COVID-19 Emergency Business Relief Loan and Grant Programs

www.gwlmcpa.com

Sparks Office: ● Phone: 410-494-0885 ● Fax: 410-321-9024 Millersville Office: ● Phone: 410-897-3313 ● Fax: 410-987-4215

FEDERAL and STATE COVID-19 RELIEF LOANS AND GRANTS

• FEDERAL• Paycheck Protection Program Loans - Small Business Administration 7(a) Loans• Economic Injury Disaster Loans - Small Business Administration 7(b)(2) Loans• Loans for Large Businesses - details to be determined

• MARYLAND COVID-19 Emergency Relief• Loan Fund• Grant Fund• Manufacturing Fund

Paycheck Protection Program Loans –Small Business Administration 7(a) Loans

• Use of funds

• Who is eligible

• Terms

• Process

• Information needed

Paycheck Protection Program Loans -What can the funds be used for?

• Payroll Costs (see components on next slide)

• Costs related to the continuation of group health care benefits during periods of paidsick, medical or family leave and insurance premiums

• Employee salaries, commissions, or similar compensations

• Payments of interest on any mortgage obligations (no prepayments or principalpayments)

• Rent (including rent under a lease agreement)

• Utilities (electricity, gas, water, transportation, telephone, or internet access forservices in place before 2/15/2020)

• Interest on any other debt obligations incurred before the covered period.

• Allowable uses of such loan - plant acquisition, construction, conversion or expansion.

Paycheck Protection Program Loans -Who is eligible?

• Small businesses concerns with 500 employees or less - the term businessincludes non-profit organizations, veterans organization, sole proprietors,independent contractors, and self-employed individuals. (some of theseconcerns are only for the covered period).

• Certain business concerns may qualify with more than 500 employees basedon guidelines determined by SBA industry standards (may not have morethan 500 employees per location and NAICS code beginning with 72, orfranchise).

• Business must have been in operation on February 15, 2020 and

• Business must have employees for whom the borrower paid salaries andpayroll taxes or paid independent contractors as reported on a Form 1099-MISC employee can be full time, part time or other basis.

Paycheck Protection Program Loans -Terms - Amount of Loan

• An eligible borrower can apply for a loan with a maximum amount of the lesser of:• Average total monthly payroll costs incurred during the 1 year period before the date

on which the loan is made multiplied by 2.5 plus.• The outstanding amounts of any Emergency Injury Disaster Loan obtained on or

after January 31, 2020 which is to be refinanced under this loan or• $10,000,000

• The above formula is modified if your business is seasonal. Average payroll costsfor 12 week period beginning on 2/15/19 or 3/1/19 and ending 6/30/19.

• The above formula is modified if your business was not in business as of the datesabove, by the average of monthly payroll costs beginning on 1/1/2020 and endingon 2/29/2020.

• Borrower may wish to determine the potential eligible forgiveness before determiningthe loan amount.

Paycheck Protection Program Loans -Terms - Payroll Costs

• Payroll Costs include:• Salary, wage, commission or similar compensation (see below for limitation)• Payment of cash tip or equivalent• Payment for vacation, parental, family medical or sick leave• Allowance for dismissal or separation• Payment required for the provisions of group health care benefits, including insurance premiums• Payment of any retirement benefit or• Payment of state or local tax assessed on the compensation of employees and• The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a

wage, commission, income, net earnings from self-employment, or similar compensation and that is an amountnot exceeding more than $100,000 in 1 year, as prorated for the beginning on 2/15/2020 and ending on6/30/2020.

• Payroll Costs do not include:• An individual employee’s compensation in excess of an annual salary of $100,000 as prorated for the period

beginning on 2/15/2020 and ending 6/30/2020.• Taxes imposed or withheld under FICA (Social Security and Medicare) Railroad Retirement Act, and IRC

Chapter 24 (Income tax at source).• Any compensation of an employee whose principal place of residence is outside of the US.• Qualified sick leave or family leave for which a credit is allowed under the Families First Coronavirus

Response Act.

