Reopening your Business amidst COVID-19: GABB June 9
Reopening a business after a shutdown will be a spring, and could take more effort and preparation than shutting it down.
That’s what business coach Russ Hall said to the Georgia Association of Business Brokers during the group’s weekly videoconference on June 9.
Watch a video of his presentation at this link.
View Russ’s PPT presentation here. Rethink Reinvent Reopen PPT
Hall is a GABB affiliate and an Action Coach with an organization focused on helping the owners and teams of small businesses improve performance so that they can improve their lives. Business brokers and others who may be solopreneurs can use these suggestions to garner positive PR and visibility in the community, Hall said.
Hall’s presentation gave business professionals something they can use to stay engaged with people that’s positive and forward-thinking as opposed to negative and a downer.
A former US Naval Aviator, Hall spent 21 years with a Fortune 100 company in the Healthcare Technology sector, leading and managing teams in Sales and Customer Service. He earned a Master’s in Industrial-Organizational Psychology at the University of Georgia, studying the application of evidence-based methods to the improvement of individuals and teams in business and other organizations.
The GABB is the state’s largest and most prominent association of professionals dedicated to the purchase and sale of businesses and franchises, and operates the state’s only professional real estate school dedicated to business brokering.
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CDC Guidelines for Opening Restaurants, BarsChildcare Centers, other
The Atlanta-based Centers for Disease Control has released a document with the agency’s initiatives, activities, and tools in support of the Whole-of- Government response to COVID-19.
The document outlines recommended procedures for restaurants and bars, healthcare facilities, schools, childcare centers and others. Here’s an excerpt:
INTERIM GUIDANCE FOR RESTAURANTS AND BARS
This guidance provides considerations for businesses in the food-service industry (e.g., restaurants and bars) on ways to maintain healthy business operations and a safe and healthy work environment for employees, while reducing the risk of COVID-19 spread for both employees and customers. Employers should follow applicable Occupational Safety and Health Administration (OSHA) and CDC guidance for businesses to plan and respond to COVID-19. All decisions about implementing these recommendations should be made in collaboration with local health officials and other State and local authorities who can help assess the current level of mitigation needed based on levels of COVID-19 community transmission and the capacities of the local public health and healthcare systems. CDC is releasing this interim guidance, laid out in a series of three steps, to inform a gradual scale up of activities towards pre-COVID-19 operating practices. The scope and nature of community mitigation suggested decreases from Step 1 to Step 3. Some amount of community mitigation is necessary across all steps until a vaccine or therapeutic drug becomes widely available.
Scaling Up Operations
In all Steps:
- Establish and maintain communication with local and State authorities to determine current mitigation levels in your community.
- Consider assigning workers at high risk for severe illness duties that minimize their contact with customers and other employees (e.g., man-aging inventory rather than working as a cashier, managing administrative needs through telework).
- Provide employees from higher transmission areas (earlier Step areas) telework and other options as feasible to eliminate travel to workplaces in lower transmission (later Step) areas and vice versa.
- Step 1: Bars remain closed and restaurant service should remain limited to drive-through, curbside take out, or delivery with strict social distancing.
- Step 2: Bars may open with limited capacity; restaurants may open dining rooms with limited seating capacity that allows for social distancing.
- Step 3: Bars may open with increased standing room occupancy that allows for social distancing; restaurants may operate while maintaining social distancing.
Safety Actions
Promote healthy hygiene practices (Steps 1-3)
- Enforce hand washing, covering coughs and sneezes, and use of a cloth face coverings by employees when near other employees and
- Ensure adequate supplies to support healthy hygiene practices for both employees and customers including soap, hand sanitizer with at least 60 percent alcohol (on every table, if supplies allow), paper towels, and tissues.
- Post signs on how to stop the spread of COVID-19 properly wash hands, promote everyday protective measures, and properly wear a face covering.
