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Podcast: SBA Loan Program Rollout

Podcast: SBA Loan Program Rollout

In this episode, Al Titone, SBA District Director of New Jersey, answers participants questions on Small Business Administration’s Coronavirus Relief Loan Program.

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This podcast was transcribed through a third-party application. Please disregard any misrepresentations.

Tom Bracken (TBR)
Tom Bergeron (TBG)
Al Titone (AT)

TBR:
Welcome everybody. This is Tom Bracken. I’m the President of the New Jersey Chamber of Commerce and I want to thank you all for joining us. Our speaker this morning is Al Titone, the district director for the SBA New Jersey district office. Al is going to discuss the latest information about the Coronavirus relief programs offered by the SBA, which is extremely important information for you all to know about. And I’m sure you have several questions about that.
I want to thank our two sponsors for the webinar today. First, the advisory and accounting firm, Withum. Withum is providing the facilities for this webinar and I especially want to thank Bill Hagaman, Withum’s Chief Executive Officer and a member of the New Jersey Chamber of Commerce Executive Team. Thank you very much Bill for all of your support.

Withum has created a team of professionals to address the Paycheck Protection Program and the SBA’s disaster loan program. The team is led by Withum partner Frank Boutillette, and Withum’s national lead for federal tax policy, Dan Mayo. If you have any questions after the webinar today about the issues you’re hearing about, please email them. The email address is SBA@withum.com and they’ll be happy to respond. Our other partner today is ROI-NJ and we want to thank Tom Bergeron, the editor and chief content officer of ROI-NJ for joining us. Tom will be moderating the discussion and when Al’s done with this presentation, conduct a Q&A with Al.
Al Titone has been with the SBA since 2008 and he has been the District Director for the New Jersey office since 2011. He was responsible for directing the financial and business development programs that the SBA administers for the 700,000 small businesses in New Jersey. The latest of these programs is the COVID-19 disaster relief programs. So it’s my pleasure to turn the webinar over to Al Titone.

Al T:
Yeah, thanks Tom. Appreciate it. And I want to thank Withum and ROI as well as the chamber for sponsoring this, we’re always looking to assist wherever we can.
So, I’m going to start with the Economic Injury Disaster Loans. So just so everyone knows, cause I fall into different terms as I go along. EIDL, economic injury loans, disaster loans, wherever you hear them, it’s all basically referring to the same disaster loan, which for us is going to be COVID-19 right now. For those of you that may not realize initially this started out as a kind of a special type of disaster loan for SBA. It wasn’t a national when New Jersey got approved for it. It wasn’t nationally declared yet and the state actually did a great job of applying for it and getting us in ahead of time. This is not something we normally see on the East coast. It’s called an Administrator Declared Disaster. They have a lot more of these out on the West coast. So I thought Jersey did a good job on it and I want to give them credit for it.

Al T:
So who can apply? Pretty much every normal type business, and cultural cooperatives, et cetera. Nonprofits can, faith-based organizations, any general legal, small business. So with disaster loans there’s a big difference, and I’ll probably touch on this again, is that this is the only loan SBA does directly. The money comes directly from the treasury through SBA to the borrower. Additionally, each disaster declaration has its own silo for a different term. So every disaster has its own limit. For these loans, for the COVID-19 loans, it’s $2 million. The interest rates are going to be 3 3/4 for small regular business and 2 3/4 for nonprofits and that will go up to 30 years. One of the big questions we get “is how is that determined?”

Al T:
I wish I could tell you the magic formula, but a bunch of things go into it. Size of the business, how long you been in business, the amount you’re looking for are just some of the things. The eligibility, it’s going to be based on size and the as well as for the nonprofits. The funds for the EIDL loan can be used for pretty much any business expense that you can think of. What they cannot be used for, and I’m going to say this a couple of times, is what you feel are your lost sales or profits or for expanding your business. That is not what these are for.

Al T:
So what is the EIDL advance? So when this first came out, when Jersey first got it and was approved, it had what I refer to as a regular disaster loan application. And we had that for four or five days and then the system crashed because it wasn’t built for the kind of input it was getting. And they did a great job of rebuilding it and when they rebuilt it, they added this advance to EIDL. So what it is, is it’s up to 10,000. I say up to 10,000 because a lot of it, initially we were told there was 10,000 up front. It is not. So it’s up to 10,000. It basically comes out to about a thousand dollars per employee. So even if you’re a sole proprietor or an independent contractor, you know, you’ll get, if you apply for the EIDL advance, you’ll get the EIDL advance for the number of employees you have up to 10,000, so it’s up to 10. And I’m going to actually go through the application quickly later on so that you can see what I’m talking about. But you have to request the advances when you apply for the loan.

Al T:
Any, again, who’s eligible while at this point, pretty every, pretty much every small business in the country. What they say is anybody who’s been affected by the COVID-19 injury The advance can be used to pay fixed debts, payroll, accounts payable and other bills that you could not have paid had the disaster not occurred. Again, it is not to be used for lost sales or profits or expansion. And even if you don’t get the loan for the advance, you can keep the advance. So we don’t use the G-word in SBA cause we don’t really have grants generally for small business. But I like to refer to it as the “forgivable advance”. But in essence it becomes a grant. But don’t say I said that.

