If you own a business, your head is likely spinning from the deluge of “information” about funding and grants being made available to help businesses endure the effects of the COVID-19 pandemic. Have no fear, this post endeavors to connect business owners with the official agencies providing the funding and suggests proactive steps business owners can take to quickly capitalize. And, if you need additional information or would like assistance with your applications, Russo Law LLC can help.
Here is some basic information for the resources available to New York and New Jersey businesses.
Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
• The CARES Act creates a new form of Small Business Administration (SBA) disaster loan that is forgivable and won’t require personal guarantees.
• The loan can only be used for qualified “payroll costs”, mortgage payments, rent, utilities, and interest on certain debt obligations.
• Payroll costs are defined to include salary (up to $100,000 per year per employee), vacation, leave time, group health care benefit premiums, retirement benefits (e.g. company match), state or local tax assessed on employee compensation.
• The maximum loan amount is 2.5x the average monthly payroll cost in 2019.
• Mayor Bill De Blasio announced that New York City will provide relief for small businesses with less than 100 employees that have experienced a reduction in revenue due to COVID-19.
• If your business has experienced a 25% or more reduction in sales, you may be eligible for zero interest loans of up to $75,000 to help mitigate losses.
• If your business has less than 5 employees, you may be eligible for an additional grant to cover 40% of payroll costs for two months to help retain employees.
• Click here for additional information.
• The New Jersey Economic Development Authority (NJEDA) has created a brief online “wizard” allowing business owners to quickly identify available funding.
• Click here to determine your eligibility.
Begin Collecting Information NOW
As precise instructions on how to access these funds are rolled out, conscientious business owners should begin gathering the supporting information they will invariably be required to submit with their applications. It is likely that most of the available grants will require some combination of the following:
• A brief description of your business, its ownership structure, a listing of all revenue streams, and a description of how the business has been impacted by COVID-19
• A timeline of the limitations placed on your business including, without limitation the precise date COVID-19 impacted the business, date(s) of any closure(s), government orders, etc.
• Daily sales records, quarterly sales tax returns
• Records of payroll costs (e.g. monthly profit & loss statement audited by a certified CPA or forensic accountant, payroll records, etc.) for 2-4 months prior to March 2020
• Bank & Credit Card statements (if no other documentation is available)
• Gross revenues, cost of goods sold and combined operating expenses for the last 12 months
• Anything else demonstrating a revenue decline (e.g. cancelled contracts, refund requests, events, bookings, etc.)
Collecting this information now will not just allow business owners to promptly submit applications (there is no guarantee that funding will be available for all applicants). This exercise will also allow owners to take a hard look at precisely how much they have been impacted so they can adjust their business models, service offerings, and contractual relationships accordingly.
Exercise Caution Before Laying Off Employees
The goal of this funding is to avoid layoffs so be sure to consult with counsel before reducing any workforce while an application is pending or after funding is issued. In most instances, the available programs build in some form of penalty or reduction in the loan forgiveness if you reduce the number of full-time employees during the covered period.
Don’t Go At It Alone
If you need assistance reviewing loan documents, preparing or packaging application documentation, or otherwise completing and submitting the on-line or paper-based applications, Russo Law LLC is pleased to do so on a reasonable flat fee basis. Call (929-262-1101) or email today to learn more.
Russo Law LLC deploys unparalleled training and modern technology to guide investors, businesses, and executives efficiently through corporate, contractual, commercial real estate, and litigation issues. Call (+1-929-262-1101) or email today to learn more.
*This blog post is for informational purposes only. It is not an offer to represent you and does not provide, nor does it intend to provide, legal advice. You should not act, or refrain from acting, based upon any information on this website. Neither the presentation of such information nor your receipt of the same creates an attorney-client relationship. This blog is legal advertising. Although this blog post intends to provide accurate and helpful information, it makes no representations, claims, promises, guarantees, or warranties, express or implied, including the warranties of merchantability and fitness for a particular purpose, Furthermore, Russo Law LLC does not assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed on this website, nor represents that its use would not infringe privately owned rights.