PLEASE ALLOW OUR LAW FIRM TO HELP YOUR BUSINESS GET A FORGIVABLE LOAN UNDER THE NEW CARES ACT
On March 27, 2020, The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), one of the largest financial assistance programs was enacted into law. There are billions of dollars allocated under the Coronavirus Aid, Relief, and Economic Security Act for Small Businesses (“CARES Act”) earmarked expressly for your company, partnership, LLC or sole proprietorship.
Among the various financial aid programs, the most generous is the Paycheck Protection Act that allows your business to obtain a forgivable loan to cover expenses such as your rent and payroll expenses through June 2020. These forgivable loans do not require the owner of the business to sign personally, to put up collateral or to pay monthly interest.
The best part is that all, or a substantial of the money the business received from the forgivable loan will be converted automatically into a free grant from the government that would wipe away any obligation to pay back the portion of the loan. According to the government’s rules issued on April 3, 2020, the full principal amount of the loans may qualify for loan forgiveness if the borrower maintains or rehires staff and maintains compensation levels. However, not more than 25% of the loan forgiveness amount may be attributable to nonpayroll costs.
Qualified Expenses Used To Establish The Amount Of The Forgivable Loan:
Examples of the “qualified expenses” that may be included to establish the maximum amount of the loan include employee salaries and other payroll costs; employee health insurance payments; state and local payroll taxes; and workers’ compensation premiums.
Qualified Expenses That Will Be Forgiven:
The amount of the loan that will be forgiven is not limited to just the payroll expenses that were used as a benchmark in establishing the size of the loan. Rather, when it comes to what you can spend the loan on and have those expenditures converted into a free grant is broader. The category of expenses that the business may use the loan proceeds to pay for and that qualifies for forgiveness includes not just payroll-related expenses, but in addition, money spent by the business on mortgage interest payments, rent and utility payments. Regardless of the amount of your forgivable loan, you would get to keep for free all of the money from the loan you spent on payroll and 25% of what you spent on the other qualified expenses.
Additional Aspects Of The Forgivable Loans:
There are additional generous features that make the forgivable loans a unique opportunity. The amount the business can get is a multiple of 2.5 times its total, average monthly, employee-related qualified expenses in 2019. For example, if the business had an average monthly expense in 2019 for salaries, state and local payroll taxes and health insurance that amounted to $50,000, the business would receive a lump sum payment from the government of $125,000. Suppose the business was much larger? The forgivable loan can be for up to $10 million. Using our example, and assuming the business’ average employee-related qualified expenses were $2 million per month in 2019, the amount of the forgivable loan would then be $5 million.
WHY MIGHT YOU NEED A LAWYER?
We have handled inquiries from our clients about how to qualify for these forgivable loans. There are some hoops the businesses must jump through, and the lawyers at Sidkoff, Pincus & Green P.C. (“SPG”) have the experience and knowledge of the law and most importantly, as we discuss below, the banking contacts to expedite the process and assist our clients in qualifying for the maximum amounts allowed.
Here are some of the problems we are working to solve for our clients:
• You Need A Bank To Sponsor You– To obtain any forgivable loan, the CARES Act requires the business to fill out an application in conjunction with a recognized bank that will sponsor the business. Unfortunately, many business owners do not have a good (or any) relationship with a bank, and without the bank vouching for the business, no forgivable loan is possible. The good news is that we have relationships with qualified banks, and often can convince the bank to accept SPG’s client as a new banking customer for the purpose of sponsoring our client for a forgivable loan.
• You Need To Submit The Correct Documentary Proof– The CARES Act requires the business to provide documentary proof of the amount of money it spent in 2019 on qualified expenses, and of course to make completely accurate calculations or face severe repercussions under the law including prosecution for criminal penalties of fines and imprisonment for submitting false information. We will undertake the due diligence to relieve you of the worry of making an innocent mistake that might be blown out of proportion; and we will guide you in exactly what records you need to present.
• You Need To Meet the Filing Deadlines– To get the full benefit and the largest allowable amount of your forgivable loan, your paperwork must be filed and accepted by a deadline. Moreover, under the law, you can use the proceeds to cover expenses arising during different periods to maximize the amount of your loan that will be forgiven and turned into a free grant. We understand the timing aspect of the CARES Act and can strategize with you to target the best period for you, and to make sure your paperwork is filed timely.
First come – First Serve- Although a very large sum has been established under the CARES Act for the forgivable loan program, it is likely there will not be enough money to go around, and some business who meet the qualifications for a forgivable loan will be out of luck if their application is not approved before the money dries up. Loans will be available only through June 30 or until the funds run out. Due to expected high demand, the Treasury Department recommends that applications be submitted as soon as possible. If your application is filed with defects, you could end up in the group that filed too late to be paid, and that is another reason why you might benefit from professional help.
• There Are Additional New Programs We Can Show You– We can help you navigate through some of the other exceptional programs created by the CARES Act, and help you with your applications, avoiding the consequences of inaccurate statements on your application, and guiding you through the process of obtaining these generous benefits.
The Cares Act has other programs that might be of great value to you in addition to the Paycheck Protection Act. For example, the Cares Act created new, highly beneficial amendments to the Small Business Administration’s (“SBA”) Economic Injury Disaster Loans Program. Under the amendments, qualifying businesses have the opportunity for an immediate advance of $10,000, that doesn’t have to be repaid if it’s used for payroll. Besides the $10,000 advance for payroll, the even bigger benefit is that your business may be able to obtain a loan for up to $2 million, and payments of principal and interest will be deferred through the remainder of 2020. Another benefit is that personal guarantees will not be required for loans of less than $200,000. Perhaps the most attractive element is that these are long-term loans with varying repayment terms of up to 30 years, with loaned amounts up to $2 million that can be used for payment of fixed debts, payroll, accounts payable, employee sick leave and other bills.
The Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. are here to help Small Businesses with Economic Relief Loans as well as any other business challenge presented by the coronavirus or anything else. We invite you to contact our legal team. You can call us at 215-574-0600, email us at firstname.lastname@example.org or contact us online using our quick contact form. We will be happy to talk to you and evaluate your circumstances and hope to become your main attorneys for business and anything else where we might be able to help.