Al T:
So the funds come directly from the treasury. You don’t have to go through a bank or a lender to apply. You apply directly at this link right here, which everyone should be able to get. If not, you know, it’s right on the, the SBA website, you just click on it. There’s no obligation to take the loan. So say you take the loan, right? And you decide by the time it comes, you don’t need it anymore. You don’t have to take it. Okay? So don’t think that you’re required for it. Collateral is going to be required for loans over 25,000. But what’s different about this loan is that it’s not taking any real estate collateral. It’s blanket UCC-1 So essentially they’re gonna take the lien against your business collateral, but no personal real estate is going to have to be pledged. Personal guarantees for loans greater than 200,000 will be pledged. But again, they’re not doing real estate collateral.

Al T:
You can have a current disaster loan. I know a lot of folks may still have loans from Sandy and Irene, but you cannot consolidate them. So you can have multiple loans, there’s really no limit, but you can’t consolidate them into one loan, each is separate. Who’s not eligible? Most agricultural enterprises, generally because they are covered under different programs, usually through USDA. If you’re involved in an illegal activity– which at the federal level includes marijuana, so if you have a marijuana business you will not be eligible for this loan. Gambling not eligible. Or if your business takes one third of their annual gross revenue or more from legal gambling activities, you cannot. So in essence, if you’ve got an illegal business either by federal level or state level or if you’re an agricultural enterprise, you will not be eligible for the EIDL or disaster loan.

Al T:
Yeah. Again, you can apply online, which is how I strongly suggest everyone does it. If you really want to go by mail, you can send the mail to the desk of customer service. They’ll send you a copy of the application, you can mail it. I strongly, strongly suggest that you do not do this unless for some reason you absolutely have to because it will take an awfully long time to get through. We have resource partners throughout the state, small business development centers or score offices or women’s business centers, all of them can help you get your records together, if you need. Your financial records, they can help prepare your statements. And in some cases even help submit submission with the loan application. Our SBDCs, our women’s centers will, at least most of them, will help with the loan application if you like.

Al T:
The Score offices are not that comfortable with doing that, but they can still help you with the financial. And of course, New Jersey actually has gotten a couple of different organizations. You can find that on the NJEDA website for the COVID response. They’re helping folks with both their own applications as well as the SBAs. But the nearest office, they tell you you can visit this, but since we’re in New Jersey, I am your nearest office. You can get us at sba.gov/NJ. If you go to sba.gov/NJ site, you’ll see, it’ll come up and there will be a big blue box and the lower left hand corner of the box, you’ll see the resource guide. Click on that and you can find all the information for us and our resource partners that you could possibly want.

Al T:
So I want to go through the application itself quickly. There’s a couple of mistakes people may make, or misunderstandings on and I want to make sure you do not make them. So remember a couple of slides ago, I showed you the COVID relief up here, right? So this is what it will bring you to when you get in. First page: this is the most important page to set you up to get the loan done correctly. Make sure you click the right one. If you’re a sole proprietor, do not click the button that is the business with not more than 500 employees. While that might be true, that’s not the forms that you’re going to want in it. So if you’re a sole proprietorship or an independent contractor, you would click this one. If you’re a cooperative, you would click this one. So just read through and make sure you click on the one that is most applicable to you. That’s really important. Disclosures: all sidebars must be green, meaning if you cannot answer this truthfully, you cannot apply for this loan. All of these have to be checked off. And then you have just the regular stuff, your business name, etc. You go down, organization type LLC, S Corp, C Corp, sole proprietorship. Make sure you click whether you are a nonprofit organization or not, again, that will affect the forms you see.

Al T:
Are you a franchise? Again, it’ll affect the forms you see. Generally it adds a couple of forms for your franchise. But again, you want to make sure you click that and then you fill out. You know, these are all pretty self-explanatory. You’ll fill out everything that applies to. You know, I had one question, about an educational organization that will have costs of goods sold. Well, it’s going to come out elsewhere, so that’s fine. Just put a zero for year or you just leave it blank. It’s a requirement. So we put a zero.

Al T:
Okay. Again, the address, the address cannot be a PO box. There is some of the more rural parts of the state, not much here in New Jersey, but there is some rural parts of States where they actually deliver based on a PO box. You can’t put that in here. It has to be the address of the home or the business. Make sure you get all this stuff. Red star,you should all know what that means. by now. It means that it’s something has to be in there.

Al T:
Are you owned by another entity? This makes a difference because if you are and you say yes, it’s gonna do another series of questions that you’re going to need to follow through on. And I’m sure we’ll touch on that later. Who’s the owner? Fill it out, you know, and please make sure you put in, you know, your emails cause that’s how you’re going to get a response on that they’ve received the loan. Is there another owner? Add them, very straightforward. Make sure you go over all of this. Make sure you take a look at these. Now these will not necessarily make you ineligible for the loan. They may cause a few more questions to be asked. But none of these things by answering “yes” makes you ineligible for the loan. We get people that will say no and they may have had a suspension or whatever when they have had it, but don’t worry about that. Answer truthfully and by itself, it’s not going to kick you out of the process unlike the first set of questions.