Intensify cleaning, disinfection, and ventilation (Steps 1-3)
- Clean and disinfect frequently touched surfaces (for example, door handles, work stations, cash registers) at least daily and shared objects (for example, payment terminals, tables, countertops/bars, receipt trays, condiment holders) between use. Use products that meet EPA’s criteria for use against SARS-CoV-2 and that are appropriate for the surface. Prior to wiping the surface, allow the disinfectant to sit for the necessary contact time recommended by the manufacturer. Train staff on proper cleaning procedures to ensure safe and correct application of disinfectants.
- Make available individual disinfectant wipes in bathrooms.
- Wash, rinse, and sanitize food contact surfaces, food preparation surfaces, and beverage equipment after use.
- Avoid using or sharing items such as menus, condiments, and any other food. Instead, use disposable or digital menus, single-serving condiments, and no-touch trash cans and doors.
- Use touchless payment options as much as possible, when available. Ask customers and employees to exchange cash or card payments by placing on a receipt tray or on the counter rather than by hand. Clean and disinfect any pens, counters, or hard surfaces between use or customer.
- Use disposable food service items (utensils, dishes). If disposable items are not feasible, ensure that all non-disposable food service items are handled with gloves and washed with dish soap and hot water or in a dishwasher. Employees should wash their hands after removing their gloves or after directly handling used food service items.
- Use gloves when removing garbage bags or handling and disposing of trash and wash hands afterwards.
- Avoid using food and beverage containers or utensils brought in by customers.
- Ensure that ventilation systems operate properly and increase circulation of outdoor air as much as possible such as by opening windows and doors. Do not open windows and doors if doing so poses a safety risk to employees, children, or customers.
- Take steps to ensure that all water systems and features (for example, drinking fountains, decorative fountains) are safe to use after a prolonged facility shutdown to minimize the risk of Legionnaires’ disease and other diseases associated with water.
Promote social distancing
Step 1
- Limit service to drive-through, delivery, or curb-side pick-up options only.
- Provide physical guides, such as tape on floors or sidewalks to ensure that customers remain at least six feet apart in lines or ask customers to wait in their cars or away from the establishment while waiting to pick up food. Post signs to inform customers of food pickup protocols.
- Consider installing physical barriers, such as sneeze guards and partitions at cash registers, or other food pickup areas where maintaining physical distance of six feet is difficult.
- Restrict the number of employees in shared spaces, including kitchens, break rooms, and offices to maintain at least a six-foot distance between people.
- Rotate or stagger shifts to limit the number of employees in the workplace at the same time.
Step 2
Provide drive-through, delivery, or curb-side pick-up options and prioritize outdoor seating as much as possible.
- Reduce occupancy and limit the size of parties dining in together to sizes that ensure that all customer parties remain at least six feet apart (e.g., all tables and bar stools six feet apart, marking tables/stools that are not for use) in order to protect staff and other guests.
- Provide physical guides, such as tape on floors or sidewalks and signage on walls to ensure that customers remain at least six feet apart in lines or waiting for seatings.
- Ask customers to wait in their cars or away from the establishment while waiting to be seated. If possible, use phone app technology to alert patrons when their table is ready to avoid touching and use of “buzzers.”
- Consider options for dine-in customers to order ahead of time to limit the amount of time spent in the establishment.
- Avoid offering any self-serve food or drink options, such as buffets, salad bars, and drink stations.
- Install physical barriers, such as sneeze guards and partitions at cash registers, bars, host stands, and other areas where maintaining physical distance of six feet is difficult.
- Limit the number of employees in shared spaces, including kitchens, break rooms, and offices to maintain at least a six-foot distance between people.
Step 3
- Provide drive-through, delivery, or curbside pick-up options and prioritize outdoor seating as much as possible.
- Consider reducing occupancy and limiting the size of parties dining in together to sizes that ensure that all customer parties remain at least six feet apart (e.g., all tables and bar stools six feet apart, marking tables/stools that are not for use) in order to protect staff and other guests.
- Provide physical guides, such as tape on floors or sidewalks and signage on walls, to ensure that customers remain at least six feet apart in lines or waiting for seatings.
- If possible, use phone app technology to alert patrons when their table is ready to avoid touching and use of “buzzers.”
- Consider options for dine-in customers to order ahead of time to limit the amount of time spent in the establishment.
