The Small Business Administration currently has two major loan programs in response to COVID-19. A business can apply for both the Economic Injury Disaster Loan program and Paycheck Protection Program IF there are different use of proceeds for each program. Funds from these loans cannot be comingled.
Emergency Injury Disaster Loan (EIDL)
· Eligibility: 500 employees or fewer.
· Up to $2 million can be provided to help meet financial obligations and operating expenses that could have been met if the disaster did not occur, think of this as working capital.
· Loans can be made based solely on credit scores.
· Loans available to all non-profits, including 501(c)(6)s.
· Loans below $200,000 can be approved without a personal guarantee.
· Borrowers can receive $10,000 cash advances that are forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments, or repaying obligations that cannot be met due to revenue losses.
· The interest rate on EIDLs will not exceed 4 percent per year.
· 3.75% interest rate for Small Businesses.
· 2.75% interest rate for nonprofits.
· First payment will be deferred and not become due until one year after the original disbursement. Interest does not accrue during this time.
· The term lease of these loans will not exceed 30 years.
· EIDL assistant is available only to small businesses when SBA determines they are unable to obtain credit elsewhere. This does not include the ability to access a general line of credit. SBA will complete the thorough analysis to determine this based on the information provided by the applicant.
· For those that apply for Economic Injury Disaster Loan (EIDL), an advance of $10,000 will be provided to small businesses an nonprofits within three days of applying for the loan.
· The EIDL grant does not need to be repaid, even if the grantee is subsequently denied an EIDL.
· Funds can be used to provide paid sick leave to employees, maintaining payroll, meet increased production costs due to supply chain disruption, or pay business obligations, including debts, rent and mortgage payments.
· Eligibility- Recipients must have been in operation on January 21, 2020 and is available to small businesses, private nonprofits, sole proprietors and independent contractors, tribal businesses, as well as cooperatives and employee-owned businesses.
Small Business "Paycheck Protection Program"
· A new $349 billion lending program, modeled on existing SBA 7(a) program. The government guarantee of 7(a) loans would be increased to 100% through the end of 2020, at which point the guarantee would return 75% for loans over $150,000 and 85% for loans less than or equal to $150,000. The complete deferment of 7(a) loan payments are permitted for up to one year. Loans will be administered through local and regional banks; any federally regulated bank may become an SBA lender for this purpose. The Department of Treasury will issue regulations for these loans quickly.
· There will be a 4% interest rate.
· Small businesses as defined by SBA size standards (generally up to 500 employees, but up to 1,500 employees depending on the sector and certain sectors are based on revenue.)
· 501 (c)(3) non-profits with fewer than 500 employees.
· Sole proprietors, the self-employed, and independent contractors.
· Regulatory Streamlining:
· SBA's standard "no credit elsewhere" test is waived.
· No personal guarantee or collateral required.
· Lenders defer fees, principal, and interest for no less than 6 month and no more than 1 year.
· Maximum Loans: up to $10 million. Payroll costs excluded compensation paid to individuals, including the self-employed, above $100,000 a year.
· Requirements: The employer certifies loan will be used to retain workers, maintain payroll, make mortgage or lease payments, and pay utilities.
· Loans can be forgiven up to the amount spent by the borrower during the 8 weeks from loan origination on payroll costs up to $100,000 in wages, mortgage interest, rent or utilities.
· Forgiveness is reduced by layoffs or pay reductions in excess of 25%.
· Forgiveness is not treated as taxable income.
SBA has streamlined the application process and reduced the administrative burden as of today. Start applying for the disaster relief loan or emergency $10k relief grant here: https://covid19relief.sba.gov/
PAYCHECK PROTECTION LOAN
Small Business Administration Loans-$349 billion authorized (pg31 lines 8-13, CARES ACT)
Administration participation increased to 100% instead of existing 75-85%.
Period covered: February 15, 2020 through June 30, 2020 ◦ "Payroll costs" includes wages, tips, leave pay (vacation, sick, parental, etc.), group health care benefits including insurancepremiums, retirement benefit, and state or local taxes
Applies to employees, and also expands coverage to sole proprietors, independent contractors, and self-employed individuals.
Excludes any wages or other compensation in excess of $100k per year, prorated for the covered period, some IRS taxes, and any employee whose principal place of residence is outsidethe United States
Also excludes benefits (sick leave and FMLA) under phase 2.
Eligibility expanded from just small businesses to any business concern, nonprofit organization, veterans organization or tribal business concern of less than 500 employees (FT andPT count).
Maximum loan amount: payroll cost average per month during the prior 1 year period multiplied by 2.5 (seasonal businesses can use month average from Feb-June of 2019) ◦ Or $10million(whichever is less).
Allowable uses: payroll, group health care and leave benefits, mortgage interest (but no prepayment of principal), rent, utilities, and interest on any debts incurred prior to coveredperiod.
Pg. 21 Lines 4-13-delegated authority-a lender approved to make loans under this subsection shall be deemed to have been delegated by the Administrator to make and approve covered loans (additional lenders shall be approved w/necessary qualifications-pg. 22 lines 4-11, CARES ACT).