Al T:
So something to keep in mind is a lot, a lot of scams going out around both this loan as well as the PPP loan. It’s perfectly fine for you to hire somebody if you want to pay them to hire you with this. That’s nothing wrong with that. Just let us know. But understand if somebody’s telling you that they’re charging you for the application, it’s not SBA, SBA does not charge for you to apply for either of these applications. All right, so just keep in mind who you’re talking to and what you’re doing. Now for the advanced, you see this little big red circle down here on the bottom right? If you want to get part of that advance up to $10,000, you check that and then this will appear. You got to give them the name of your bank, the account number and the routing number.

Al T:
And then you read all this. You check off. You agree. If you do, if you don’t, then obviously you won’t get it. So they’ll send the funds there. Now, initially the guidance was they were gonna send the funds out within three days. That didn’t happen. They’ve just started sending them out late last week and they are continuing to send out the advances now. So just be aware. I just ask that people be understanding and be patient. This system was initially designed for a few hundred thousand applications. I think they got that the first day or two. That’s why we went to the simplified application. Much more robust, much quick and you can get in it. It required less information. So it’s really turned out to be extremely helpful.

Al T:
Then you’ll come to this. This is a summary. Make sure it is all correct. So what happens with the EIDL program is if it’s wrong, it doesn’t mean that you can’t do it, but you’ll get kicked out of the system. You’ll have to fix whatever is being done, and then you’re going to go back to the end of the system. So you don’t want to do that. So you want to make sure that you do it properly. And that all the information is in there, which is why we tell folks, which is why I kind of put this up her,e so you have an idea of what you’re going to need going forward.

Al T:
You check everything and make sure it’s low, right? You tell them you are not a robot. And if you are a robot, please don’t lie, but you tell them you’re not a robot, you click submit. And you should be good. Okay, so, we’re going to take questions for both of these on the end. I’m going to go right into the payroll protection program. This is shorter. So, what is this? So this is more our traditional, this kind of follows more traditional lending practices where you go through a participating lender, bank or non-bank lender and you can use this link to try to find one. Okay? And it’s designed to provide a direct incentive for small businesses to keep their workers on the payroll. You can use it for up to eight weeks of payroll costs, including benefits. We’re going to go through what all that includes in a minute. And you can pay interest on mortgages, rent and utilities. That is not for paying the mortgage. It’s not for paying their rent. It’s for Interest on mortgages and interest on rent and utilities, if there is. You can pay utilities, I’m sorry, but you cannot pay your mortgage and you can only pay part of the rent. When can small business or proprietors apply? They could apply as of the 10th.

Al T:
So here are the terms. The maximum amount you can get is $10 million. The interest rate is 1%. Your first payment is going to be deferred for six months. All right? The loan maturity is two years. Please take note of that cause that’s going to be important for when we go into some of this stuff in a minute. There are no collateral requirements. There are no personal guarantees required. There’s no borrower or lender fees payable to SBA. Remember when somebody is asking you for money, it’s not SBA to apply. Money to apply, it’s not SBA. And the program is available through June 30th of 2020. So the unique thing about this loan as opposed to every other loan SBA has ever done before, this can be fully forgiven when 75% of the funds are used for payroll. Now that’s going to be forgiven. This is based on the employer maintaining and rehiring employee levels and maintaining salary level.

Al T:
So what does that mean? If you had 10 people employed, and you were paying them $100,000 a week, you have to get 10 people on board at $100,000 a week. There’s a 20-25% play in the dollar amount, but not in a number of people. Both have to be met. Who’s eligible to apply? Small business with 500 or fewer employees. But there’s an asterisk there because SBA has different size standards and you can go on, you can look for certain NAICS codes. Certain folks with larger employees or have a higher limit than the income and limits outlined in the SBA small business programs, they can still apply for the PPP cause they still qualify as small in their industry. And that’s why those are like that. So certain manufacturing sectors, certain manufacturing codes are considered small for SB even though they may have more than 500 employees. So make sure you check that if you are at that level.

Al T:
Pretty much everyone is able to apply for this program. Nonprofits, Vet’s organizations, faith-based, sole proprietors, self-employed, independent contractors. Pretty much everyone’s eligible for this loan. So how’s the loan going to be forgiven? Well, first off, you’re going to owe money if you use it for anything other than what’s listed here. So payroll cost, mortgage interest, rent, utility payments over the eight weeks after receiving the loan. If you use less than 75% of the loan amount for payroll costs, you will owe money. If the borrower maintains staff at less than the February 15th, 2020 levels, you will owe money. For total loan forgiveness, and I’m stressing total here because you can actually get partial, full time employee head count has to be maintained or retained. Salaries and wages have to be maintained. Borrower has until June 30th to restore full time employment and salary levels from any changes made between February 15th and April 26. I read that word-for-word because those are important dates. So you have until the 30th to get back up to your levels. So these are what counts for payroll costs: salary level, salary, wages, commissions, benefits are included, so vacation, sick leave, etc, and you can allow for a separation dismissal. Well, everything you read here, so this is all apply-able and all applicable under the PPP.

Al T:
Well, what you can do for sole props, wages, commissions, income, that earnings for self-employment? One of the big questions we get is for sole proprietors and independent contractors and partnerships to a degree, how do we determine what the salary is? Basically whatever you were, whatever you put in for the IRS, whatever you tell the IRS would generally be acceptable.

Al T:
And with that, that’s the end of the program. And I’m sure we’re going to have a ton of questions. So bring them on.