- Avoid offering any self-serve food or drink options, such as buffets, salad bars, and drink stations.
- Install physical barriers, such as sneeze guards and partitions at cash registers, bars, host stands, and other areas where maintaining physical distance of six feet is difficult.
Train all staff (Steps 1-3)
- Train all employees in the above safety actions while maintaining social distancing and use of face coverings during training.
Monitoring and Preparing
Checking for signs and symptoms (Steps 1-3)
- Consider conducting daily health checks (e.g., temperature and symptom screening) of employees.
- If implementing health checks, conduct them safely and respectfully, and in accordance with any applicable privacy laws and regulations. Confidentiality should be respected. Employers may use examples of screening methods in CDC’s General Business FAQs as a guide.
- Encourage staff who are sick to stay at home.
Plan for when an employee becomes sick (Steps 1-3)
- Employees with symptoms of COVID-19 (fever, cough, or shortness of breath) at work should immediately be sent to their home.
- Inform those who have had close contact to a person diagnosed with COVID-19 to stay home and self- monitor for symptoms, and to follow CDC guidance if symptoms develop. If a person does not have symptoms follow appropriate CDC guidance for home isolation.
- Establish procedures for safely transporting anyone sick to their home or to a healthcare facility.
- Notify local health officials, staff, and customers (if possible) immediately of any possible case of COVID-19 while maintaining confidentiality consistent with the Americans with Disabilities Act (ADA) and other applicable federal and state privacy laws.
- Close off areas used by a sick person and do not sure them until after cleaning and disinfection. Wait 24 hours before cleaning and disinfecting. If it is not possible to wait 24 hours, wait as long as possible. Ensure safe and correct application of disinfectants and keep disinfectant products away from children.
- Advise sick staff members not to return until they have met CDC’s criteria to discontinue home isolation.
Maintain healthy operations (Steps 1-3)
- Implement flexible sick leave and other flexible policies and practices, such as telework, if
- Monitor absenteeism of employees and create a roster of trained back-up
- Designate a staff person to be responsible for responding to COVID-19 concerns. Employees should know who this person is and how to contact them.
- Create and test communication systems for employees for self-reporting and notification of exposures and closures.
- Support coping and resilience among employees.
Closing
Steps 1-3
- Check State and local health department notices about transmission in the area daily and adjust operations accordingly.
- Be prepared to consider closing for a few days if there is a case of COVID-19 in the establishment and for longer if cases increase in the local area.
Deductible Expenses Under PPP
The U.S. Internal Revenue Service issued the following, Notice 2020-32, to answer questions about how to handle the deductibility of certain expenses if a taxpayer gets a loan under the Paycheck Protection Program, created under the CARES Act.
The CARES Act, however, did not address whether the business expenses that result in PPP loan forgiveness will be deductible for tax purposes, according to a post by JD Supra, which posts a daily newsletter of news, commentary and analysis from leading lawyers and law firms. In this notice, released on April 30th, JD Supra concludes that “the IRS concludes that when the payment of business expenses results in the forgiveness of a PPP loan, such as payroll costs or rent, those business expenses will not be deductible for tax purposes. According to the IRS, this treatment prevents a “double tax benefit” and is consistent with Section 265(a)(1) of the Internal Revenue Code, which generally provides that no tax deduction is available for expenses that are paid with tax-exempt dollars.”
The full text of the IRS notice is reproduced below:
PURPOSE
This notice provides guidance regarding the deductibility for Federal income tax purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or business when the taxpayer receives a loan (covered loan) pursuant to the Paycheck Protection Program under section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)). Specifically, this notice clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281, 286-93 (March 27, 2020) and the income associated with the forgiveness is excluded from gross income for purposes of the Code pursuant to section 1106(i) of the CARES Act.