Paycheck Protection Program Loans -Terms - Additional Items

• Non-recourse to the borrower

• No personal guarantees required

• No requirement to be able to receive credit elsewhere

• No fees

• Up to 10 year duration

• 4% interest rate

• No prepayment penalty

• Payment deferral for loans before 6/30/2020 for a period of no less than 6months and not more than 1 year (interest, principal and fees)

• Eligible for forgiveness up to a limited amount

Paycheck Protection Program Loans -Terms - Forgiveness

• Recipients shall be eligible for forgiveness of indebtedness in an amount equal to the sum of the following payments made during the 8 week period beginning on the date the loan was originated:• Payroll costs• Any payment of interest on any covered mortgage obligation• Rent • Utility payments (electricity, gas, water, transportation, telephone, or internet access in place before 2/15/2020)

• Reduced by:• (Average number of full time equivalent employees per month during the covered period )/ (Average number of full

time equivalent employees per month from 2/15/2019 - 6/30/2019) or at the option of the borrower between 1/1/2020 and 2/29/2020. If seasonal the option is not allowed.

• The amount of any reduction in total salary or wages of any employee during the covered period that is in excess of 25% of the total salary or wages of the employee during the most recent full quarter during which the employee was employed before the covered period• Salaries to not exceed $100,000. • Exemption for rehires

• Debt forgiveness is not included in taxable income.

Paycheck Protection Program Loans -Process

• Contact your lender/ a bank. The list of which banks are eligible to lend under this program is currently being updated.

Paycheck Protection Program Loans -Documents and Information Required

• Eligible self-employed individuals, independent contractors, or soleproprietorships will need payroll tax filings and Forms 1099-MISC and incomeand expenses from the sole proprietorship.

• Documentation verifying the number of full time equivalent employees onpayroll and pay rates for the required periods. Including:• Payroll tax filings, reported to the IRS• State income, payroll and unemployment insurance filings

• Documentation including cancelled checks, payment receipts, transcripts ofaccounts, or other documents verifying payments on covered mortgagesobligations payments on covered lease obligations and covered utility payments.

Economic Injury Disaster Loans -Small Business Administration 7(b)(2) Loans

• Use of funds

• Who is eligible

• Terms

• Process

• Information needed

Economic Injury Disaster Loans -What can the funds be used for?

• Pay fixed debts

• Payroll

• Accounts Payable

• Other bills that could have been paid had the disaster not occurred.

• Loans are not intended to replace lost sales or profits or for expansion.

Economic Injury Disaster Loans -Who is eligible?• Certain Businesses in a location that have suffered a substantial economic

injury due to a declared disaster.• COVID-19 pandemic has been declared a disaster

• Businesses include:• Businesses with 500 employees or less (includes private nonprofit

organizations, and small agricultural cooperatives)• sole proprietors, independent contractors (no employee requirement)• A cooperative with 500 employees or less• An ESOP with 500 employees or less• A tribal small business concern

Economic Injury Disaster Loans -Who is not eligible?

• Agriculture enterprises

• Religious organizations

• Charitable organizations

• Gambling concerns

• Casino’s & racetracks

• Real estate developers

Economic Injury Disaster Loans -Terms - Amount of Loan

• Maximum amount of $2,000,000

• May request an advance up to $10,000 that does not have to be repaid even if denied the loan. The advance can be used for the following:• Providing sick leave to employees unable to work due to the direct effect of the

COVID-19.• Maintaining payroll to retain employees during disruptions or substantial

slowdowns.• Meeting increased costs to obtain materials unavailable from the applicant's

original source due to interrupted supply chain.• Making rent or mortgage payments.• Repaying obligations that cannot be met due to revenue losses.

