to submit the PPP Loan Forgiveness Calculation Form and PPP Schedule A
- The SBA audit period will be 6 years from the date the loan is forgiven or repaid in full. You should maintain documentation until this period expires.
- Borrowers will not see a reduction in loan forgiveness if headcount is reduced due to the following reasons: any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and (2) any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours.
Economic Injury Disaster (EIDL) Program:
An additional $60 billion in funding was approved on 4/24/20 to support the EIDL program.
- Up to $2 million in loans
- Must prove economic injury
A new bill authorizes an additional $60 billion in funding ($50 billion for loans and $10 billion just for forgivable advances) for the EIDL program that had run out of money.
In general, all of the following entities that have suffered substantial economic injury caused by a disaster provided they were in existence on January 31, 2020:
- Businesses with fewer than 500 employees
- Cooperatives, ESOPs, and tribal small businesses with fewer than 500 employees
- Sole proprietors
- Independent contractors
- Most private nonprofits
- The maximum EIDL is a $2 million working capital loan at a rate of 3.75% for businesses and 2.75% for non-profits with up to a 30-year term
- Payments on Coronavirus EIDL loans are deferred for one year
- Up to $200,000 can be approved without a personal guarantee
- Approval can be based on a credit score and no first-year tax returns are required
- Borrowers do not have to prove they could not get credit elsewhere
- No collateral is required for loans of $25,000 or less. For loans of more than $25,000, general security interest in business assets will be used for collateral instead of real estate
- The borrowers must allow the SBA to review its tax records
- Eligible applicants for an EIDL can receive a $10,000 emergency grant within three days of application (through Dec. 31, 2020)
- There is no obligation to repay the grant. To receive the $10,000 emergency grant, it is not necessary to have an approved EIDL loan. However, if you are able to secure a PPP loan, the $10,000 grant will be subtracted from the forgiveness amount
- NOTE: The Paycheck Protection Program (PPP) created by the CARES Act prohibits borrowers from taking out two loans for the same purpose.
Apply online at www.SBA.gov/disaster
New York City Initiatives for Small Businesses
NYC Employee Retention Grant Program
Created to help companies retain employees as businesses face decreased revenue as a result of COVID-19
- Eligible businesses will receive a grant covering up to 40% of their payroll for two months
- Maximum funding of $27,000
visit the NYC Small Business Services website.
- Must be located within the five boroughs of New York City and have no outstanding tax liens or legal judgments
- Must have been in operation for at least six months and employ 1 – 4 employees across all locations
- Be able to demonstrate the COVID-19 outbreak caused at least a 25% decrease in revenue.
- Revenue loss – average revenue for two months in 2020 (after the COVID-19 impact) will be compared against average revenue for the same two month period in 2019 as well as average monthly revenue based on 2019 total revenue
- Financial documents for the two months in 2020 demonstrating revenue decrease
- Financial documents illustrating revenue for the same two months in 2019 (unless the company was not in business at that time)
- Financial documents showing 2019 calendar year revenue
- Most recent two months of payroll records
- Signed Participation Affidavit verifying that the company is eligible for the program and that you are applying in order to retain employees
- Bank account information
- May also include some or all of the following:
- Point-of-sales reports
- Bank statements
- Quarterly sales tax filings
- 2019 tax returns
- CPA-certified profit & loss statements
NYC Small Business Continuity Loan Program
Created to help businesses with fewer than 100 employees that can demonstrate at least a 25% decrease in revenue as a result of COVID-19.
- Eligible businesses can apply for an interest-free loan up to $75,000
To apply, visit the NYC Small Business Services website and complete the NYC Small Business Continuity Loan Program application. Once complete, a link will be send to access an application on a partner lender’s site.
https://www1.nyc.gov/nycbusiness/article/nyc-small-business-continuity-loan-program
- Must be located within the five boroughs of New York City and have no outstanding tax liens or legal judgments
- Must have been in operation for at two years and employee fewer than 100 employees across all locations
- Must demonstrate ability to repay the loan
- Be able to demonstrate the COVID-19 outbreak caused at least a 25% decrease in revenue.