BACKGROUND
I. Paycheck Protection Program
The Paycheck Protection Program was established by section 1102 of the CARES Act. Under the Paycheck Protection Program, a recipient of a covered loan may use the proceeds to pay (1) payroll costs, (2) certain employee benefits relating to healthcare, (3) interest on mortgage obligations, (4) rent, (5) utilities, and (6) interest on any other existing debt obligations. See section 7(a)(36)(F) of the Small Business Act (describing allowable uses of a covered loan). See also Q&A 2.r. in Part III of the interim final rule, Business Loan Program Temporary Changes; Paycheck Protection Program, Docket No. SBA-2020-0015, 85 Fed. Reg. 20811, 20814 (April 15, 2020).
Under section 1106(b) of the Cares Act, a recipient of a covered loan can receive forgiveness of indebtedness on the loan (covered loan forgiveness) in an amount equal to the sum of payments made for the following expenses during the 8-week “covered period” beginning on the covered loan’s origination date (each, an eligible section 1106 expense): (1) payroll costs, (2) any payment of interest on any covered mortgage obligation, (3) any payment on any covered rent obligation, and (4) any covered utility payment. See section 1106(a) (defining the terms “covered period”, “covered mortgage obligation,” “covered rent obligation,” “covered utility payment,” and “payroll costs”), (b) (regarding eligibility for covered loan forgiveness), and (g) (regarding covered loan forgiveness decisions). However, section 1106(d) of the CARES Act provides that the amount of the covered loan forgiveness is reduced if, during the covered period, (1) the average number of full-time equivalent employees of the recipient is reduced as compared to the number of full-time employees in a specified base period, or (2) the salary or wages of certain employees is reduced by more than 25 percent as compared to the last full quarter before the covered period. In addition, pursuant to an interim final rule issued by the Small Business Administration, no more than 25 percent of the amount forgiven can be attributable to non-payroll costs. See Q&A 2.o. in Part III of the interim final rule, Business Loan Program Temporary Changes; Paycheck Protection Program, Docket No. SBA-2020-0015, 85 Fed. Reg. 20811, 20813-20814 (April 15, 2020).
Section 1106(i) of the CARES Act addresses certain Federal income tax consequences resulting from covered loan forgiveness. Specifically, that subsection provides that, for purposes of the Code, any amount that (but for that subsection) would be includible in gross income of the recipient by reason of forgiveness described in section 1106(b) “shall be excluded from gross income.” Thus, section 1106(i) of the CARES Act operates to exclude from the gross income of a recipient any category of income that may arise from covered loan forgiveness, regardless of whether such income would be (1) properly characterized as income from the discharge of indebtedness under section 61(a)(11) of the Code, or (2) otherwise includible in gross income under section 61 of the Code.
II. Deductibility of Eligible Section 1106 Expenses
Neither section 1106(i) of the CARES Act nor any other provision of the CARES Act addresses whether deductions otherwise allowable under the Code for payments of eligible section 1106 expenses by a recipient of a covered loan are allowed if the covered loan is subsequently forgiven under section 1106(b) of the CARES Act as a result of the payment of those expenses. This Notice addresses the effect of covered loan forgiveness on the deductibility of payments of eligible section 1106 expenses.
III. Summary of Relevant Law
Section 161 of the Code provides that, in computing taxable income under section 63 of the Code, there shall be allowed as deductions the items specified in part VI, subchapter B, chapter 1 of the Code (for example, sections 162 and 163). However, section 161 of the Code provides that the allowance of these deductions is subject to the exceptions provided in part IX, subchapter B, chapter 1 of the Code. These exceptions include section 265 of the Code. See also section 261.
In general, section 162 of the Code provides for a deduction for all ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Covered rent obligations, covered utility payments, and payroll costs consisting of wages and benefits paid to employees comprise typical trade or business expenses for which a deduction under section 162 of the Code generally is appropriate. Section 163(a) of the Code provides a deduction for certain interest paid or accrued during the taxable year on indebtedness, including interest paid or incurred on a mortgage obligation of a trade or business.