Economic Injury Disaster Loans -Terms - Additional Items

• No requirement to be able to prove you can obtain credit elsewhere.

• No rules for personal guarantee on advances and loans of not more than $200,000 during the covered period.

• No requirement to be in business for 1 year before the disaster.• Not available for businesses not in operation on 1/31/2020.

• Up to 30 year duration

• 3.75% interest rate for small business and 2.75% for nonprofits

• Payment deferral for loans before 6/30/2020 for a period of no less than 6 months and not more than 1 year

• Usually require collateral but loans will not be declined for a lack of collateral.

Economic Injury Disaster Loans -Process

• Apply directly to SBA’s Disaster Assistance Program at https://www.sba.gov/disaster/apply-for-disaster-loan/index.html.

• Please make sure that all information is complete to ensure your application will be accepted.

Economic Injury Disaster Loans -Documents and Information Required

• The online application asks for the following financial information:• Gross Revenue for the 12 months prior to 1/31/2020• COGS for the 12 months prior to 1/31/2020• If the business has rental properties the lost revenue• Non profit cost of operations for the 12 months prior• Other sources of compensation as a result of the disaster• Number of employees

• The process is being updated daily and may require more documentation.

• SBA may approve an applicant based solely on credit score or alternative methods.• Can waive requirement to submit tax returns, tax return transcripts

Maryland Small Business COVID-19-Emergency Relief Loans

• Use of funds

• Who is eligible

• Terms

• Process

• Information needed

MD Emergency Relief Loans -What can the funds be used for?

• Working Capital to support• Payroll expenses• Rent• Mortgage payments• Utility expenses• Other similar expenses that occur in the ordinary course of operations

MD Emergency Relief Loans -Who is eligible?

• Maryland businesses impacted by the COVID-19• Must demonstrate financial stress or disrupted operations

• Business must have fewer than 50 employees

• Business must have employees on their payroll for whom they have paid payroll taxes withheld (W-2 employees)• Independent contractors do not qualify

• Business must be stablished prior to March 9, 2020

• Must be in good standing with the state

• Minimum personal credit score of 575

MD Emergency Relief Loans -Terms -

• Maximum amount of the lesser of:• three months of cash operating expenses• $50,000

• Deferral of any payments for the first 12 months

• Term of 36 months after the first 12 months

• Straight Line Amortization

• 0% interest for the first 12 months

• 2% interest for the remaining 36 months

• No collateral requirement

MD Emergency Relief Loans -Documents and Information Required

• Two years of historical financial statements• Tax returns may be substituted if no financial statements are available

• Most recent interim statement to benchmark revenue against

• Six month pro forma of estimated lost revenue or other documented loss evidence

• Evidence of financial stress or disrupted operations include, but not limited to:• Notices from tenants closing operations and not paying rent caused by loss of

income.• Notice of inability to pay rent or make loan payments due to reduced sales,

suspended operations• Increased cost related to COVID-19 prevention measures• Notice of disrupted supply network leading to shortage of critical inventory or

materials• Other circumstances subject to review on a case by case basis.

MD Emergency Relief Loans -Process

• Apply online at the following address:• https://onestop.md.gov/forms/maryland-small-business-covid-19-emergency-relief-

loan-fund-5e7a6d838bdbb100fe352aa9

Maryland Small Business COVID-19 -Emergency Relief Grants

• Use of funds

• Who is eligible

• Terms

• Process

• Information needed

MD Emergency Relief Grants -What can the funds be used for?

• Working Capital to support• Payroll expenses• Rent• Mortgage payments• Utility expenses• Other similar expenses that occur in the ordinary course of operations

MD Emergency Relief Grants -Who is eligible?

• Maryland businesses impacted by the COVID-19• Must demonstrate financial stress or disrupted operations.

• Annual Revenues of the business or nonprofit not to exceed $5 million as evidenced by Financial Statements or other financial documentation.

• Business or nonprofit is expected to seek longer term funding through its bank, SBA or other source.