TBG:
Hey, all great stuff. It’s Tom Vertrauen here from ROI. And we didn’t get a single question the whole time. They’ve sent me a list of 30 or 40, so I’m going to try to go through as many as we can and not talk about the same thing. Let me hit you quickly first with two questions that are coming up a lot. First of all, you had talked about getting kicked out of the system. People are asking if they’ve, if they filled out an application, and then they realize I need to change something or update it or correct it, are they able to go back in and resubmit an application? Can they get access to the application? Talk about after you hit the button, what kind of control you have on your application.

Al T:
At this point, you would need to call the disaster’s customer service center to make any changes to your application. You can’t do it. Once you hit that, once you hit send, once you hit submit, new can no longer access the application.

TBG:
And I’m sure plenty of people that are ready to take your call at a moment’s notice too. So it sounds like once you hit it, it’s going to go into no man’s land.

Al T:
Well they’ve been fairly responsive once they rejiggered the system made it much more robust. They’ve been pretty good at getting to folks, but sometimes the volume can be overwhelming, so you do have to wait a while. But they’re there. They’re manning a 24/7 now. Initially they weren’t, but they’d been manning it 24/7 for a couple of weeks. So if you’re having trouble or you’re on hold for a long time, try late at night, Just remember this is nationwide, so you’ve got to take into account the West coast.

TBG:
All right. And another question that’s going to come in that everyone’s going to have, they’ve submitted their application, what kind of updates are you going to get on the status? Is there a place where you can check, like your FedEx package on where the status of your application is? Is any of that possible or is it just hurry up and wait?

Al T:
No, not anymore. As long as you applied and you got your notice that the application has been submitted and you got a loan number that’s really about it You can try to call the center and see if they can track it for you, but I don’t even think they’re able to do it anymore. Basically, all the firepower, all the computing power that was going to getting in as many of these applications as possible so they can’t take the bandwidth out to track and give the ability to track alone, which I didn’t realize actually, apparently it takes a lot more than I would have thought it took. But if you think about it, you know, just again, bear in mind, this is millions and millions of folks are applying for these loans. So the short answer is you can’t really do it, but as long as you’ve got the number and you’ve got the notice, you’re in the queue. Also for the EIDL loan or disaster loan, that’s a minimum 24 day turnaround. So we’re really just starting to see folks that are getting that. And for the advance, I think I said this, but I’ll repeat myself just in case, that was delayed, but those have started going out last week.

TBG:
All right. In the presentation, you talked a lot about maintaining your payroll and your number of employees. So here’s a question comes in, Company ABC has 10 employees, they furlough five of them. Of those five, let’s say, two find a different job or they have health issues or they’re caring for someone or they move and you want to bring them back, but they’re not, they don’t want to come back and they’re not available to come back. So now your employee payroll went from 10 people to eight people. Is there a provision for that? Do you need to, are you allowed to go out and hire two different people to get your numbers back up to 10 to make sure you qualify? Talk about the number of employees that you have before and you have after and the needs around it.

Al T:
Sure. So it’s number, it’s not person. So the answer to that is yes. So if you had 10 people and two for whatever reason just cannot or will not come back, you can hire another two people. So you just need 10 people at the same salary level. So what you can’t do is hire 10 people and then pay them half as much. Okay. Or vice versa. You can’t have the same payroll and hire less people. But you have to have the same number of people in the same payroll. The payroll has like a 20-25% play in it. So you can go a little bit either way because they realized that you know, you may need to do that, but the number of people is really important. You have to have the number of people. Doesn’t have to be the same people, but it has to be the same number.

TBG:
So if, if the owner or owners decide to take half salary or no salary to, to invest that money somewhere else, how does that play as far as your number of employees and total payroll?

Al T:
If they’re taking salary and it’s included in their initial calculation, they have to do the same thing when they take the loan. The loan is very specific about what you can and can’t do with that. That’s why with the PPP loan, yes, you can get more money and you’ll probably get it faster, but it’s not as versatile as the other one, but it’s also potentially forgivable as long as you do the 75%. So the other thing people should realize is if you don’t do 75% the whole loan won’t be forgiven. But as I understand it, the portion of it that you did use properly for payroll, et cetera, will be forgiven. So instead of meeting 75% let’s say you met 50% so that 50% would be forgiven, but you would still have to pay off the other 50%. And keep in mind it’s only a two year timeframe. So even though it’s 1% the payoff is in two years. So you got to keep that in mind.

TBG:
Right, I think I know the answer to this after hearing your talk. But another question that’s come in is after received the funds for the CARES act, we have eight weeks to use the funds. My business is closed right now and I don’t know that we’ll be opening right away. How do I use the funds then to make sure that forgiven? Do I have to pay people even though we’re not open? This could be, say for instance, a restaurant that is unable to open or for no reason. How does that work?

Al T:
As crazy as it sounds, that’s what you have to do. You have to pay the folks. So if you took it out and you’ve got the money, you have that eight weeks, the second that you get the money in your hand or the second the bank forwards the money, the clock starts. So yes, even though you are closed, you start to pay the people. And keep in mind, that’s what this is about. It’s to help you and peoples get stay on their feet while we get through the worst of this. And hopefully things open up later on. So yes, even though you’re going to be closed, you still have to pay people as if you were open.