However, section 265(a)(1) of the Code and §1.265-1 of the Income Tax Regulations provide that no deduction is allowed to a taxpayer for any amount otherwise allowable as a deduction to such taxpayer that is allocable to one or more classes of income other than interest (whether or not any amount of income of that class or classes is received or accrued) wholly exempt from the taxes imposed by subtitle A of the Code. See generally section 265(a)(1); §1.265-1. The term “class of exempt income” means any class of income (whether or not any amount of income of such class is received or accrued) that is either wholly excluded from gross income under any provision of subtitle A of the Code or wholly exempt from the taxes imposed by subtitle A of the Code under the provisions of any other law. See §1.265-1(b)(1). The purpose of section 265 of the Code is to prevent a double tax benefit.
Section 265(a)(1) of the Code applies to otherwise deductible expenses incurred for the purpose of earning or otherwise producing tax-exempt income. It also applies where tax exempt income is earmarked for a specific purpose and deductions are incurred in carrying out that purpose. In such event, it is proper to conclude that some or all of the deductions are allocable to the tax-exempt income. See Christian v. United States, 201 F. Supp. 155 (E.D. La. 1962) (school teacher was denied deductions for expenses incurred for a literary research trip to England because the expenses were allocable to a tax-exempt gift and fellowship grant); Banks v. Commissioner, 17 T.C. 1386 (1952) (certain educational expenses paid by the Veterans’ Administration that were exempt from income tax, were not deductible); Heffelfinger v. Commissioner, 5 T.C. 985 (1945), (Canadian income taxes on income exempt from U.S. tax are not deductible in computing U.S. taxable income); and Rev. Rul. 74-140, 1974-1 C.B. 50, (the portion of a state income tax paid by a taxpayer that is allocable to the cost-of-living allowance, a class of income wholly exempt under section 912, is nondeductible under section 265).
In Manocchio v. Commissioner, 78 T.C. 989 (1982), a taxpayer attended a flight-training course that maintained and improved skills required in the taxpayer’s trade or business. As a veteran, the taxpayer was entitled to an educational assistance allowance from the Veterans’ Administration pursuant to 38 U.S.C. section 1677 (1976) equal to 90 percent of the costs incurred. Because the payments received were exempt from taxation under 38 U.S.C. section 310(a) (1976), the taxpayer did not report them as income. The taxpayer did, however, deduct the entire cost of the flight training course, including the portion that had been reimbursed by the Veterans’ Administration. In a reviewed opinion, the court held that the reimbursed flight-training expenses were nondeductible under section 265(a)(1) of the Code.
NON-DEDUCTIBILITY OF PAYMENTS TO THE EXTENT INCOME RESULTING FROM LOAN FORGIVENESS IS EXCLUDED UNDER SECTION 1106(i) OF THE CARES ACT
To the extent that section 1106(i) of the CARES Act operates to exclude from gross income the amount of a covered loan forgiven under section 1106(b) of the CARES Act, the application of section 1106(i) results in a “class of exempt income” under §1.265- 1(b)(1) of the Regulations. Accordingly, section 265(a)(1) of the Code disallows any otherwise allowable deduction under any provision of the Code, including sections 162 and 163, for the amount of any payment of an eligible section 1106 expense to the extent of the resulting covered loan forgiveness (up to the aggregate amount forgiven) because such payment is allocable to tax-exempt income. Consistent with the purpose of section 265, this treatment prevents a double tax benefit.
This conclusion is consistent with prior guidance of the IRS that addresses the application of section 265(a) to otherwise deductible payments. In particular, Rev. Rul. 83-3, 1983-1 C.B. 72, provides that, where tax exempt income is earmarked for a specific purpose, and deductions are incurred in carrying out that purpose, section 265(a) applies because such deductions are allocable to the tax-exempt income. In accordance with the analysis set forth in Rev. Rul. 83-3, the direct link between (1) the amount of tax exempt covered loan forgiveness that a recipient receives pursuant to section 1106 of the CARES Act, and (2) an equivalent amount of the otherwise deductible payments made by a recipient for eligible section 1106 expenses, constitutes a sufficient connection for section 265(a) to apply to disallow deductions for such payments under any provision of the Code, including sections 162 and 163, to the extent of the income excluded under section 1106(i) of the CARES Act.
