Are there other opportunities for small businesses in the context of the coronavirus shutdown? – Company press
By Candace Wiest, Contributing Columnist
Last night I spoke to a dentist friend with a small practice in Arizona. His office has been closed for several weeks now, except for emergencies.
When asked how his team was holding up, he said officials told them to “take it one day at a time” before the reopening. I don’t know if that statement made his team feel better.
Benjamin Franklin put it better: “From adversity comes opportunity.” Right now, you have the opportunity to grow your business, elevate your team, and use the programs that benefit you and your employees through the Care Act.
We all know that capital is the lifeblood of any business. The government has programs to help you acquire this capital. The Care Act allocated $ 350 billion to the Small Business Administration loan program. The SBA will forgive a portion of your loan if you keep all of your employees on the payroll for eight weeks and the money is used to fund payroll, rent, mortgage interest, and utilities.
As the program ran out of funds last week, Congress is debating an additional $ 300 billion to fortify the paycheck protection program, and small business advocates are calling on lawmakers to add more money to the program. economic disaster loan program, according to Bloomberg.
Once funded, you can apply for a PPP loan from federally approved financial institutions that participate in the SBA 7A program. This loan also offers better payment terms. You can delay your first payment for up to one year from inception date, and loan terms can be up to 10 years. The application does not require any personal guarantee, collateral or that the applicant proves that he could not have received credit elsewhere.
Although the program had a rough start, including a computer crisis, this program has the potential to help small business owners and their employees. For more information, go to SBA.gov and click COVID-19[female[feminine. To start the process and to confirm that you meet the conditions, talk to a lender at a bank or credit union that offers SBA loans.
If you live in California, check out IBank at ibank.ca.gov. Their collateral allows banks to extend loans to help small business clients. As a lender, I have used this program for over 20 years. It offers a loan guarantee program for small businesses in disaster situations and, as an added bonus, they can respond faster than the SBA.
Eligible applicants include small businesses in California with one to 750 employees negatively affected or disrupted by COVID-19.
The loan proceeds can be used for continued operations or to remedy economic harm due to COVID-19. They can guarantee the loan for up to seven years for up to 95% of the loan proceeds. Interest rates are negotiated with the participating bank and the borrower.
The Cares Act also offers certain tax and other benefits that may apply to your business.
– The rules on net operating losses under the Tax Cuts and Jobs Act have been changed so that losses can now be carried back five years.
– The limit on commercial interest charges has been increased from 30% to 50% for tax years starting in 2019 or 2020.
– The minimum required distribution of IRAs and 401k plans can be ignored.
– There is also a new provision that provides an above-the-line deduction for charitable donations, and the limits on charitable donations have changed.
– If you borrow on your 401K, the loan limit has increased from $ 50,000 to $ 100,000.
– Perhaps the best measure allows employers to defer paying their share of 2020 payroll taxes until 2021 and 2022. Consult your accountant or lawyer to see if you qualify for these options.
These uncertain times are ripe for opportunity. In the words of the immortal Dr. Spock, may you live long and prosper.
Candace Wiest recently retired after 34 years in the community banking industry. She was CEO of banks in Phoenix and Southern California for 27 years and was the first woman elected to represent community banks on the Federal Reserve Board of San Francisco. Wiest lives in Arizona. Contact her by email at [email protected]