If COVID-19 is forcing you to make tough decisions about payroll and which bills to pay in order to keep the doors open, several options through the Small Business Administration (SBA) are available under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
As a certified lender with the Small Business Administration (SBA) in the state of Vermont, we are here to help you navigate through the available options.
Economic Recovery Grants
On July 6, the Agency of Commerce and Community Development (ACCD) will begin accepting applications for Economic Recovery Grants to eligible Vermont businesses. The grants will provide $96 million in funding for eligible businesses that experienced significant revenue losses due to COVID-19. Visit the ACCD COVID-19 Recovery Resource Center to learn whether your business is eligible, how to apply, how grant amounts will be determined, and what you can do to prepare for the ACCD application.
The Paycheck Protection Program
This SBA loan program, which was originally set at $349 billion and was later increased to $659 billion in funding, was created to support small businesses and make sure employees continue to receive an income. This is a federally-guaranteed loan and it does not require collateral or a personal guarantee.
While we continue to accept applications for the Paycheck Protection Program, we are also accepting applications for forgiveness of qualifying loans. Loans will be forgiven at the time the loan is due if most of the funds are used to keep people on payroll and to pay for interest on mortgages, rent, and utilities so that you can keep your business running through August 8, 2020 (see “Do I Qualify for Loan Forgiveness” for more details). If the funds are used for other purposes, the loan has a maturity of two years and an interest rate of 1.0%.
WHO IS ELIGIBLE?
Small businesses and eligible non-profits with fewer than 500 employees, including sole proprietors and independent contractors or businesses that meet SBA employee size standards.
HOW TO APPLY
We are a certified SBA lender, so you should apply directly with us at VSECU so that we can disburse your funds directly to you.
If you want to apply for the Paycheck Protection Program, please email us at firstname.lastname@example.org and we will send you an application for completion. This process will be done online through a secure portal.
You do not have to be a VSECU member to apply through us. You will however need to become a member after your loan has been processed so that loan funds can be disbursed to your VSECU account. You can start the membership process any time by contacting Laurie Gormley, our new business account representative to help during this SBA process. Send an email to email@example.com or call 802-371-5115.
DO I QUALIFY FOR LOAN FORGIVENESS?
Loans will be eligible to be forgiven if most of the funds (60% or more) are used to keep employees on payroll and no more than 40% is used to pay interest on mortgages, rent, and utilities. You must have used all loan proceeds in order to apply for forgiveness.
WHEN CAN I APPLY?
PPP borrowers can apply for loan forgiveness starting eight weeks after the loan disbursement date and up to 24 weeks after the loan was received.
WHAT DOCUMENTATION DO I NEED TO SUBMIT WITH THE APPLICATION?
Along with the PPP loan forgiveness application, you must submit documentation for the time period for which you received the disbursement. The documentation will be similar to what you submitted for the original application, including all payroll records and/or other records to evidence the use of proceeds.
HOW SHOULD I SUBMIT MY APPLICATION?
To ensure a speedy and secure application process, we strongly recommend that you submit your application on our electronic platform. We’ll send you a link when you reach out to us at firstname.lastname@example.org. If you prefer paper, you can drop of your application at any VSECU branch location.
WE CONTINUE TO EXPECT HIGH DEMAND
We experienced high demand for PPP funding and expect that we will receive a high volume of applications for forgiveness. To manage the high volume of requests, we are asking members to email the VBiz staff with application requests or additional questions.
Other SBA Direct Resources
Economic Injury Disaster Loans (EIDL) provide working capital loans up to $2 million to cover payroll, rent, utilities, interest on debt, accounts payable, and some bills not paid due to coronavirus. This loan requires collateral or a personal guarantee and offers a 3.75% interest rate and terms up to 30-years.
Immediate Loan Advance up to $10,000 that does not have to be repaid is available to all small business owners as part of the Economic Injury Disaster Loan Advance program.
Tax Credit Relief
The Employee Retention Tax Credit (ERTC)—this credit can be claimed towards quarterly payroll taxes to employers who were forced to close or suspend operations due to a coronavirus shut-down order or whose gross receipts declined by more than 50% in comparison to the same quarter the prior year. The ERTC provides a refundable payroll tax credit for 50% of wages paid to employees during the pandemic. It is offered for the first $10,000 of compensation paid or incurred from March 13, 2020 through December 31, 2020. Businesses that receive assistance through the Paycheck Protection Program are not eligible for the credit. Consult with your tax advisor to learn more about the ERTC.