Loans, Grants, and Funding Sources in a COVID-19 World

Small business owners are desperately in need of cash to help them survive through COVID-19. What funding sources are available? “Small Business Stacey” interviews Maggie Rife, CPA to find out. #ASmallBizLife #WhereMarketingMeetTechnology

Episode Transcript

Stacey: Hello everybody, “Small Business Stacey” here talking about money, money, money, money. Every small business owner right now during COVID-19 is looking for something green, something called money. And that is why I am so excited to have with me Maggie Rife, CPA who’s going to help you learn about all the different funding options that are available to you as a small business owner.

Maggie: Hi. Thanks for having me.

Stacey:  Tell everybody a little bit about yourself, what you do, who you serve, and how you help.

Maggie:  Okay. I am in Columbus, Indiana, but I do work remotely so I can help people all over the country. I am a CPA with, I think this was my 12th tax season, so I’ve got quite a bit of experience there with taxes. And I actually went out on my own to serve small businesses specifically and even more to niche down into startups cause I really like to help startups get everything organized and kind of help them navigate the systems and relieve some of the pressure and confusion. So I do bookkeeping, taxes and accounting for small business.

Stacey:  Well fantastic. You are in the right place at the right time because so many small business owners need your help right now during COVID, The great news is there’s a lot of help available to small business owners, but on the negative side it’s overwhelming. It can make your head spin. There’s all these acronyms, there’s CARES, PPP, EIDL, like what does this stuff mean? So Maggie, give us some clarity today, kind of paint the picture because I know it’s changing every day. What’s going on out there and what is available to help small business owners when it comes to getting some different funding options?

Maggie: With the CARES act, there’s basically two major programs. One is the EIDL. That actually was already in place before the CARES act. It’s a loan program through the SBA for areas where there’s been a federally declared disaster, which is the whole country right now. So pretty much every small business owner, whether you’ve got employees, you’re a sole proprietor, you’re a 1099 contractor, you’re an Uber driver, if you are self-employed, you can go apply for the EIDL. So I think a lot of people don’t realize what is considered self-employed. For example, f you’re doing Instacart, Uber, any of those other on-demand services where you get paid as a 1099 contractor, you’re also self-employed.

Stacey: This is the first time they’ve ever made something like that available, right?

Maggie: Yeah. So, the EIDL, that’s one program that’s directly applied to through the SBA. all these acronyms that’s directly applied to through the SBAs website. It is basically to help small businesses cover a cashflow. So like even payables and if you have, like for myself, I have a lot of software, the Payroll Protection Program, that’s the other loan that’s not really meant for regular payables, like my software that’s meant to cover payroll expenses and rent and utilities and a couple of other things. But they’ll probably be too much detail for this one. The economics disaster loan has an advance of up to $10,000. Now everyone keeps hanging on the $10,000. But even in the CARES act itself, I read it after it was passed that third piece of the CARES act, it did say in there up to $10,000. It never promised exactly $10,000. So don’t expect that to be deposited into your bank account. Also it’s taking a long time to get the money out to people. The SBA systems, the computer systems were not big enough, I guess to handle all these requests. So there are delays in processing, but they are processing the loans. So you will get it eventually, but like don’t include it in this month’s budget.

Stacey: So let me ask you a question. You say, you know, it’s the up to right, it’s that small print with the asterisk. How are they determining how much a small business can get right now?

Maggie:  That is a mystery. There’s conflicting information on there. The SBA isn’t being very forthcoming with information for the actual business owners. I don’t know how they’re determining that. Some people are saying $1,000 per employee, but I haven’t seen that in writing. I’m not getting any official guidance from the SBA. I’ve only seen that on Reddit and angry tweets. So I’m not really sure. I don’t take that as real information. I’m waiting for a regulation cause I love my regulations.

Stacey:  Well also the people in my community, they probably don’t follow the SBA legally so to speak. So can you simplify things and explain what the difference? There’s grants, there are loans, there may be other things. I mean, what’s the difference between all of those?

