For eligible small businesses, sole proprietors, independent contractors, and other self-employed individuals, the CARES Act provides $349 billion through federally backed loans under a modified and expanded Small Business Administration (SBA) 7(a) loan guaranty program. Borrowers are eligible for loan forgiveness for the first 8 weeks of the loan. The SBA’s existing 7(a) program will see an increase in maximum loan amount to $10 million, a much larger lending pool, and an expansion of allowable uses for loans to include:
Payroll support (including paid sick or medical leave);
Mortgage, rent and utility payments;
Insurance premiums; and
Other debt obligations.
Certain borrowers would be eligible for loan forgiveness equal to the amount spent during an eight-week period after the origination date of the loan to offset expenses incurred for:
Interest payment on any mortgage incurred before Feb. 15, 2020;
Rent on any lease in force before Feb. 15, 2020; and
Utilities for which service began before Feb. 15, 2020.
The amount forgiven will be lowered in proportion to a reduction in employees retained compared to the prior year and to the reduction in pay of any employee beyond 25% of the prior year’s compensation. Borrowers that rehire workers previously laid off will not be penalized for having reduced payroll at the beginning of the period.
An outfitter who was denied an SBA loan last week may be eligible for a new loan this week. Though credit ratings, proof of profitability, and other requirements remain the same, the CARES Act relaxes other requirements:
No personal or collateral guarantee will be required.
The eligible recipient does not have to certify that it is unable to obtain credit elsewhere.
Loan forgiveness will be limited to the payment of certain types of permitted expenses incurred before the covered period started and paid after the loan was secured. Rental payment under a lease in effect as of January 1, 2020, would be eligible for forgiveness while rental payment under a lease effective as of March 15, 2020, would not. Eligible payroll costs do not include compensation above $100,000.
Any loan amount not forgiven at the end of one year is carried forward as an ongoing loan with a maximum term of 10 years and a maximum interest rate of 4%. Detailed accounting and complete and accurate recordkeeping will be vital to taking advantage of these provisions.
MAXIMUM LOAN AMOUNT
The maximum loan amount is the lesser of $10 million or the product obtained by multiplying average total monthly payments for payroll costs during the 1-year period before the loan is made by 2.5. So, if the loan was made on April 1, 2020, and average monthly payroll costs for the period April 1, 2019, to April 1, 2020, were $1,500,000, the maximum loan amount would be $3,750,000. The loan can also include the outstanding amount of a loan made under the SBA’s Disaster Loan Program between January 31, 2020, and the date on which such loan may be refinanced as part of this new program.
Under the CARES Act, the loan period for this program would begin on February 15, 2020, and end on December 31, 2020, during which time an application must be submitted. The program would cover businesses with fewer than 500 employees.
For those who lost employment because of the pandemic, the measure provides robust unemployment insurance, including for self-employed, independent contractors, and those with limited work history. The assistance will include an additional $600 per week for each recipient and provides an additional 13 weeks of benefits to those who remain unemployed after state unemployment benefits are no longer available.
FAMILIES FIRST CORONAVIRUS RESPONSE ACT AND THE FAMILY MEDICAL LEAVE ACT
Payroll also factored significantly into the second coronavirus relief bill that passed on March 18, 2020. Within it, small businesses with 500 employees or less are directed to offset payroll costs with a tax credit. In addition, federal sick leave and family medical leave programs are significantly expanded.
FMLA is typically unpaid leave, but the Families First Coronavirus Response Act provides 80 hours of paid coronavirus-based leave. The first 14 days of leave may be unpaid, but an employee can choose to substitute accrued vacation leave, personal leave, or other medical or sick leave during the leave. The employer cannot force an employee to use their accrued paid leave.
As we gain more insight into the nuance of the work for Congress, we will be sharing that information broadly. If you have a resource that you think would benefit your fellow outfitters, send it to America Outdoors and we will add it to our ever-growing collection of community resources.
WHAT YOU NEED TO KNOW ABOUT ECONOMIC INJURY DISASTER LOANS
When: Tuesday, March 31, 11:00 a.m. (MT)
Made Possible by our Hardworking Industry Friends at
The Outdoor Industry Association (OIA)
These are tough economic times for small businesses all over the country affected by the impact of the coronavirus. Business owners are doing everything they can to stay in business and take care of valuable employees and business share. A lot of businesses have been doing well, but few have the financial resources to survive on their own without customers. They need help!
U.S. Small Business Administration (SBA) disaster assistance can be just the help business owners are looking for in the form of low-interest, long term direct federal Economic Injury Disaster Loans.
Find out how it works, what you need to do today, and how businesses and private nonprofits of all sizes can benefit in this short information- filled presentation by the SBA Office of Disaster Assistance.
Northwest River Supplies (NRS), a worldwide leader in paddlesports equipment and apparel, has announced plans to aid in the COVID-19 pandemic by providing personal protective equipment (PPE) to medical personnel and first responders combatting the virus. As hospitals, fire departments and police struggle to obtain basic protective supplies such as masks, respirators, goggles and protective suits, NRS will redirect portions of its supply chain, logistics and distribution operations to support the cause.
NRS operates a business division that supplies safety and rescue equipment to government agencies and NGOs for emergency preparedness and disaster relief. Providing PPE for medical personnel and first responders is a logical shift for the Moscow, Idaho based company during the coronavirus pandemic, according to Bryan Dingel, Chief Executive Officer of NRS.
“We have the supply chain relationships and operational capabilities needed to make this happen,” says Dingel. “There’s a tremendous shortage of this equipment right now, and we’re glad that we can step in to help get supplies to those on the front lines of this pandemic.”
NRS has arranged urgent air-freight shipment of 30,000 respirator masks, which will be distributed from its warehouse in Moscow. The company is also sourcing protective goggles, surgical masks and suits along with additional respirators. NRS plans to fulfill requests from hospitals and agencies in Idaho and the Northwest initially but will distribute more broadly as supplies allow.
“Our doctors, nurses and first responders are making great sacrifices to save lives in our communities,” says Dingel. “We’re proud to do our part to help make sure that they have the protective equipment they need to do their jobs safely.”
NRS will donate PPE to the Moscow Volunteer Fire Department and will offer medical facilities fair-market pricing.
100% employee-owned NRS is the world’s leading supplier of equipment and apparel for water recreation, safety and rescue. Founded in 1972 with a vision to create a better kind of company, NRS is dedicated to promoting the health and well-being of its customers, employees and community.