The deductibility of payments of eligible section 1106 expenses that result in loan forgiveness under section 1106(b) of the CARES Act is also subject to disallowance under case law and published rulings that deny deductions for otherwise deductible payments for which the taxpayer receives reimbursement. See, e.g., Burnett v. Commissioner, 356 F.2d 755, 759-60 (5th Cir. 1966); Wolfers v. Commissioner, 69 T.C. 975 (1978); Charles Baloian Co. v. Commissioner, 68 T.C. 620 (1977); Rev. Rul. 80-348, 1980-2 C.B. 31; Rev. Rul. 80-173, 1980-2 C.B. 60.
CONTACT INFORMATION
The principal authors of this notice are Sarah Daya and Patrick Clinton of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding the application of sections 161, 162, 163, and 261 please contact Ms. Daya at (202) 317-4891 (not a toll-free call); for further information regarding the application of section 265, please contact Mr. Clinton at (202) 317-7005 (not a toll-free call).
Read MoreUnemployment Guidelines During the Pandemic
Georgia Department of Labor Employer Update
The CARES (Coronavirus Aid, Relief, and Economic Security) Act
Tips for Filing Successfully
- You must file your claims each week for benefits to be paid to your employees. Your employees do not request their weekly payments. Do not file subsequent claims less than 7 days after the week ending date (WED) of the previous week’s claims. Claims submitted for a WED that is less than 7 days after the previous week’s WED will not be paid.
- You must use the GDOL Excel template for multi-claim upload. Do NOT alter the template.
- You cannot submit claims for a future WED. The earliest you can file is the 8th day after the previous WED.
- Verify employees’ earnings for other employment and report combined gross earnings for each WED submitted, if applicable. Failure to do so could result in an overpayment.
- Enter the employees’ names as First Name Last Name. The first name must be entered first to match their GDOL wage record.
- Try to limit the Mailing Street Address to 25 characters. Do not use periods when abbreviating. Use # instead of “Apt.”
- If you answer “Yes” to the question “Did the employee earn at least $7,300 in your employ?”, do NOT enter an amount in Question 15 on Single Entry or Column R on the Excel spreadsheet.
- If you answer “No” to the question “Did the employee earn at least $7,300 in your employ?” enter the amount as four (4) characters, disregarding cents.
- Enter the employee’s gross weekly earnings in Question 16 on Single Entry or Column S on the Excel spreadsheet as five (5) characters with the last two (2) characters representing cents. Example: earnings are $125.75, enter as 12575. If the employee earned $1,000 or more during the week, enter 99999 ($999.99).
- Report all gross earnings, including any earned from another employer. Earnings over $50 will be deducted dollar for dollar from your employee’s benefit payment for weeks ending on or before March 28, 2020. Earnings over $300 will be deducted from the benefit payment for weeks ending April 4, 2020 or later.
- if you make an error on a claim, resubmit the claim for the individual as soon as possible with the corrected information.
What to Tell Your Employees
- Email the link to the COVID-19 Individual FAQs to your employees and review it yourself to help answer their questions.
- When you file the first week of claims, they will receive a Georgia Way2Go Debit MasterCard® within 7-10 days loaded with their first payment, unless they have direct deposit information on file with GDOL from a previous claim within the last 18 months.
- After the first week of claims, they can expect payment within 24-48 hours of you submitting their weekly claims.
- Do NOT tell your employees to claim their weekly benefits with GDOL. You are claiming their weekly benefits for them by filing each week.
- They can create a PIN online using UI Benefit Payment Methods after their claim is processed by GDOL.
- They can check the status of their claim and payments using My UI (Check My UI Claim Status). Their PIN is required.
- They can enroll in direct deposit using Benefit Payment Methods.
- They cannot enroll in direct deposit until AFTER the first claim is processed by GDOL.
- They can reset their PINs using Reset Your PIN
- They are exempt from work search requirements.
- eliminating mail delivery.
- ensuring complete information is provided the first time.
- reducing the need for phone calls.
- reducing paper handling, staff time, and postage costs.