Maggie: A grant doesn’t have to be paid back. So if you apply for this EIDL through the SBA, you get a grant of an unspecified amount. It will be less than $10,000 probably or up to $10,000. You don’t have to pay that back. Even if you get denied for the EIDL or if you get approved for it and you say no thanks, I don’t want it. You still get to keep the grant. But the caveat is you keep the grant money but that reduces the forgivable portion of the payroll protection loan. So you’re not going to be able to double dip.

Stacey: I was wondering about that.

Maggie: Yeah.  And also you can’t use the same payroll expenses for the payroll protection program that you use for the EIDL alone or if you take the payroll credits that are out there. So there’s no double D, no triple dipping, no double dipping.

Stacey: Well, okay. So here’s a question for you. So I’m being impacted. My coffee/smoothie business is shut down right now because we do catering and there’s no catering. So I’m certainly looking at the options that are open to me. I happen to reside in Maryland and Maryland has it’s own grant and funding programs in addition to the SBA. Can you as you double dip and apply for both?

Maggie: That’s a good question, I think I’d have to take that on a state by state basis. Also if you are unemployed or even just partially unemployed, if your hours have been reduced or your pay has been reduced, you should go to your unemployment office and apply because they’re relaxing the rules for unemployment and increasing the benefits. So they’re just trying to like shore up all the wages that they can. They’re working on a fourth part of the CARES act. So we’ll see what happens with that. I don’t really like to report on things that haven’t happened yet because it changes every day. So just consider it a rumor at this point on the dollar amounts and what’s going to happen. Because as you can see from the third part of the CARES act and it seems like nothing has gone according to plan, so I don’t want to put any more rumors out there.

Stacey: Okay. The new new, yeah. Things are changing day by day. So a small business owner, you’ve laid out all these different options, what should they plan on having ready so that they can effectively apply and get approved hopefully for some of these funding options?

Maggie:  So they want to make sure they have their profit and loss and balance sheets up to date for this year and have last year’s tax returns ready to go for their business and if they have payroll, all their quarterly payroll reports ready to go. And their year-end report. I don’t know if anyone would know what these are, but 941s for quarterly, the 944 yearly, and then you’ve got the tax returns. Those are the biggest pieces. And then for the EIDL and maybe for the payroll protection program too, they might request a personal financial statement.

Stacey: So you’ll need to know all of your personal debt. Like, are there balances, are they requiring a personal guarantee on these? Do you know?

Maggie: For the payroll protection act, no personal guarantee. For the EIDL loan, no personal guarantee for loans under $200,000. And there’s no collateral required. I think under $25,000. Yeah, I think that’s right.

Stacey: I know that many of my clients, they have employees. They’re struggling, wondering do we let people go? Do we keep them on?

Maggie: Let’s say in a month we’re going to ramp up, you know, we want to be ready to go. If you’re getting the payroll protection program money, for it to be forgivable it has to be paid. 75% of it has to be used for wages and you have to have the same amount of employees as you did. I think it’s February 15th, as when you apply for forgiveness. And if your employees fluctuate through the year, you can use your average number of employees. So even if you’ve already laid people off, you can hire them back on and it’ll still counts as having kept them. So they want to make sure people keep their jobs basically.

Stacey:  Okay, interesting. So this is a great way that if you’ve built a great team around you and maybe your revenue has slipped off, the government is encouraging you to keep those people on board. So when we come through this, you’re just booming ready to be back in business. And so they’re basically covering your payroll costs as long as you continue to pay them through this. Is that correct?

Maggie: Yes. They’re just trying to keep everything going for eight weeks. That’s their goal is just to make it through eight weeks I guess. And then hopefully have everyone open the doors like nothing happened and everyone will just start going shopping again and going back to work.

Stacey:  Well, that’s what we’re all praying for. When it comes to filling out the forms online and applying for these, does the business owner have to do it themselves or could they hire somebody like you to do it for them?