TBG:
So to some extent it’s replacing unemployment. You can’t tell people to take unemployment for a month and then you’ll start paying them later with this money.

Al T:
Correct. Yup.

TBG:
Got it. All right, here’s a good question. Must be from an accountant. What’s the best way to document the use of loan proceeds to make sure they’re forgivable? What do you need to do to make sure the government will agree that these loans would be forgiven.

Al T:
Keep track of your payroll, keep track of what you use the money for. Very, you know, straight up. Just as if you’re going to do it for your regular business, you know, this is what I use this money for this, this is where it is. I paid this, this, this and this. So as long as you have your regular business accounting system, it should be fine.

TBG:
All right. I’ve got a couple of questions here and I think you went over it. It’s worth going over again. The $10,000 advance from the EIDL loan. People are saying they applied for it. “I applied for it on April 1st”, “I applied for it April 7th”, I have a number of comments here and they haven’t seen the money. Is that, is that the way it should be? What can they do? Where do they go?

Al T:
Okay, so if you applied for, you had to apply for the new ones. So one of the questions you’re probably also going to get, and I’ll answer it now, is some folks who applied right away for the old, under the old EIDL system and then to get the advanced had to apply for the new one, the old one is still in effect. So that is actually where your place in line is. The new loan will be just so you could get the advance. All right, so you could actually have two low numbers. One of them will disappear, but your place in line is secured by the first loan you put in. So that’s number one. Number two, yes, the advances was supposed to go out quickly. They did not go out as quickly as they should have. Please. Again, keep in mind this thing was huge, you know, literally millions of applications the first week. So things didn’t quite run as smoothly as everyone would have liked, but they started going out last week and they’d been going out consistently ever since.

TBG:
But I think you said a 24 day turnaround is fair because someone’s asking what’s a realistic timeline?

Al T:
Well, for the advance, they’re going as they received it, so I can’t tell you what it would be, but generally the EIDL is a minimum 24 day turnaround under normal times. These are not normal times, but let’s hope that they stay within the 24 to 30 day and we won’t really know cause we’re just really at the 24 to 30 day timeframe.

TBG:
So here’s another question that’s coming up a couple of times. And this about when when the system crashed or was overwhelmed, people saying, I applied before, do I now need to reapply or is that application okay?

Al T:
If you have a confirmation and application loan number, you are fine. If you want the advance, you have to apply again.

TBG:
So let me read this specific question and I’ll make one viewer happy. I understand that anyone who applied for an EIDL before the quote streamlined application was available, all caps must file again under the streamlined process. Is that correct?

Al T:
No. Only if you want the advance. Now if it were me, I would still do it because even if it’s a thousand, $1,000 is better. Free grants is better than nothing.

TBG:
Okay. Someone is asking, does the EIDL loan interact with the PPP loan? Are you able to do both? Can you have both at the same time? Is there any restrictions on that?

Al T:
Yes. So the answer is yes and yes. You can have both, but you cannot use them for the same thing. So if you take out the EIDL loan, let’s say you get the EIDL loan first and use that for payroll. Well you can’t use the PPP for the same payroll. You can use the PPP to pay down the EIDL or it comes off the top of the PPP, but you can’t use them for the same thing. But the bottom line is yes, you can apply for both loans, but you can’t use them for the same thing. It’s called double dipping. You can’t, the government doesn’t let you do that. Again, the EIDL loan is much more flexible. So whereas PPP can only pay, let’s say interest on your mortgage with the EIDL and you can actually pay mortgage. So think of it like that.

TBG:
All right, next question. “I filled this out and got the confirmation number, but I never submitted paperwork. Is there a way to include that after the fact?” I don’t know how you were able to submit without the paperwork. What say you?

Al T:
I don’t. If you got a confirmation and a loan number, more power to you. But what might wind up happening is that you get kicked out cause the applicable paperwork doesn’t show up. I’m not really sure what that question means cause I’m not sure how you could have done that. But if you want to, you can try to get hold of somebody on the help line they can help assist you to upload…

TBG:
the paperwork.

Al T:
Yeah, that’s uh, I’m a little confused about that one.

TBG:
All right. So we’ve got a couple of comments about how much money is available referencing how the, the EDA small business loans went right quick as we say in the South. And here they say I got a call from the SBA said the most are given out as 15,000 per company. Somebody else said, I heard that all the funds are gone and that are they gonna are they going to add to the total to make more money available? What say to you?

Al T:
Okay. So the rumor for the EIDL, for the disaster, the EIDL loan was that 15,000 thing. That is not true. If it was true, it is not true. I confirmed that on a call, actually, just last night. So it is not going to be limited if $15,000 you don’t have to worry about that. The other one, I don’t know which one you’re talking about, but the PPP loan as it stands now, yes. When that money runs out, it’s gone. For the EIDL loan, we have been told there is no limit as to how much is going to go out right now.

TBG:
All right. Question. When they say employees and quote, we have freelancers, do they account as employees? That’s a great question.

Al T:
No, they’re independent. Assuming a 10-99 so they’re independent contractors.

TBG:
So that would not count as your payroll?

Al T:
Nope.

TBG:
Okay. Nonprofit orgs don’t have an owner, who should we put in that segment of the application?

