Has your business or income been affected by the coronavirus crisis?  If you are self-employed or an independent contractor without any employees, here are a few tips from recent legislation for ways that you can help bridge some gaps until the you can make up some of your income.

  1. First, you can apply for the PPP beginning today Friday, April 10th.  The application process for small businesses started last Friday, but local banks should be allowing the Self-employed and Independent Contractors sign up today.  Check your bank to see if they are now accepting applications from businesses like yours.
    1. The maximum loan size is up to 2.5 times your average monthly 1099-MISC or net self-employment income for the past 12 months.
    2. All amounts spent on the following list of items during the first 8 weeks of the loan term are 100% forgivable: (a) to replace your 1099-MISC income or your net self-employment income, (b) interest on mortgages, (c) business rent, and (d) business utilities. Note that if more than 25% of this amount is used for interest on mortgages, c business rent, and business utilities, not all of the amount spent may be forgivable.
    3. The term is 2 years, Interest rate is 1% and payments are suspended for the first 6 months of the loan.
  2. Next, you can apply for an Economic Disaster Injury Loan with Advance directly from the SBA
    1. The EIDL will give you an advance of up to $10,000 that is forgivable.  The issue that we have seen though, is that due to high demand it seems to be based on the number of employees to the tune of $1000 of credit per eligible employee.
    2. Interest rate is 3.75% for small businesses and independent contractors and 2.75% for nonprofits for the loan (which does not include the advance) and the term is up to 30 years.
    3. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.
    4. You can apply for both an EIDL and PPP, however you cannot use the funds on the same items.  Therefore, it would make sense to put each of these loans in different accounts and keep track of how they are spent.  Also, using the PPP on the forgivable costs and the EIDL on other items would most likely be the best way to go.
  3. Unemployment (This sucks, I know, but if a government forced shutdown of your business doesn’t merit an unemployment claim, I do not know what would).
    1. The CARES Act (Section 2102) also allows for self-employed individuals and Independent Contractors to file for Unemployment if the filer:
      1. is diagnosed with COVID-19 or experienced symptoms or is seeking a diagnosis
      2.  has a member of his or her household that has been diagnosed with the illness
      3. is providing care to a family member with COVID-19
      4. has primary caregiving responsibility to a child that is unable to attend school due to COVID-19
      5.  cannot reach his or her place of work because of a quarantine or advice of a health care provider to self-quarantine
      6.  has become a breadwinner after the head of household has died from COVID-19
      7. has had to quit his or her work as a result of Coronavirus, or
      8. has a work location that is closed as a direct result of a COVID-19 public health emergency.
    2.  Indiana is far behind in accepting unemployment benefits for the self-employed because of incredibly high volumes and the fact that we just have never allowed for it in the past.  But please try and file and you will be
    3. When they are accepted, benefits will be paid retroactively back to March 29th and will consist of the federal $600 per week.  Here are tips on how to add yourself as an employer to the Indiana system.   
  4. Delay IRA Contributions and Tax Payments from 2019. 
    1. Do you have a tax bill due from your 2019 taxes?  You can postpone paying that (and filing your taxes) until July 15, 2020.  This could help with Cash Flow for the next couple of months.  2020 Estimated taxes for the first quarter are also delayed until July 15, but be careful because they are not postponing estimated taxes for the second quarter or beyond, so you could have a large estimated tax bill come July 15.
    2. Were you planning on making IRA Contributions for the year 2019?  Now you can postpone those contributions until July 15th as well.  This could also help with cash flow while allowing for the ability to preserve the right to:
      1. Lower your tax bill from 2019 (if contributing to a traditional IRA)
      2. Take advantage of saving for retirement via taking advantage of IRA limitations each year.
  5. Take advantage of the Forbearance on Federal Student Loans
    1. This program should be automatic based on the CARES act starting on March 13th.
    2. What Student Loans qualify?  All Federal loans taken out after 2010 including Parent PLUS Loans.
    3. What Student Loans do not qualify?  Private Student Loans (ie you have refinanced to a lower rate), FFEL Loans and Perkins loans only qualify if they are federally held.  So if in doubt ask your loan servicer.
    4. Payments and Interest are waived until September 30, 2020
    5. If you want to continue making payments to pay down your principal faster CONTACT YOUR LOAN SERVICER.  All continued payments will go directly to your principal, and you can move back to suspend payments at any time between now and September 30th.
  6. Distributions from IRA’s and 401k’s 
    1. This is not my favorite, and most likely should be a last resort, especially with the market down, but the CARES act allows for distributions of up to $100,000 from your qualified account.  You can then decide to pay the amount back over a 3 year period without tax consequences.
    2. Who qualifies for this provision?  Anyone….
      1. Who is diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention.
      2. Whose spouse or dependent (generally a qualifying child or relative who receives more than half of his or her support from you) is diagnosed with COVID-19 by such a test.
      3. Who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, or having work hours reduced due to COVID-19.
      4. Who is unable to work because of lack of child care due to COVID-19 and experiences adverse financial consequences as a result.
      5. Who owns or operates a business that has closed or had operating hours reduced due to COVID-19 and has experienced adverse financial consequences as a result.
      6. Who has experienced adverse financial consequences due to other COVID-19-related factors to be specified in future IRS guidance.
    3. Again, this should be utilized as a last resort due to the facts that:
      1. You may not have clarity on your business prospects on the future
      2. If you do not pay it back there could be a huge tax liability
      3. You are robbing yourself of retirement savings, and who knows when you may be able to save again.