Economic Injury Disaster Loan (EIDL) Grant FAQ’s
The SBA’s Economic Injury Disaster Loan (EIDL) Program provides small businesses (500 employees or less) and nonprofits with low-interest loans of up to $2 million. The loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing due to COVID-19, according to information posted online by New York state. EIDL interest rates are 3.75% for small businesses and 2.75% for not-for-profits.
Due to the COVID-19 impact on small businesses nationwide, an overwhelming number of loan requests are coming into the GABB’s affiliate banks. Our SBA lenders are working hard to return all emails and phone calls as quickly as possible, and are prioritizing working with their existing customers. We encourage you to contact your lending or depository bank about their participation. For the fastest response time please correspond via email or text.
The law provides that applicants can request up to $10,000; however, it seems that the SBA may scale the advance based on the number of employees an applicant has, according to information posted online by U.S. Sen. Brian Schatz of Hawaii. Based on reports, the SBA may provide $1,000 per employee for up to ten employees. However, SBA has not provided public guidance on how it will determine the amount of the advance. Please check back for updates.
UGA’s Small Business Information Center also is providing information on this program, along with helpful comparisons of the various aid programs available.
New York posted the following information about the EIDL grants on the Empire State Development section of the state website.
As part of the COVID-19 relief effort, borrowers can also apply for an Emergency EIDL Grant from the SBA to request an advance on the loan of up to $10,000.
- SBA will determine the amount of grant based on the information provided by the borrower.
- SBA must distribute the Emergency EIDL within three days of the request.
- The advance will be considered an Emergency EIDL grant.
- The borrower will not be required to pay back the Emergency EIDL Grant even if they are subsequently denied for an EIDL loan.
- In advance of disbursing the advance payment, the SBA will require that the borrower file a certification, under penalty of perjury, that they are eligible to apply for an EIDL loan.
- The Emergency EIDL Grants will end on December 30, 2020.
Who is Eligible to Apply?
The following types of businesses are eligible to apply for the EIDL:
- Small businesses;
- Small agricultural cooperatives,
- Small aquaculture businesses;
- Most private non-profit organizations
- Tribal businesses;
- Cooperative;
- ESOPs with fewer than 500 employees;
- Any individual operating as a sole proprietor; and
- An independent contractor during January 31, 2020 to December 31, 2020.
The SBA generally defines a small business as an entity with 500 employees or less. There are, however, specific size standards depending on the type of business. You can look up the standards for your specific business by NAICS code here.
How to apply:
- Apply directly with the Small Business Administration. Applications can be submitted here.
- Deadline to submit your application is December 21, 2020.
- Businesses are encouraged to submit applications as soon as possible.
FAQ’s
Can I apply for EIDL grants and loans as a sole proprietor, ESOPs, non-profits, or a Tribal business?
•Yes, eligibility has been expanded to include:
- Tribal businesses;
- Cooperative;
- ESOPs with fewer than 500 employees;
- Any individual operating as a sole proprietor; and
- An independent contractor during January 31, 2020 to December 31, 2020.
Can I apply for COVID-19 EIDL with a business operating for less than a year?
- Yes.
Do I need to provide a personal guarantee on EIDL loans?
- The SBA waived any personal guarantee on advances and loans below$200,000.
- For loan amounts over $200,000, the SBA may require personal guarantees.
What are the underwriting criteria for EIDL loans?
- The SBA can approve and offer EIDL loans based solely on an applicant’s credit score or use an appropriate alternative method for determining applicant’s ability to repay.
What can I use the advance payment for?
- Advance payment may be used for:
- Providing paid sick leave to employees;
- Maintaining payroll;
- Meeting increased costs to obtain materials;
- Making rent or mortgage payments; or
- Repaying obligations that cannot be met due to revenue losses.
Will advance payment be deducted from PPP loan forgiveness?
- Yes. If the applicant transfers into a loan made under SBA’s Paycheck Protection Program. The advance payment will be considered when determining loan forgiveness.
When does EIDL grant program end?
The Emergency EIDL Grants will end on December 30, 2020.
ECONOMIC INJURY DISASTER LOAN
What types of businesses are eligible to apply?