Al T:
I got that question this morning. I don’t have an answer for that, so I’d have to get back, I’ll find out the answer to that and I’d have to get back.

TBG:
All right. Another question, looking for a timeline. When they get the application under review, what’s the timeframe to hear back? I know everybody wants a specific date and I know that’s a difficult one for you to answer.

Al T:
Which application?

TBG:
It does not say, it just says an application.

Al T:
I’m going to assume EIDL. At a minimum. It’s 24 to 30 days. It might be more, we haven’t gotten a timeline of how fast they’re going. Again, when you think about it, 24 days I think was just towards the end of last week. And we were told some were going out, but I don’t know where anybody using the queue. So I would love to have that answer, but I don’t.

TBG:
Another question on the application a reader asks, I own 80% of my LLC, but I didn’t add the other owners. Will that be a problem?

Al T:
It’s only if they own, if an individual owns 20% or more. So if you have two people at 20%, you know, they’re not 20% owners, so you should be okay.

TBG:
All right. I’m glad you said that because the question specifically said I own 80%, 80.25% of the company. I don’t know how they came up with those shares, but this person owns 80.25, however, it did not allow them to use a percentage. So it went in as 80%. Are they going to be looking for the other 20% when my math tells me the other person owns 19.75?

Al T:
Well technically they might ask for it, but if you can show them that then no, no. I don’t think that they’re going to be looking back close. You know, I think if it’s 80% and I think the language actually says more than 20% I don’t remember. But anyway, I doubt it.

TBG:
All right. Someone’s asking about 10-99 and someone’s asking about anybody who might be paid cash. Those numbers won’t count?

Al T:
That is correct. The government, as far as the governments can turn, you’re paying somebody cash, you’re breaking the law, so you don’t want to necessarily bring that up to anybody else.

TBG:
Can real estate companies, I guess this could be any company, with commissions only qualify for these programs?

Al T:
I think it’s going to depend when they say real estate companies, cause I mean you’re talking about realtors, you’re talking about like apartment buildings are specifically not part of this program. That’s one of the carve outs for this program. Commissions. If they’re treated, you know, usually the answer is it depends. It’s really, you got to take a look on a case by case. Some commissions are commission-based on sales, right? Others are just, you know, you get a commission if you make this many sales and you can keep. So it’s going to depend. The answer is maybe.

TBG:
Okay. All right. So here’s another may be question. As an independent contractor who is commissioned based, how do I claim I’m paying myself a payroll? I received checks from my broker. I’m a realtor, they write.

Al T:
You can use previous years income, however you report. Basically this is the best way to think of it. However you report income on the IRS, it’s how you, you could use for this. All right? So whatever forms you use for that you can use for this and you should be okay.

TBG:
All right. Here’s an interesting question. It reminds me of the time when I was waiting on tables. Someone is saying that they applied for a loan and the next day somebody else applied and that person heard before them. Right. How come they got their food before I got my food? Type of question. Is there any determinant on how people are put in line? The rumor about is banks are going with their best customers or their existing customers first. Do you know anything about place in line when in terms to getting a loan?

Al T:
With that I need to know if it’s EIDL. It’s first come first serve with the PPP. It depends how fast the lender got their loan in. Some lenders we’re collecting information. Some lenders were hanging on and putting in a group at one time. With the PPP there’s no way to tell, but the EIDL loan, it’s really first come first serve.

TBG:
All right. A numbers question. If an employee is paid on a 40 hour rate at say, for some reason, they give 1680 per week and benefits are another 1520 which gives them a total of 3,200 a week, which would be over 150k a year. How do you calculate the amount to be paid to employee versus benefits based on the 100k limit?

Al T:
I don’t know that it matters, but you can ask your accountant that. That’s a little too much in the weeds for me. Bottom line is it’s 100,000 so anything over that, it doesn’t really matter what you’re calculating. You can only calculate. So if his base, if his gross is 100,000 well that’s his gross. You don’t have to worry about the rest cause you can’t get reimbursed for more than a hundred thousand.

TBG:
All right. Somebody asks, what if I have a confirmation number but no loan number. Have you heard of that scenario?

Al T:
No.

TBG:
All right.

Al T:
If we’re talking about EIDL, that if you had a confirmation it was submitted and you don’t have a loan number, I would go through it. The only way I can think that could have happened if you were right near the end when the system crashed. And if that’s the case, I would put in a new application. That’s honestly, that’s the first time I’ve been doing these for just like week four. That’s the first time I’ve had that question. So if you don’t have a loan number, you’re probably not in the system.

TBG:
Got it. All right. First of all, I’m going to give a shout out to my friends at Withum here because among other things, they’re actually forwarded me all these questions. I know people go on webinars and they ask questions and they feel like they’re going in a black hole. I’m getting all of them. We’re well over a hundred. We’re going to try to get to as many as possible. Al’s doing a great job. What he can’t answer, I know the folks at Withum can, or at least I’m going to put them on the spot and say that they can. So make sure you give Withum a call after this, for more specifics on some of this stuff. They’re good folks and they’ll help you out. So here’s one for Al and we’ll see if he can handle this one. Can you explain how partial loan forgiveness works?

