COVID 19: SBA DISASTER LOAN UPDATE I
Small Business Insights
U.S. Small Business Administration, programs and initiatives: Coronavirus Aid, Relief & Economic Security (CARES) Act
PRG is working hard to stay on top of the aid packages recently passed by Congress and made available through the Small Business Administration (SBA). Many PRG clients and friends have been requesting info about these programs. Although there is never a substitute for performing your own research, we want to share our recent findings with you.
Also, rather than just studying the details and reporting them to you, PRG is taking steps to fill out our own applications. We believe that "learning by doing" and reporting to you via our direct experience is more valuable that simply reading the numerous articles and blogs bombarding the internet. Here is PRG's findings in no particular order:
There appears to be four main programs tailored to small business:
You can apply for the EIDL and a Grant right now... today. It appears you must apply for PPP loans via a SBA 7(a) lender, (i.e. a bank, credit union or Small Business Investment Company). Small Business Debt Relief Programs appear to be programs for businesses who have a existing non-disaster SBA loans.
PRG completed an application for the Economic Injury Disaster Loan (EIDL) and concurrently requested an Emergency Economic Injury Grant over this past weekend. Originally, we elected the paper application, but after conferring with one of our colleagues who is more connected to the source, we were informed the online application was the ideal method. Therefore, we completed our online application on Tuesday, 3/31.
A link to the Economic Injury Disaster Loan (EIDL) application process can be found here.
Last week, we heard stories of the SBA website being super slow due to increased traffic, but today (3/31) we found the site to be functioning perfectly.
PRG successfully completed an application via the online process. Once we completed the steps we were provided with a unique application number. Be sure to make a note of that number and/or print the screen.
The Grant portion of the program appears to be an "emergency advance" of "up to $10,000" for small businesses within "3 days of applying for an Economic Injury Disaster Loan (EIDL)".
Right at the end of the application process there was a question asking if we wanted to request the grant. We said "yes" and then we were prompted to enter our bank account number and routing number. To us, this signals a high probability of receiving the grant. Every small business out there, negatively impacted by recent events, should be seriously looking into this.
In order to complete the EIDL paper application, we were asked to provide the following additional items:
Most recent tax return for the "applicant business"
IRS Form 4506-T (Tax info Authorization form)
Personal Financial Statement (SBA Form 413) for each principal owning more than 20% of the applicant business plus one for the "applicant".
Schedule of liabilities
The paper application also said, "additional information may be requested such as":
Individual tax returns,
Profit & Loss Statements
Balance Sheets
The paper application stated in big bold text that any additional information would need to be provided within 7 days of the information request.
However, the online application did not ask for any of these items, but the confirmation page did say, "you will be notified through the email address you submitted for any additional information needed once your application has been processed". We are interpreting this to mean, every one of us better be organized and ready to supply financial information quickly when prompted.
A lot of info came across our desks today regarding Payment Protection Program (PPP) Loans.
Since the PPP loans must be applied for via an SBA approved lender, you may want to check with your main financial institution ASAP.
PRG banks with JP Morgan Chase. We received an automated email from Chase today that basically said they will be requiring customers to apply for PPP loans online only, and the web links should be up very soon.
Another blog post that hit my inbox today stated the PPP loans will be first come first serve. I really don't know how credible the source is, but the advice is well received. We too are recommending our small business community to move fast! (i.e. this Friday, April 3rd).
Final Thoughts:
Try to get your financial records as solid as can be as quickly as possible.
You may be asking... should I even be borrowing money right now? The question can only be answered individually. However, these loans are being provided to give a much needed boost to the economy and especially small businesses. Without getting into the exact specifications of each program and for each business, there appears to be many attractive attributes to these programs, such as:
Certain forgiveness attributes,
Grant attributes
Very nominal, fixed interest rates amortized over long re-payment periods, &
The possibility of no personal guarantee requirements.
If everything we are being told is true, the terms of these loan programs are unprecedented. Think about your competition taking full advantage of these programs while you sit back. What could that mean for you? Like any debt capital, you must be able to earn a positive rate of return above the cost of the capital, so if you truly believe you cannot do that, perhaps you should hold back. However, if you feel confident in your product, service, industry, or unique operation this may be a once in a lifetime opportunity.
If anybody wishes to speak directly with me, or if I can help in any way shoot me an email at joe@pacrg.com and I will make myself available.
We believe in small business. We love small business. We are the back bone of the American economy. We can compete with the big boys if we are determined, brilliant, fearless and take massive, decisive & calculated action.
Stay strong & focused!
WE ❤️ SMALL BUSINESS
Pacific Resources Group of Companies LLC | 1-877-700-3010 | 4630 Campus Drive, Suite 108
Newport Beach, CA 92660 | www.pacrg.com