- Small businesses;
- small agricultural cooperatives,
- small aquaculture businesses;
- most private non-profit organizations
- Tribal businesses;
- Cooperative;
- ESOPs with fewer than 500 employees;
- Any individual operating as a sole proprietor; and
- An independent contractor during January 31, 2020 to December 31, 2020.
What is the definition of a small business under this program?
- Businesses with 500 or fewer employees. The SBA size standards show by NAICS code for each type of business: https://sba.gov/size-standards
How much can I borrow?
- Businesses may qualify for loans up to $2 million.
- Eligibility is based on the size and type of business.
What are the loan interest rates?
- The interest rate is 3.75% for small businesses.
- The interest rate for non-profits is 2.75%.
How can I use loan funds?
- Loan funds can be used as working capital to pay fixed debts, payroll, accounts payable and other bills that could have been paid had the disaster not occurred.
What is fixed debt?
- Fixed debt is a permanent debt, or a debt continuing for an extended period.
How long do I have to submit my loan documents?
- Submit your application as soon as possible. Applications can be submitted at https://disasterloan.sba.gov/ela/Information/ApplyOnline
- Deadline to submit your application is December 21, 2020.
How can I get assistance with my SBA application?
- Governor Kemp announced a partnership between the University of Georgia Small Business Development Center, the Georgia Department of Community Affairs and the Georgia Department of Economic Development to provide the small businesses of Georgia with assistance during this time of need.
- SBDC: https://nysbdc.org/appointment.html
- EAC: https://esd.ny.gov/sites/default/files/EAC%20Contact%20List%20for%20ES D%20Website%20-%20Sheet1.pdf
- CDFI: https://esd.ny.gov/sites/default/files/CDFI21_ContactList.pdf
As a small business, what documents would I need to submit to prove my business suffered economic injury as a result of the Coronavirus?
- Substantial economic injury occurs when a business concern is unable to meet its obligations as they mature or to pay its ordinary and necessary operating expenses.
- Establishing economic injury is a comparison between the financial information from the period in the prior year to the injury period of the current year (this period must be associated to the disaster and cannot be attributed to a downturn in local economy or other unrelated issues).
- The loans are not intended to replace lost sales or profits, rather they are intended to pay fixed debts, payroll, accounts payable, and other expenses that could have been paid had the disaster not occurred.
How can a business owner document physical presence in the declared disaster area?
- An applicant must show that they have tangible presence such as lease, property address, property tax
- Merely having a P.O. Box in the disaster area would not qualify as a physical presence.
What are the repayment terms of the loan?
- SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30
- Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
Will someone notify an application if information is missing from an application?
- A SBA loan officer works with you to provide all the necessary information needed to reach a loan determination.
- The goal is to arrive at a decision on your application within 2-3 weeks.
How will the business owner know if the loan request has been approved?
- A loan officer will contact you to discuss the loan recommendation and your next
- You will also be advised in writing of all loan decisions.
How quickly can a loan application move to closing and loan funds be disbursed?
- Timing depends on the completeness of the
- An SBA loan officer will work with you to provide all the necessary information needed to reach a loan determination.
- The goal is to arrive at a decision on your application within 2-3 weeks.
- If approved, the SBA will prepare and send your Loan Closing Documents to you for your signature.
- Once they receive your signed Loan Closing Documents, an initial disbursement will be made to you within 5 days for Economic injury- working capital of $25,000).
- A SBA case manager will be assigned to work with you to help you meet all loan conditions.
- They will also schedule subsequent disbursements until you receive the full loan amount.
What if my circumstances change and I need more money than I originally applied for?
- Your SBA loan may be adjusted after closing due to your changing circumstances, such as increasing the loan for unexpected costs or reducing the loan due to additional insurance
- Please contact your SBA case manager for more details.
What if I have an existing SBA Disaster Loan?
- Applicants can have an existing SBA Disaster Loan and still qualify for an Economic Injury Disaster Loan for this disaster, but the loans cannot be consolidated.
What happens if a loan request is denied?
- If the loan request is denied, the applicant will be given up to six months in which to provide new information and submit a written request for reconsideration.