Minimal requirements. No personal guarantee. No collateral.
LOAN FORGIVNESS FOR PAYCHECK PROTECTION LOANS
A separate section of the CARES Act calls for a portion of the aforementioned paycheck protection loans to be forgiven on a tax-free basis. The amount to be forgiven is the sum of the following payments made by the borrower duringthe 8-week period beginning on the date of the loan:
payroll costs (as defined above)
certain utility payments.
To seek forgiveness, a borrower must submit to the lender an application that includes documentation verifying the number of employees and pay rates, and cancelled checks showing mortgage, rent, or utility payments.
Loan forgiveness is reduced proportionally if employer reduces FTEs.
Loan forgiveness is reduced if employer reduces wages by more than 25%.
Employer can avoid reductions by bringing back employees and restore wages within 30 days and maintain through June 30.
DELAY OF PAYROLL REMITTANCE
Delay payment of employer payroll taxes (social security) between now and 1/1/21
50 % due 12/31/21
50% due 12/31/22
Does not apply to employers who have loans forgiven under Paycheck Protection Program
EMPLOYEE RETENTION CREDIT (ERC)
Employers fully or partially shut down or with 50% drop in gross receipts in a quarter compared to last year
Shutdown must apply to all aspects of nonprofit organization
Refundable tax credit for 50% of the wages (including employers health plan expenses) by the employer up to $10k per employee
Employers with 100 or more employees applies to employees not providing services
Employers with 100 or less employees applies to all employees paid during the eligible period.
Employers are not eligible for ERC if they receive a Paycheck Protection Program Loan
Allows for advanced payment of credit
SBA ECONOMIC INJURY DISASTER LOAN PROGRAM (EIDL)
The CARES Act expands the SBA's Disaster Loan Program. The covered period for this section is January 31, 2020-December 31, 2020. In addition to current eligible entities, the following may receive SBA disaster loans:
A business or nonprofit organization (including faith based) with 500 or fewer employees;
Sole proprietorships, with or without employees, and independent contractors;
Cooperatives with 500 or fewer employees;
ESOPs with 500 or fewer employees; and
Tribal small business concerns.
The CARES Act makes the following additional changes to the SBA Disaster Loan program during the covered period for loans made in response to COVID-19:
Waives rules related to personal guarantees on advances and loans of $200k or less for all applicants;
Waives minimum 1 year in business rule
Up to $2 million working capital loan up to 30 year term; 3.75% interest for businesses; 2.75% for nonprofits
Payments deferred up to 1 year.
Loan is based on credit score; no tax return needed.
No collateral for loans under $25k.
$10k emergency grant that is issued within 3 days. The advance can be used to maintain payroll, and is not required to be repaid, even if the borrower's request for a 7(b) loan is denied.
Effective Time Period: FEBRUARY 15, 2020 –JUNE 30, 2020
A loan made under the SBA's Disaster Loan Program on or after January 31, 2020, may be refinanced as part of a covered loan under this new program as soon as these new loans are made available. The CARES Act specifically allowsSBA Disaster Loan recipients with economic injury disaster loans made since January 31, 2020 for purposes other than the permitted loan uses under this program to receive assistance under this program.
PAID SICK LEAVE AND FAMILY LEAVE PROVISIONS FROM FAMILIES FIRST ACT
Employers with less than 500 employees are required to provide up to 10 weeks of paid FMLA leave if it involves a child sick or home from school because of Coronavirus.
Leave paid is 2/3 regular pay at a maximum of $200 per day and $10k in the aggregate
Paid FMLA is in addition to any leave the employer provides
Payment for FMLA leave will reimbursed by the federal government
Businesses with less than 50 employees may be exempt under special circumstance.
Paid leave is not available if employee can telework.
The CARES Act provides a few clarifications and makes modest changes to the Family Medical Leave Act provisions in the Phase 2 Families First relief package. Those changes include:
Authority for the Office of Management and Budget (OMB) to exclude certain US government employers and executive branch employees for good cause from the expanded COVID-19 FMLA requirements; and
A new rule for rehired employees under which "eligible employee" (defined as employed for at least the last 30 calendar days) includes someone who:
Was laid off by the employer March 1, 2020 or later,
Had worked for the employer for at least 30 days in the last 60 calendar days prior to the lay-off; and
Has been rehired by the employer; and
Allows for advances on anticipated tax credits for employers' paid family leave costs (the details/process for which will be worked out in instructions provided by the Department of Labor (DOL)), and provides penalty relief forfailure to deposit tax amounts in anticipation of credits allowed under this section.
PAID SICK LEAVE
Employers with less than 500 employees are required to provide 10 days of paid sick leave if it is related to coronavirus
Sick leave can be taken when ill, quarantined, to care for a sick or quarantined family member or a child from school closure
Leave is paid at regular rate with maximum of $511 per day if taking care of oneself or 2/3 rate with maximum of $200 per day if caring for family member
Payment up to the max will be reimbursed by the federal government.
