It was announced over the evening that both parties had come to an agreement regarding the CARES Act for Covid19 relief. There is a ton in the bill, but a relatively small section is devoted to SBA financing support for impacted businesses.
FINAL BILL – https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf
**NOTE: the final bill differed in significant ways from the Senate bill that is the subject of this post, so please verify against the current law before taking any specific actions
For many businesses the section 1102 provisions for expanded 7a SBA loans will be important.
Those 7a loans will be administered in addition to the currently available disaster relief loans, however unlike those loan programs, the 7a program will be available through traditional banking relationships.
Highlights include:
- Loan amounts of the LESSER of:
- 4 times monthly operating expenses (including payroll, mortgage payments, rent payments, and payments on any other debt obligations), or
- $10,000,000
- Loan proceeds may be used for:
- payroll support, including paid sick, medical, or family leave, and costs related to the continuation of group health care benefits during those periods of leave;
- employee salaries;
- mortgage payments;
- rent (including rent under a lease agreement);
- utilities; and
- any other debt obligations that were incurred before the covered period.
TIPS for Businesses:
From a trusted friend that has been keeping me up to date on these provisions, he suggested that businesses go ahead and reach out to their current banker and prepare the following items.
- FORMS 413 – Personal Financial Statement
- FORM 1919 – Background (If the answer to the felony provision is “YES” then also FORM 912)
- Current Debt Schedule
- 2016, 2017, 2018 Business and Personal Tax Returns
- 2019 Business Profit and Loss Statement (after April 1 will need 2020 interim statement)
- 3 Years of projected financial statements
- Year 1 – Monthly projections
- Year 2 and 3 – Annualized projections
- Short Business Plan
- Identify current problem and solution to be applied
- Monthly operating expenses calculation for the covered classes (payroll, mortgage payments, rent payments, and payments on any other debt obligations)
There are a number of other business provisions, including the Title II business provisions (mostly tax related) which are as follows:
Sec. 2201. Delay of estimated tax payments for corporations.
Sec. 2202. Delay of payment of employer payroll taxes.
Sec. 2203. Modifications for net operating losses.
Sec. 2204. Modification of limitation on losses for taxpayers other than corporations.
Sec. 2205. Modification of credit for prior year minimum tax liability of corporations.
Sec. 2206. Modification of limitation on business interest.
Sec. 2207. Technical amendments regarding qualified improvement property.
Sec. 2208. Installments not to prevent credit or refund of overpayments or increase estimated taxes.
Sec. 2209. Restoration of limitation on downward attribution of stock ownership in applying constructive ownership rules.
Here is a link to the full Senate bill (link) which also includes a number of individual provisions in Division B.
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