Please Note that this should not be considered advice to take advantage of any of the following programs as we do not know your situation, it is merely a list of resources that are newly available to you.  You should contact your CPA and/or Financial Advisor/Planner before making these decisions as they will have a better knowledge of you and your business and can best direct you in which direction to go.

New Updates on the Paycheck Protection Program!

A new application and interest rate have been released based on guidance from the SBA and updates from participating lenders.

You can find a copy of the application at the link below and the interest rate has been moved from 0.5% to 1%.

You can apply for both the Paycheck Protection Program and the EIDL, you just cannot use the funds from each loan on the same purpose.  Applying for the Economic Injury Disaster Loan (EIDL) happens directly through the SBA and may be a good idea for some businesses, but if you do apply for both loans you will want to make sure you set up separate bank accounts to make sure you do not commingle the funds, and can show where the money from each loan has been used.  If you apply for the EIDL, you can receive an advance in the form of a grant of up to $10,000, which will not have to be repaid.

So far I have been told that First Merchants is currently taking applications, Bank of America and Horizon Bank are accepting them. Huntington Bank will be going live this afternoon, but Bankable, Old National and Citizens are not taking applications yet.

We will try to keep you updated as we learn more.

SBA Paycheck Protection Program Guidelines

Paycheck Protection Program Details

The Details are finally out on the $349 Billion from the CARES Act that is meant to help small businesses and non-profit organizations have been affected by the coronavirus.  This is a different loan than the SBA Disaster Loan which does not have forgiveness and comes with a 3.75% interest rate.  We have had a ton of questions about this since it passed last week, and now we have some clarity.  Here is the breakdown from the department of the treasury, but if you want a synopsis you can keep reading.  Our friends at the Indiana Small Business Development Center – West Central District are hosting a Zoom conference call on the SBA funding programs.

How to Apply

Small Businesses and Sole Proprietorships can apply as soon as Friday (April 3) through an existing SBA lender or participating banks, credit unions, and Farm Credit System.  Independent contractors and self-employed individuals can apply as soon as April 10th.  Please ask your bank or credit union if they are participating before you send in the loan.  I have talked to several banks today, and they are still working on the details.  We hope to have a list of local banks for you to check out as soon as possible.  Also, you want to make sure that you apply as soon as you can on Friday to make sure you reserve you place in line.

Who Can Apply

This program is for small businesses with less than 500 employees, INCLUDING sole proprietorships, independent contractors (1099 workers), and self-employed persons.  It also allows non-profit organizations and veteran organizations to apply.  For those in the hospitality and food industry with multiple locations, each location could be eligible if that particular establishment employs less than 500 workers.

Loan Details and Forgiveness

Amount:  Up to 2 months of 2020 average monthly payroll costs plus an additional 25% of that amount.
Maturity Date:  2 years
Interest Rate:  0.5% (wow)
Needed Documents:  Payroll Documentation for 2019 and 2020
Loan Payments are deferred for 6 months (interest will accrue during that time)
No Personal Guarantees or Collateral required
No Fees
Forgiveness:  Based on Employer maintaining or quickly rehiring (by June 30th) employees and maintaining salary levels.  It is reduced if full-time headcount, salaries, or wages decline.  Also only 25% of loan earmarked for non-payroll costs is anticipated to be forgiven.

