Via Sweetgrass Development:
Here is the SBA information that businesses may utilize. You may apply for both. Please let me know if you have any questions and pass the information on to everyone in your communities. If you are having issues logging into any of the programs, off peak hours are the best. As always, contact me if you have any further issues, there are many people willing to assist with navigating the waters and answering questions!
- If your business has incurred economic injury tied to the COVID-19/coronavirus crisis, apply right away for an SBA Economic Injury Disaster Loan (EIDL). Here is a link directly to the application.
EIDL loans are designed for economic recovery. You do not need to put a dollar amount in when you complete your online application, but down the road, you will need to document your economic loss caused by the COVID-19 crisis. You will be contacted by an SBA loan officer to discuss your application, hopefully within 2-3 weeks. Applications are processed first come first served. The maximum loan amount is $2million; 30-year term with no prepayment penalty. Rate is 3.75% (2.75% for non-profits).
The SBA has streamlined the process and upgraded its web site. You will need your gross revenue, cost of goods sold and operating expenses for the 12 months ending January 31, 2020. Be sure to write down the password you set as there is no way to reset it.
Applying for an EIDL loan qualifies your business for a loan advance of up to $10,000. The SBA hopes to fund the advance to a business’ bank account within three days of application. You will need to provide your bank routing information (Bank name, account number and routing number). You must provide this for direct deposit. If you receive any emails from the SBA, FIRST verifies the email sending address (click on it) to be sure it actually is from the SBA. Scammers are prevalent right now.
If you submitted an EIDL application prior to March 31, 2020, you will need to go back into your application and select the loan advance up to $10,000 to be eligible for the advance. Businesses qualify for the $10,000 loan advance even if they are denied for an EIDL or even if you decide to not take the EIDL loan. It appears that the legislation made the $10,000 tax-exempt.
Essentially there is nothing to lose by applying for an EIDL. Nonprofit 501 c 3 entities are also eligible. Even if you are approved for the EIDL, you will not be required to accept it. Read the specifics on EIDL loans on the SBA website above. That is the most definitive information. The website is changing dynamically so check back often. - Congress created a new program in the CARES Act design to enable businesses to cover operating costs so that you can keep more employees on your payroll. The maximum of the loan will be 2.5 times your average monthly payroll for a twelve-month period. SBA is working to roll out the Payroll Protection Program (PPP) loan product through bank partners as soon as possible. You will be able to apply for this through any SBA 7a loan guaranty lender. Talk with your bank to see if they are an eligible lender. Other banks and credit unions, even groups like GFDA may become eligible (GFDA is a certified Community Development Financial Institution).
The Montana SBA District Office advised lenders today to encourage applicants to begin gathering documents for the PPP. Those documents may include: verification of employees, including full-time and part-time hours, worked; pay rates; payroll tax filings reported to IRS; unemployment; documentation for any other expenses sought to be included in the loan amount, including rent, utilities, or other bills; transcripts of accounts; and, any other sort of document for payment they want to be included. With those documents, lenders may then start to calculate a loan amount. A borrower certification will likely also be required to be submitted. Montana SBA District Office staff also stated additional documentation not noted above may be required as official SBA guidance is released.
The SBA posted a sample loan application (see here) for the PPP program. This can be useful for you to gather the information you need, but keep in mind your bank may use different forms and that the form can change once the SBA issues all of its guidance to lenders. This is not an actual application form. - Once the official PPP guidance is issued from SBA, talk with your banker to evaluate whether the EIDL or PPP would be a better route for you. Our business advisers will also be able to assist you. You cannot apply for multiple financing to cover the same things — no double dipping — but you may be eligible to receive loans from both programs to cover different things.
- The PPP loan has a forgiveness component if certain criteria are met. Criteria will be announced within the official SBA guidance. If you receive the loan advance of up to $10,000 from the EIDL program, that may be deducted from the PPP loan forgiveness. Applying for an EIDL now does not affect your eligibility for the PPP, so long as the only funds you take is the $10,000 advance. Once the guidance for PPP loans is issued, you may decide to go back in to EIDL and withdraw your request. 5) If you previously applied for an EIDL and were denied, you can go back in and apply now for the $10,000 loan advance. Due to relaxed guidelines for the EIDL passed through the CARES Act, businesses that have applied for the EIDL and were denied are being encouraged to reapply. 6) As always, the devil is in the fine print. Read the details (from SBA) and talk with your banker and other professional advisers before making any decisions. Now more than ever, do business with those you trust. With all the funding Congress has approved, every scam scum around the world has risen out of the gutter.