Al T:
So this is kinda new. I mean we all suspected but it got it. So basically as I understand it, anything you use for, and this is again for the PPP loan only. There’s no loan forgiveness is for EIDL. So the PPP, what you pay on payroll. So, you couldn’t hire back 10 people. You could only hire back five people and the payroll for make the math easy, you can only get 50%.

Al T:
You would be forgiven for the part you used on payroll. But whatever’s left of that loan, cause remember the loans based on 10 people, 100,000, let’s say. And then you only got five people at 50,000, well that’s other 50 grand or whatever the amount you get because, it’s actually times a quarter. You got to pay that back and you only have two years to do it. That’s how it works. So whatever you use officially on the payroll stuff that outlined earlier that you can use it for, that would be forgiven, but you’d have to pay back the rest of the loan.

TBG:
Got it. All right. Here’s an interesting question and I think I understand it. So let’s say you have to let people go during this situation for whatever reason, and you qualify this, so you need to, so you have the money and you can pay them, which is great. We’re all happy about that. The question is, would that be considered as severance pay if severance pay is mandatory in some way? So I need to let you go and you furloughed and, I’ve told you that you’re not going to come back, but hey, here’s some money from the government. Can I count this as their severance pay?

Al T:
I believe one of the things in the loans was that you could use it. I don’t think there was the word severance so I don’t remember. The answers very possibly cause you could use it, they didn’t use “severance” or used a different term, I think. But I would double check that. I can’t answer 100% of that. But I think so.

TBG:
Al is great. They say they tip the hat to you, Al. If the question is, if you don’t meet the 75% requirement, do you get reimbursed for whatever payroll you actually pay?

Al T:
Yeah, that’s what we were just talking about. So yes, you’ll get reimbursed for the part that you paid on payroll. That was, you know, as long as it was done properly, you’ll have to pay the rest of the loan. The rest of the loan will have to be paid off, not forgiven.

TBG:
I think we’ve touched on this, I’ll bring it again. Home based businesses, are they eligible or excluded?

Al T:
You are absolutely eligible. Again, however you report to the IRS you can use for this and the EIDL loan, you would count as once you could get the thousand dollars advance.

TBG:
All right. What if you have a personal tax lien or your business owes federal taxes?

Al T:
Well, you’re going to have to check it. It wouldn’t automatically kick you out if you are current with everything and you’re on a plan, generally you would not get kicked out of this, but that’s a case where, you know, for the PPP loan, the lender would have to check in, and for the EIDL loan, you’d probably want to check the disaster center though quite honestly with the EIDL loan, it’s so simple. Now I’d just put it in, answer honestly and the hope for the best. But generally, as long as you’re on a payment plan for the taxes and whatever the lien is for, I mean, usually a lien means you’re not in good standing. So that could be an issue. But maybe.

TBG:
All right, so let’s, let’s say your application gets denied. Do you reapply or do you appeal? And if you appeal, how do you do that? And how many times can you appeal and how does that work?

Al T:
With the EIDL loan, you have the right of PLA. I believe it’s first six months or so, but when you get declined, they tell you why. So you get a chance to either one, explain cause maybe the reason they declined you was incorrect. So you can explain it to them. You gotta send it in writing with backup, or you can fix it. You have six months to fix it. So, and if you get declined with the EIDL loan, they will tell you right off the bat, not only what’s wrong, but how you will reapply and how you argue the point.

TBG:
Again, thanks to you. I know in the pre-call you said you wouldn’t be able to answer all of the questions, but I’ve got you batting about 98% here. So I’m going to keep going. I’m going to try to stump the band. Here’s a pretty good one. It’s after my own heart. It’s about words. You were talking about a loan number. Do you mean application number? I received an application number. Does that mean I’m good?

Al T:
No, you have to have a loan. You should have gotten a loan number.

TBG:
All right. Will everyone who applies for a 10K advance under EIDL get the 10k? Are you pretty confident that?

Al T:
No, because if you don’t have 10 employees, you’re not going to get $10,000.

TBG:
Well, you’re going to get a thousand for every employee. Can you assume that whatever you get, you’re going to get, you’re pretty confident you’re going to get it? And that will be, and someone’s asking, this will be forgiven automatically?

Al T:
That is correct.

TBG:
All right. Note to self. I need to apply for this. A self-employed contractor, can they still apply? I think we’ve done this. I’m just going over the questions.

Al T:
Yup.

Speaker :
Okay. We applied a week ago and have not received a loan number or any acknowledgement yet. Is that typical, one week?

Al T:
No. No, that is not typical you haven’t gotten acknowledgement. You applied. Okay. When you say you, well see again, I need to know if it’s, if it’s the EIDL loan, no, you should have gotten something really within a day or so. With the PPP loan, again, that depends on the lender you went through. So without knowing which loan it is, I can’t tell you if it’s correct.

TBG:
Someone’s asking the definition of a part time employee or a full time employee. When you’re in regard to PPP, is there an hour requirement? I think we went over this.

Al T:
Nope. Doesn’t matter. As long as it’s whatever, whatever the count was, it’s gotta be the same. So they had five full time and two part time, that’s fine. There’s no minimal amount of hours required, but you have to maintain at least that level with the PPP law.

TBG:
“I have a restaurant and we can only have 10 people working at a time. How can I possibly reach payroll numbers that I had before with this math?” I think you just submit what you had before, right?

