March 27, 2020 Update 2
Dear Ironwood Business Owners,
New opportunities are happening everyday to provide relief to our small businesses. Charly Loper from Bessemer continues to put out a great summary of what is going. I’ve included her information in the below update. Please feel free to reach out to me for questions and concerns. The best way to reach me is by my cell or by email. 906-285-9013 or firstname.lastname@example.org .
Livestream with attorneys
Invest UP is working with attorneys out of Marquette to answer any legal questions about the stay-at-home orders sometime Tuesday. We won’t be able to get to all the questions but please send me any you want answered by Sunday evening. Send questions to email@example.com
Federal CARE Act
This still hasn’t been adopted and is subject to change but I’m trying to get you all the information so you can make the most educated decisions. This came from Paul Arsenault at Concepts Consulting regarding the SBA programming contained in the Stimulus bill:
- Main new program called Payment Protection Program. This is what you have heard about the most in the news and articles that gives a maximum size lesser of: $10MM or 2.5x average monthly payroll. This would be the forgivable amount. You can include in the loan other monthly expenses like rent, utilities, etc. Still trying to find out if rent, utilities, etc will be forgivable. Anyone paid over $100k the amount over $100k would not count in forgivable amount. Unknown if distributions taken as salary would count. Does not appear to.
- Covered period for these loans is 2/15/20 – 6/30/20
- Eligibility – Normal qualifiers should work based on NAICS code or 500 employees or less. Still needs to be verified.
- Non Profits – Need SBA guidance around this. Such as religious organizations, casinos, etc.
- Prior loss to government or criminal history – need guidance from SBA
- Unsure on Affiliation on size requirements or $ amounts. Indicated it may depend on Industry – Need guidance
- No collateral or personal guarantees required. Non-Recourse, SBA wants this to be close to a grant.
- Lender annual fee would be waived through 6/30 (covered period). After that it is indicated it would resume.
- Credit elsewhere is waived for these loans.
- Can sell loans, but only after SBA redeems forgivable amount (covered period)
- Interest rate – Maximum of 4%
- No payments due for 6 months – could go longer than 12 months
- Fees will be provided to the banks by SBA for making loans. Tiered structure 5% for loans under $350M, 3% up to $2MM, and 1% to $10MM.
- Application will try to be streamlined, but more to follow.
- Use existing forms 1919 and 1920
- Use through Etran system
- Delegated authority will work as normal
- Non Delegated will have ability to get special approval to get delegated authority. Not sure on how this takes place
- Will require a special borrower certification for borrower to sign indicating use of proceeds.
- 4506 – T and IRS verification. Still unknown if required and if we would need to wait to verify before funding.
- Cannot use other SBA programs for the same uses. Includes Express, 7a, or Disaster loans
- SBA Express temporarily increased to $1MM through 12/31/20 and then reverts back.
- Discussion on SBA making payments for the next 6 months on all existing SBA loans. This needs guidance on how to get and understand. Deferments should be accommodative as well. Need further guidance, but this could be huge. Not sure on process of how these are done.
- No changes to existing 7a or 504 program that were included in previous iterations or handouts like increased guaranty percentage and no fees. There is discussion of a follow up bill that could include these after the fact.
Note: For you bankers, the PPP loans will have a Risk Weight of zero. The House is supposed to Pass today. Keep in mind, the House could make some changes, and the SBA Administrator has to clarify, and come up with the rules(details) of the legislation. This will probably take 30 days or so.
Current SBA Loan Process
The SBA is already writing checks for businesses. They are promising a 30 day turn-around and seem to be sticking to it. Their site crashed but you can still download and print the application. Scan it and upload it. Or you can use a fillable form and upload to the site.
It is important to read up on the Families First Coronavirus Response Act: Employer Paid Leave Requirements that goes into effect on April 1st, 2020. Businesses with less than 50 employees MUST take action to be considered exempt. Emergency guidance from the DOL is still forthcoming regarding the requirements.
State Grants/ Loans
I had passed along incorrect information earlier. Almost any business under 50 employees who have been negatively impacted by the virus are eligible for GRANT funding. Almost any business under 100 employees who have been negatively impacted by the virus are eligible for LOAN funding.
You can apply for both loans and grants but can only get one. Since we don’t have a county wide Economic Development Organization you are all stuck working with me on the applications. Loans are between $50,000 and $200,000 and grants are up to $10,000. See attached specifications. For Western UP we will get $135,500 for grants so it’s highly competitive. We don’t know how loans will be allocated.
This is a super short turn around. The applications will be made available on Monday and due next Friday. This is to get checks out to people soon. The applications will be review by a five person committee made up of the Directors of the three UP Planning Agencies, the Director of InvestUP, and the Executive Director of the UP Michigan Works.
3/30 – Applications available
4/5 – Application deadline (submissions due by 11:59 pm ET)
4/6 – 4/12 – Applications are reviewed
4/13 – Grant recipients notified
Things to start gathering
Start gathering all the information as discussed on the attached sheets. The UP application will also be looking at the following
- Is the business current on all its tax obligations;
- What is the nature and/or amount of the loss that the business estimates it will sustain during the course of the Executive Order;
- How will the grant dollars be used by the business;
- Is there a seasonality aspect to the business;
- How essential is the business to a community;
- Is it a destination business that is important to local culture;
- Does the proprietor have any “skin in the game,” and if, please that investment;
- Has the business recently done an expansion or otherwise committed a recent investment into the business;
- Has the business applied to receive any other support to date, and does the business intend to apply for any other support moving forward; and
- If this grant money is not received, how long can the business sustain itself.
Like I said, the application will come out Monday here: https://update906.com/medc-relief-programs. If you have all this information together you can tackle the application. If you get the application to me by Thursday morning at 8AM I can help edit it and give you pointers but you will need to have gathered all the information and have it drafted.
Answers to Miscellaneous Questions
If you have a business that can ship packages, you can continue to ship packages as long as it’s only one person at a time. This seems to be a grey area but more than one person seems to be forbidden.
This is a ton of information. I’m expecting you to be overwhelmed. If looking over everything you are still uncertain how to proceed, contact Daniel Yoder at SBDC. He can walk you through what’s best for your business. In good news, SBDC will be getting lots of funding to hire more people to help our businesses through this chaos.
Daniel Yoder | Senior Business Consultant
Michigan Small Business Development Center
Michigan Technological University
1400 Townsend Dr
Houghton, MI 49931
906-231-0417 (text or call) | firstname.lastname@example.org
Stay Strong everyone. We’ve got this!
Bessemer City Manager
(906) 663-4311 │ cityofbessemer.org
Community Development Director
City of Ironwood
213 S. Marquette Street
Ironwood, MI 49938
906-932-5050 ext. 126