- Revenue loss – average revenue for two months in 2020 (after the COVID-19 impact) will be compared against average revenue for the same two month period in 2019 as well as average monthly revenue based on 2019 total revenue
- Financial documents for the two months in 2020 demonstrating revenue decrease
- Financial documents illustrating revenue for the same two months in 2019
- Financial documents showing 2019 calendar year revenue
- Signed Participation Affidavit verifying the company is eligible for the program
- May also include some or all of the following:
- Point-of-sales reports
- Sales reports demonstrating fees collected or earned income
- Bank statements
- Transaction level data from banks
- Quarterly sales tax filings
- Tax returns
- Profit & loss statements
New Jersey Initiatives for Small Businesses
Small Business Emergency Assistance Loan Program
Created to provide total of $10 million to NJ small businesses an non-profits to cover operating expenses and ensure continuity of business during COVID-19 outbreak
- Maximum loan available of $100,000
- Provides low-cost, flexible terms:
- 10-year term and amortization
- 0% interest rate years 1 – 5
- Followed by NJEDA’s prevailing interest rate floor (capped at 3.0% years 6 – 10).
- Payments are deferred for 12 months.
Completed applications will be considered on a first come, first serve rolling basis. Review the eligibility guide wizard here: https://assistance.business.nj.gov/
- Physical commercial location in the State of NJ; home-based businesses are not eligible
- Must have been in existence for at least one year
- Must have less than $5 million annual revenue, have positive EBITDA in 2019, and be able to show a global debt service coverage ratio of 1.00 (as of 12/31/19)
- Are able to demonstrate negative impact related to COVID-19 on or after March 9, 2020.
- Are registered to do business in the State of NJ and are in good tax standing with the State.
- Are in good standing with the Department of Labor and Workforce Development
- Are able to provide a CEO certification that the firm will make its best effort not to lay off employees or will re-hire employees as soon as possible.
- Any company owner of more than 20% will need to personally guarantee the loan.
NJ Entrepreneur Guarantee Program
This $5 million program was created to encourage private sector investors to provide additional working capital loans to NJ-based entrepreneurial businesses in which the inventors is already an equity holder.
- Provides a guarantee of an investor loan advanced for working capital to an entrepreneurial company impacted by COVID-19. The investment must have been made after the date of emergency (March 9, 2020).
- NJEDA will guarantee up to 80% of the total investment amount, not to exceed $200,000 per company.
The application process for this program is currently being designed and implemented. More information should become available soon: https://faq.business.nj.gov/en/articles/3835239-what-assistance-is-available-for-startup-investors-or-entrepreneurs-via-the-njeda-entrepreneur-guarantee-program
- Have a minimum of 50% of employees in NJ with less than 25 total employees at time of application
- Have under $5 million in revenues
- Having corporate headquarters in NJ (including at least one C suite member with a principal office in NJ)
- Fall under one of these eight sectors: advanced manufacturing, information/technology, life sciences, finance and insurance, clean energy, food and beverage, advanced transportation, film and digital media.
- Are registered to do business in the State of NJ and are in good tax standing with the State
- Are in good standing with the Department of Labor and Workforce Development.
- Investors must already have an equity interest and equity position in the company; investors can include individuals, trusts, and corporations. They do not need to be NJ residents.
Cash Flow Management
Cash flow is the lifeblood of your business. During this (or any) time of crisis, it is imperative to keep an eye on your cash flow and regularly monitor your cash position. Instituting effective cash flow management may be the most important action you can take to navigate through challenging times. Here are some key fundamentals our Cash Flow Management Task Force is reviewing with clients. Please reach out if you have specific questions or would like to schedule an advisory call to discuss how we can help you implement these practices.
Create a Cash Flow Forecast
As a small- to medium-sized business owner, you may already review your income statement to see that the bottom line is trending positively. You should also be keeping an eye on your cash flow. We recommend a weekly or monthly cash flow forecast to monitor your company’s overall liquidity position. Understanding the nature, timing, and amount of cash inflows and outflows is critical to projecting your liquidity position and maintaining healthy cash reserves.
Some forecasting numbers you may consider:
- Review 2019 historical data to build a baseline for 2020
- Payroll and Operating expense analysis including assumptions and savings
- Line of credit analysis and loan funding analysis
- Development of key revenue and expense assumptions to demonstrate the impact on cash flows to be expected