Leave is in addition to any other leave the employer may provide
Businesses with less than 50 employees may be exempt under special circumstance.
Paid sick leave is not available if an employee can telework.
Includes provisions intended to improve the ability of taxpayers to monetize the benefit of the recently-enacted sick and family leave credits. Specifically, the CARES Act allows employers to receive an advance tax credit fromTreasury instead of having to be reimbursed on the back end. Also, it provides penalty relief for failure to deposit tax amounts in anticipation of credits allowed under this section.
Treasury is currently in the process of scaling this to provide advances on future refundable tax credit so employers can afford to provide sick leave for employees.
2020 American Legion Regional Tournaments and 2020 American Legion World Series canceled
Awarding American Legion Baseball and Samsung American Legion Scholarships suspended for 2020
With the unpredictability of the current worldwide COVID-19 (coronavirus) pandemic, the manner in which the virus spreads, its duration and the resulting public health regulations and restrictions across the nation, The American Legion is facing an improbable situation. The Americanism Commission, in consultation with National Commander James William "Bill" Oxford, announces cancellation ofall 2020 American Legion Baseball national tournaments, inclusive of all eight 2020 Regional Tournaments and the 2020 American Legion World Series. The awarding of American Legion Baseball scholarships and Samsung American Legion Scholarships for 2020 have also been completely suspended(Samsung American Legion Scholarships awarded in years prior to 2020 will continue to be paid out to students upon their requests to receive their funds).
Many baseball coaches are unable to complete prerequisite league play scheduled between May and July due to the closure of schools and playing facilities across the nation. In August, more than 500 players, coaches and volunteer staff are scheduled to travel and participate in eight regional tournaments and the American Legion World Series, collectively attracting thousands of fans and spectators. Many of these individuals are of a high-risk demographic.
Currently, there are 32 American Legion Boys State and 9 American Legion Auxiliary Girls State programs who have found it necessary to cancel their 2020 programs due to health and safety concerns related to the COVID-19 pandemic, with several more having indicated that cancellation is probable. It is through the Boys State and Girls State programs that youth are afforded eligibility to apply for Samsung American Legion Scholarships. Many, many Boys State and Girl State delegates did not pursue their applications for 2020 Samsung American Legion Scholarships as a result of the scores of Boys State and Girls State program cancellations.
The decision to cancel was extremely difficult but deemed necessary, first and foremost in the interest of health and safety, and in the face of uncertainty. As Americanism Commission Richard Anderson noted, "These times are unparalleled. And while it is distressing to think of all those youth across the nation who are disappointed to learn of the cancellation of American Legion programs this year, it would be a much, much greater tragedy if even just one of those youth were to fall ill during a program. The Americanism Commission feels this is the right thing to do."
Health emergency forces cancellation of American Legion national convention
(INDIANAPOLIS, April 8, 2020) -- The American Legion’s 102nd National Convention, originally scheduled for Louisville, Ky., Aug. 28 – Sept. 3, 2020, is canceled due to public-health concerns, ongoing restrictions and uncertainties related to the global coronavirus-COVID-19 pandemic.
“The safety of our members and compliance with state and federal public-health restrictions and guidelines made this decision not only prudent but necessary,” American Legion National Commander James W. “Bill” Oxford said. “The commonwealth of Kentucky has taken emergency actions to prevent the spread of infections and to follow federal guidance that restrict public gatherings and urge social distancing. No one can say with any certainty when these measures will be lifted or in what manner.”
The American Legion National Executive Committee approved a resolution Wednesday, April 8, by email to cancel the annual convention of wartime veterans and their families for the first time in history. The 2020 Sons of The American Legion National Convention is also canceled.
“Local American Legion services – such as Buddy Checks, blood drives, meal delivery and volunteer assistance – remain the top priority of the organization as we navigate these challenging waters,” Oxford said. “Community efforts are now under way throughout the country and around the world, while many American Legion state and foreign departments are canceling or postponing their conventions and elections to protect public health in the midst of this pandemic. Normally, national convention delegates are appointed during department conventions. This year is anything but normal.”
The 102nd National Convention is now scheduled for Aug. 27 – Sept. 2, 2021, in Phoenix. Terms of currently serving national officers, including National Commander Oxford, are extended until then, according to the resolution. Nationally appointed American Legion commission and committee chairpersons will also remain in their positions until the Fall 2021 meeting of the National Executive Committee.
The convention cancellation and extension of national officer terms are within the authority of the NEC, according to The American Legion’s constitution and bylaws.
Also Wednesday, the NEC selected Louisville as the site of the 2026 American Legion National Convention, the first available date.
With a current membership of nearly two million wartime veterans, The American Legion was founded in 1919 on the four pillars of a strong national security, veterans affairs, patriotic youth programs and Americanism. Legionnaires work for the betterment of their communities through nearly 13,000 posts worldwide. From the drafting of the original GI Bill to the creation of the Department of Veterans Affairs, The American Legion, www.legion.org, is the most influential voice for America’s veterans.