Maggie: They can hire me to help them complete the forms and collect the right data. I think sometimes it is hard to figure out what different forms are asking for. If you’re not familiar with working with payroll and finance. But as far as actually taking on the loan, I think you have to be a 20% owner. But don’t quote me on that because I don’t know that. I think that’s more of an attorney question.

Stacey:  Okay. Are there any mistakes that you’re seeing small business owners make when it comes to looking at and/or applying for these loans? I mean it may be too early on or are they getting approved?

Maggie: They’re not getting approved for what they thought. It’s moving so slowly. We haven’t even been able to see the mistakes because nothing has happened. Like everyone’s just waiting, everyone’s applied and like they’re not getting any feedback yet because none of the systems, most of the systems are not up. So it’s just total quiet right now. We’re waiting to see what happens, what comes back. The mistake was following the instructions and they expect to get something to happen in three days because that’s not anything they’re doing.

Stacey: Well actually one of my clients, a dental practice, they had applied on the first day, when all this was announced and it took them almost three hours to fill out the paperwork.

Maggie: This was through the SBA?

Stacey: Yeah, they got notified because then there were all these complaints that it was complicated and then the SBA couldn’t even figure it out and process it. So they said, Oh, we’ve changed the process. So they had to reapply and start over again.

Maggie: I was in the military for 13 years before being an accountant and I worked in logistics. I knew it wasn’t gonna happen in three days.

Stacey: This is new for all of us and they just did not have the infrastructure in place for sure. But on the positive side, I am so glad to see that there’s finally financial support for small business owners and from everybody to the individual to the gig worker. You know, the independent contractor and the small business owner and large companies. Cause this has impacted everybody all around.

Maggie: I think it’s actually a really good bill. It’s just going to take time to get it in place, and next time something like this is implemented, it’ll be a lot smoother. We just have to wait for it to happen. You can apply for both loans. That’s one thing, but you can’t pay for the same expenses with both loans. So if you’re paying for payroll costs out of your EIDL, you can’t go and get a payroll protection loan to pay for those payroll costs, but you can roll your EIDL out into a payroll protection program alone. So then it would become forgivable for those costs. And I think they did that because they thought the EIDLs would be up and running way before the payroll protection program loans. But, it looks like it might be the reverse of that.

Stacey:  Interesting. So you’re kind of suggesting that a small business owner should really apply for everything first.

Maggie:  Yeah. Cause you might need both anyway. I don’t have a lot of overhead. Obviously, I’m a sole proprietor with one part-time employee, but, if you are a construction company and you have to buy materials, you’re going to need the EIDL for the materials and then you’re going to need the PPP for payroll.

Stacey: Okay, great. Well, Maggie, I know you put together a nice one-pager here that summarizes everything, all the different options available and I understand that you’re being super gracious with your time and expertise and you’re willing to do a free 15-minute consult to both review this and talk about each person’s unique situation and perhaps if they have questions you’re willing to provide your expertise. Can you share how people can get this free resource and get in touch with you?

Maggie: Yes. The best way to reach me is through email. It’s maggie at maggie rife cpa.com. So it’s really easy to remember. Just shoot me an email and tell me that you saw the webinar with Small Biz Stacey and that you want to talk about the CARES act.

Stacey:  Excellent. And if you guys didn’t know, I forgot to say it at the beginning. Maggie is part of my mastermind group and she has just been so generous in coming into the mastermind calls and sharing her expertise and really helping the whole group understand how they can thrive and prosper in their businesses. If you want to learn more about my mastermind group, reach out to me small biz stacey@gmail.com. So Maggie, any last parting words to the small business owner who right now it’s still a little uncertain?

Maggie:  Don’t wait to apply. Get in line because you want to get your packet in there. You can always provide more supporting documentation.

Stacey: Okay, so there you have it from Maggie. Do it. Do it now. Take advantage of everything that’s out there. Why not, and see what you get approved for. All right. Thank you, Maggie, for coming on. Thank you for those who joined us live. I’m Small Business Stacey, your small biz marketing specialist here to help you get your marketing into action and help you become a #SmallBizMarketingWiz. Bye everybody.