Application for Paycheck Protection Program

 

More Resources for Small Businesses and Entrepreneurs

We know you are busy and you are being bombarded with one COVID-19 email after another, and I am sorry to be another person littering your inbox, but we do have some valuable information to share.

1.  Level Two is currently staying open to service our Coworkers who provide “Essential Businesses and Operations“.  Our board did not come to this decision lightly, and we are implementing several strict measures to make sure we do not contribute to the spread of this deadly virus.  We will be having some digital marketing workshops remotely, which you can find out more by clicking the links below:

  1. Google Pay Per Click/SEO Optimization with Patrick Keller on April 7th at 9:00 am
  2. How to Build an Integrated Digital Ad Campaign

2.  We want to continue to provide you with a list of resources that could help you or your business through this stressful time.

  1. General Resources:
    1. gener8tor CARES Act vs Disaster Loan – a break down of the differences between the Disaster Loan program and the Cares Act
    2. Purdue Extension Economic Outlook webinar – join Dr. Larry DeBoer for an update of how the COVID-19 pandemic could impact the economy.
  2. Funding Resources:
    1. SBA Disaster Loan Program – loans up to $2 million for eligible entities, with interest rates of 3.75% for small businesses and 2.75% for nonprofits
    2. Facebook Small Business Grants Program – $100 Million in grants and ad credits for small businesses with more news coming soon.
    3. James Beard Foundation Relief Fund – micro grants for independent small businesses in the food and beverage industry.
    4. Google Small Business and Crisis Response  – $340 million in Google Ad Credits to SMBs with active accounts and much more.
    5. Micro Loans from Bankable or may be a good alternative, but the interest rates are higher (usually around 8%).
  3. Small Business Coaching:  Our partners continue to offer free business coaching services remotely.
    1. Business Ownership Initiative
    2. Indiana Small Business Development Center
  4. Resources and tools for working remotely:  A number of businesses are stepping up to the plate to expand their free offerings or trial period in order to help you get the most out of working remotely.  This is a big list (with providers offering more every week), but some of our favorites include Google, Microsoft Teams, and Zoom.
    1. Webinars to help you get the most out of your work from home time.  
  5. Skill-up Resources:  If you have lost your job and are looking for a new opportunity, gain skills, or a way to pivot your business in a new direction, here are some resources.
    1. MatchBOX Acceleration’s Entrepreneur Development series – for new or pivoting entrepreneurs.
    2. Unemployment Resource Guide – there is a webinar this afternoon (March 25th) at 3:00 as well.
    3. Eleven Fifty Academy – Learn to code or other cool tech stuff.
    4. Hendricks College Network and Visit Hendricks County Facebook Live on Job Assistance
    5. New Employment  Opportunities-  There are employers hiring, including CVS, WalmartAmazon and many more you can find at Hendricksjobs.com.
  6. At Home Wellness:  We all need exercise, and here are some resources to get exercise at home.
    1. Headspace – is offering a variety of guided meditations and exercises for free to all businesses and your employees.
    2. Fitness Blender – free workout videos
    3. CrossFit:  At Home Workouts
    4. Here is a list of other workouts you can stream for free!  
  7. Digital Resources for your education and entertainment.
    1. The Plainfield | Guilford Township Public Library or your local library, while they may be closed, has a ton of resources for you to utilize.
    2. Education Resources for the kiddos or the kid inside you.  
    3. Amazon Prime for Kids
    4. More Digital Resources

You can also find a ton of resources, blogs, and articles about best practices to get the most out of your work from home experience, but after reading several I will try to oversimplify it for you.

  1. Communicate – Communication is key, so communicate with your partner, your kids, and your employees or employer.  Set expectations and guidelines.
  2. Set Boundaries – Set up a work space and try to keep it your work space.  When you are there focus on work, and when you are not there, focus on other things like your kids, your partner, or anything other than this stupid virus.
  3. Get Outside – the weather is warming up and 100 bazillion studies have shown that fresh air is good for you.  Go for a walk or a hike and for Pete’s sake stay 6 feet away from other people.
  4. Set a routine – yes this is hard, but getting in a rhythm is important.  Try your best and give yourself (and your kids) some grace if something comes up (because something always comes up).
  5. Do the most important thing first – Pick one thing that you need to get done in any given day, and do that first.  Go to your work zone, and focus on getting it done without distractions.