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SBA Info for Pole Businesses

SBA Info for Pole Businesses

UPDATED 3/30/20 with new info now that the CARES Act has passed. 

Hello, pole community! We've started a Whatsapp discussion of pole industry coronavirus updates and assistance that has been really helpful for connecting with each other. The below explanation is WAY too long for a post in there so I thought it should end up on the blog so more can read it in detail.

I am not an expert in loans but I am connected to some great people in the entrepreneurial community with info. I've received a ton of helpful information which I hope helps all of you. I will also share my experience with you of what I have done. Here's what I learned today about the new legislation.

* I have to write that the following is not financial or legal advice, it's my interpretation of the stimulus bill text and a collection of the info that I have gathered to help my own business. Please consult with your financial advisors or bankers before making any decisions. *

Looking for info if you're a 1099 worker (usually an instructor) in our industry? Scroll down to the EIDL section.

TLDR - Today's key takeaway

The CARES Act has passed and there is a lot of money out there to get. However, the money is going to go fast and potentially run out.

You can apply and then decline the loans if you don't want them when the time comes. This to me means that I want to apply for both now to get in line, and decide later what to take when I get the offers.

If you just want to see images of the EIDL application and the US Chamber of Commerce information, scroll to the bottom of this post.

There are 2 kinds of programs available to small businesses under the new legislation. 

Payroll Protection Program (PPP)

Who is eligible?

Small businesses and 501(c)(3) nonprofits. There's some other group types but I don't think they apply to our industry.

Banks are supposed to be receiving directions from the SBA on how to send this money out by Friday, April 3. There is no application available at this time for this program.

How much is it for?

2.5 x your average monthly payroll cost.

How do I apply?

You would apply at a local bank. The bank must have the authority to do SBA 7a type loans. 

What can I use it for?

You can use this money for payroll support, such as employee salaries, paid sick or medical leave, insurance premiums, and mortgage, rent, and utility payments.

Why is the government giving this money with these stipulations?

The government is trying to incentivize you to retain your employees rather than firing them and them getting on unemployment. 

Is it free money?

Possibly. You would be eligible for loan forgiveness (meaning you don’t have to pay it back) for an 8 week period of payroll, rent, and utilities. 

If the loan or portion of it does not get forgiven, then you can pay that part out over 10 years, at no more than 4% interest.

What's the fine print?

The rent/utilities limitation just says you must have had your lease and utilities in place before Feb 15. Ex. If you just got a new internet company or moved into a new space on March 1, 2020, you couldn’t get the utility or rent payment forgiven. I don’t think this really applies to most of us so you should get the whole thing forgiven.

Payroll forgiveness will be in proportion to the payroll that you had last year during this time period vs. this year. So if I had $10,000 in payroll last year for March-April, and only $8,000 this year, I might be eligible to receive a $10,000 loan but only get $8,000 of it forgiven. There's some more complicated calculations on this as shown below in the pretty pictures from the US Chamber of Commerce.

Economic Injury Disaster Loan (EIDL)

Who is eligible?

Small businesses AND any individual operating as a sole proprietor or an independent contractor during the covered period (January 31, 2020 to December 31, 2020). By my understanding, that means that instructors who are 1099 and out of work would be able to apply for this too.

Loans will be given based on individual applicant credit score. The eligible credit score has not been specified.

How is this different from the prior SBA disaster loan program that we all applied for?

In summy, there are fewer restrictions on this new program. 

- Expands the program to sole proprietors and independent contractors.

- You no longer have to have a business operating for 1 year prior to the disaster.

- This requirement is removed: EIDL assistance is available only to small businesses when SBA determines they are unable to obtain credit elsewhere. So even if you can get credit elsewhere, that will not affect your eligibility for the EIDL.

How much is it for? 

They make you an offer after you submit your application, so the amount is unclear.

There's a twist. 

You can check a box on the application that requests an immediate amount of up to $10,000 that does not have to be paid back, even if the SBA determines that they cannot give you a loan for some reason.

There's another twist. 

You're encouraged to apply for both PPP and EIDL if you're eligible for both, but if you get approved and accept the EIDL first, there is one consequence:

- If you are allowed to apply and be approved for PPP at that point, you don’t get to double-dip and get forgiven twice. Ex. If I get $10,000 via EIDL, then I get $50,000 for PPP, the only up to $40,000 for PPP can be forgiven.

How do I apply? 

Through the SBA disaster loan website

If you already did the disaster loan, you must do the EIDL application again. It's a completely different application form. 

DON'T click the back button in your browser when you're filling it out. I did that and it deleted all my info and I had to start over. The bottom of this blog has screenshots of the application. Go through and find all the requested info and have it ready before you start the application.

What can I use the advance payment for? 

Providing paid sick leave to employees, maintaining payroll, meeting increased costs to obtain materials, making rent or mortgage payments, and repaying obligations that cannot be met due to revenue losses.

Is it free money?

Any advance payment you get is a grant (free, no repayment) but anything that is not an advance would be a loan that you have to pay back. 

And, remember the second twist - if you get approved and accept the EIDL first and then get approved for PPP later, you don’t get to double-dip and get forgiven twice. Ex. If I get $10,000 via EIDL, then I get $50,000 for PPP, the only up to $40,000 for PPP can be forgiven.

What am I doing for PSO?

We're going to try for both because I think the times call for trying all the things. I think that probably the PPP will be easier/faster to get because it's going through a local bank and they will be slammed, but less slammed than trying to navigate the federal system for the EIDL. 

We filed our taxes for 2019 so that we have the most updated tax info when we apply for the programs. 

We also have finished our bookkeeping through February 29, 2020 so that we have the most updated overhead costs available. I plan to make sure that our books are updated through the end of March ASAP after April 1 as well.

We applied for the disaster loan.

I got in contact at a financial institution that does SBA 7a loans to follow up with this week when the time is right to apply for the PPP.

What would I do if I was a studio owner?

I would be:

- Submitting an application for the disaster loan.

- Getting my 2019 taxes completed.

- Keeping my bookkeeping updated.

- Calling or researching banks to find out which banks can issue SBA 7a loans (the program PPP will be funded through). Scheduling an appointment to talk to a representative next week and begin a relationship even if we can't apply yet.

Helpful Pictures and Screenshots - US Chamber of Commerce

 

Helpful Screenshots - EIDL Application

Click here to download a PDF screenshot of the EIDL Application.