Al T:
Yup. Again, and this is the weird thing about the loan, it’s only weird because it’s not how we normally think. This is to keep people liquid and to help the business stay liquid. Just because you don’t have the people in the store doesn’t mean you can’t be paying them with the PPP money.

TBG:
We mentioned it before. Is it fair to say this really should be viewed as unemployment money that you’re paying to your employees as opposed to a loan that you’re getting for your business?

Al T:
Those are your words. I can’t say that as federal, even though I did before, but it is sorta like that. Yes.

TBG:
Are we supposed to have received a loan number when the lender dated the application was successfully submitted? Let’s go over that cause we’re getting a lot of questions on this. Someone submitted either an EIDL or a PPP. How soon should you hear something back? What type of verifications you should get? Is it a loan number? Is it an application number? Go through that one more time. Cause we’re still getting questions on that.

Al T:
Okay, so here’s the deal. If it’s EIDL, if it’s a disaster loan, if it’s the online program that I went over earlier in the presentation, when you got done with that, you should have gotten an email acknowledging that the application was submitted and within a day or two after that you should have gotten a loan number.

Al T:
If you didn’t and it’s more than a few days, double check. And I’ll double check on the timing of this cause I don’t know if that’s changed with the volume that they’re getting with the PPP loan, you’re not going to know anything until the lender. It tells you, Hey we got you in the money. Okay. So that the PPP loan is different as far as loans and stuff. The assumption is that you’re working with the lender because, okay. So let me touch on something I haven’t touched on. Do not, do not just send your application out to a lender thinking that it’s okay. Because that could be part of the problem here. A lender has to accept the loan application. I know people that send in stuff out willy-nilly to wherever they can. I understand people are desperate, but please don’t do that for a number of reasons.

Al T:
Number one, you’re exposing yourself to identity theft. You’ve got a lot of personal information in there and there’s a lot of fake sites out there. Be very careful where you’re sending these PPP applications to. Number two, unless you have spoken to a lender and/or gotten an email telling you that they will accept your application, you do not have an application in there. It has to be submitted through a lender. Okay, so that could be where part of the disconnect here is. If you’re just sending your application out, the PPP application, thinking that, okay, well I sent it to somebody, they’re going to process it. That’s not going to happen. You need to make sure you’ve spoken with someone and you’ve done the application through them and you’ve gotten an acknowledgement of it. For the EIDL loan, you should have gotten an email as well as a loan number within a few days.

TBG:
All right. I got two more questions as we’re running out of time here, but before I say that, I want to let everybody know that we are going to put this webinar or online so you can hear it. In addition, honestly guys, we got two or 300 questions here. We’ve tried to blow through 50 or 75 of them. Here at ROI we’re going to make an effort to work with Al and work with Withum to have more question and answers and throw that up on our site. So look for that. But let me just give you two before we wrap up. Someone’s talking about rent, are real estate taxes included as part of the rent? As far as the repayment?

Al T:
I don’t think so, I don’t have it in front of me. I don’t think so though.

TBG:
11:56, we stumped the band. Look at that. All right, last question for you, Al. This group, God bless them, It looks like they got 25 owners, all of which owned 4%. Do they have to list all 25 on the application as managing-partner type that you do it again?

Al T:
Yeah. Yeah. 25 owners at 4% I guess you would have to cause you’re all taking a salary, right? So for you all making money, technically they say any owner has to be listed with more than 20%, but since nobody has 20%, I’d have to say, yeah, all of you would need to be listed.

TBG:
There you go. All right. Again, I just got another batch of questions guys. I appreciate everything that’s coming in. We’re going to try and get you more answers. We will let you know where this webinar can be viewed a second time. We know so many people have so many different questions on this. I’d ask everyone to give a hand to Al, but we can’t hear you clap. And so we’ll assume that you do. And right now I’m going to turn it over to Tom Bracken closing words. But again, my thanks to the fine folks at Withum who put this all together, along with the New Jersey state chamber. Again, make sure you use Withum as a resource. They’re fantastic. Al is a resource. I’m just a talking head so I’m doing what we can, but with that, let me send it to Tom Bracken.

Speaker 2:
Thanks a lot Tom. And I know Al as pre-call you a little hesitant about taking these questions. But I’ll, tell you, Al, you did a phenomenal job. And I think everybody on the phone probably really respects your transparency how candid you were with your responses and Tom Bergeron, I think it was a phenomenal way to handle this. So the questions were very succinct and straightforward. You kept it moving. I know it was a tough job, but you did a great job. So Alan, Tom, phenomenal, great job. I think greatly exceeded the expectations of a lot of people, but not me because I know you two. Anyway, thank you very much. Also a very big thank you to the advisory and accounting firm of Withum and Bill Hagaman CEO. And just remember there are a lot of questions that you have that weren’t answered as Tom Bergeron said, we’re going to try to find a way to get answers, but probably the best way is to call Withum at sba@withum.com which appears on the slide deck did you’ve seen. The questions were taken by Withum, so the group at Withum should have access to those and being able to handle them for you. So again, thank you everybody for being on the call.

Speaker 1:
Thanks for joining us. Be sure to subscribe to our podcast so you’ll be first in line to hear what’s coming next.
Don’t want to wait for our next episode. Check us out at withum.com that’s withum.com.

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