• Business must have fewer than 50 employees.

• Business must have employees on their payroll for whom they have paid payroll taxes withheld (W-2 employees).• Independent contractors do not qualify.

• Business must be established prior to March 9, 2020.

• Must be in good standing with the state.

MD Emergency Relief Grants -Terms -

• Maximum amount of the lesser of:• three months of cash operating expenses• $10,000

MD Emergency Relief Grants -Documents and Information Required• Financial documents to prove revenue is less than $5 million.

• Evidence of financial stress or disrupted operations include, but not limited to:• Notices from tenants closing operations and not paying rent caused by loss

of income.• Notice of inability to pay rent or make loan payments due to reduced sales,

suspended operations.• Increased cost related to COVID-19 prevention measures.• Notice of disrupted supply network leading to shortage of critical inventory

or materials.• Other circumstances subject to review on a case by case basis.

MD Emergency Relief Grants -Process

• Apply online at the following address:• https://onestop.md.gov/forms/maryland-small-business-covid-19-

emergency-relief-grant-fund-5e7a6d8db5d67700fe1e6050

Maryland Small Business COVID-19 -Emergency Relief Manufacturing Funds

• Use of funds

• Who is eligible

• Terms

• Process

• Information needed

MD Emergency Relief Manufacturing Fund -What can the funds be used for?• Funds to be used:

• To increase existing capacity to produce critical need items• To quickly pivot operations to produce critical need items

• Eligible costs include but are not limited to:• Capital expenses such as machinery and equipment• Raw materials needed for production • Operating expenses associated with increased production

MD Emergency Relief Manufacturing Fund-Critical Need Items

• N95 Masks• Type 1860• 3M• Industrial N95s are also good as they were

approved for virus a few days ago

• Surgical Masks• 3 ply• The above is preferred but any type will help at

this point

• Gowns• Surgical gowns• Single use are preferred

• Tyvek Suits• Various sizes (XS, S, M, L, XL)• Tyvek is a brand name so anything equivalent

will work

• Face Shields and Goggles• For the shields, anything that covers the whole

face• Goggles can work with surgical masks

• Gloves• Vinyl (Nitril)• Powder-fee• Latex, powder-free• All sizes

• Thermometers• InfraRed Thermometers• No touch Thermometers (that might be

the same as IR but just in case it’s advertised differently)

• Hand Sanitizer• 70% alcohol, 3% Hydrogen Peroxide,

Glycerin• Disinfectant Wipes

• Wipes that say they can kill tuberculosis is preferred

• Ventilators• Vyaire• Noll• Covidien

MD Emergency Relief Manufacturing Fund -Who is eligible?• Manufacturers who can produce critical need items

• Must be an established Maryland business (located in Maryland)

• Manufacture products in Maryland

• Be in good standing with the State, OSHA and MOSH regulations

• Must demonstrate experience, technical expertise and financial stability to implement the proposed project

• Funding will be made based on a variety of evaluation criteria, including but not limited to:• Technical capacity• Operational experience• The priority purchasing needs of the State of Maryland

MD Emergency Relief Grants -Terms -

• Grants up to $100,000• Grant awards will vary based on the applicants total investment

• Funds will be disbursed 50% at notice of award, with the remaining 50% paid upon completion with proof of expenses

MD Emergency Relief Grants -Documents and Information Required• To be determined

MD Emergency Relief Grants -Process

• Apply online at the following address: https://onestop.md.gov/forms/manufacturing-innovation-grant-application-

5e7df8b3140f8000fcc3c1f0

Sparks Office:954 Ridgebrook Road, Suite 200Sparks, Maryland 21152Phone: 410.494.0885 Fax: 410.321.9024

Millersville Office:8370 Veterans Highway, Suite 104Millersville, Maryland 21108Phone: 410.987.3313 Fax: 410.987.4215

www.gwlmcpa.com