Frequently asked Questions and Answers on COVID-19 Relief Programs for Small Businesses

(Answers provided by the Tire Industry Association with assistance from SESCO Management Consultants, a TIA benefit partner.  These answers are intended to provide general information; please consult a lender for specific information on eligibility, applications, recordkeeping, and forgiveness requirements and a financial professional for advice as your business weighs these important financial decisions.)  

Q – We currently have a good line of credit available. Does that eliminate us from possible stimulus grant money? 

A Typically with a Small Business Administration (SBA) 7A loan, you need to exhaust your other opportunities for financing. But with the CARES Act, it appears this borrower requirement has been waved. That means even if you have other lines of credit, it does not necessarily exclude you from receiving a Paycheck Protection Program (PPP) loan. The PPP loans will be administered through a lending organization so your lender will be able to help you make a final determination of your eligibility. 

 

Q Is the loan a grant if you keep all your employees or a tax deduction at the end of the year? The final wording is still being written and what if you already have let people go?               

A This a loan not a grant and you are not required to retain employees to get the loan, but the amount of forgiveness will be defined by payroll cost and other business expenses paid during the covered period with the proceeds of the loan. If you have laid off or furloughed your staff so they can get unemployment, you can still get the Paycheck Protection Program loan, but...the amount of loan forgiveness will be reduced proportionally to any reduction in the average full-time equivalent employees per month or in the amount that an employee’s pay is reduced by greater than 25%. If, by June 30, 2020, you eliminate the reduction in full-time equivalent employees and/or eliminate the reduction in wages, then your loan forgiveness will not be reduced. Be aware, there is substantial documentation required for loan forgiveness as far as showing what was actually spent on the qualifying costs during the covered period when you apply for forgiveness.

 

Q – How do we apply for the Paycheck Protection Program loan?  What is the process and official website to apply for funds assistance? 
 
A – The Small Business Administration (SBA) is administering Paycheck Protection Program loans and you will need to apply for one through one of the 1,800 SBA-approved banks and credit unions nationwide that offer SBA 7(a) loans. Start with the bank at which you have your business banking account. The loan application will require a sizeable amount of documentation, since the maximum loan amount will equal 2.5 x your average monthly payroll costs during the 12-month period preceding the loan.  
 

Q What is the correct form to fill out for a Paycheck Protection Program (PPP) loan?

A Applying for a PPP loan is similar to applying for a Small Business Administration loan for other reasons. The difference is that PPP loans have certain rules and procedures that govern them. Click here https://www.sba.gov/sites/default/files/2020-03/Borrower%20Paycheck%20Protection%20Program%20Application.pdf  to access the PPP application form from the SBA

 

Q What is the process and official website to apply for CARES Act funds assistance?

A Find a Small Business Association lender and speak with them about this. Paycheck Protection Program loans are SBA loans. The SBA website and SBA-approved lenders are your best resource for information about and to apply for PPP loans.   

 

Q Should we as a small business apply for emergency relief funds as well as for the SBA CARES Act? 

A This is a question a business will have to decide on its own. There are many factors and scenarios to consider. For example, you can’t use the CARES Act Personal Protection Plan to fund emergency paid sick leave or paid Family Leave resulting from a qualifying reason related to COVID-19. Those payments would fall under the Families First Coronavirus Response Act (FFCRA) reimbursements through tax credits. CARES Act loans carry some unique opportunity for forgiveness but depending on the needs of the business other options may make more sense. Your accountant or other financial professional should be able to help determine the right approach for your business.

 

Q Under the bill passed by the House, if a shop stays open so that employees still have income, will the CARES Act reimburse the business owner? Forgivable loans? Grants? Other?  

A You seem to be asking several different questions. Reimbursement is related to the Families First Coronavirus Response Act (FFCRA), which provides COVID-19-affected employees with paid sick leave and paid family leave. For wages and payments made in accordance with the FFCRA for the qualifying reasons, the employer will be reimbursed through a tax credit. Forgivable loans are related to the Paycheck Protection Program (PPP) offered through the CARES Act. Click here https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf for more information.

 

Q How will the bill support medium-sized (over 500 employees) multi-location tire retailers and wholesalers? All the SBA loans are for businesses with fewer than 500 employees. 

A The CARES Act provides some provisions for business loans to larger employers (more than 500 employees) including money for loans, but these provisions are not the same as what is being offered to smaller business such as the Payroll Protection Program. We suggest talking to your lender and other financial advisors for more details.

 
Q If we have already had an SBA loan, can we apply for the new Covid-19 inclusions? 

A Check with your lender about this. It appears that if you already have a Small Business Administration loan you can apply for another one such as the Payroll Protection Program loan. If you talk to the lender where you already have an SBA loan, the lender should be able to give you an answer on your loan eligibility and how the two loans will interact.

 

Q What is the difference between the Small Business Administration (7a) loan and an SBA loan? Can you have both?  

A – What you seem to be asking is what is the difference between a loan governed by section 7(a) of the Small Business Act and the Payroll Protection Program (PPP) loan under the CARES Act, which is also administered by the SBA. SBA (7a) loans are those for a broad number of business uses while PPP loans are designed to assist employers suffering economic impact due to the COVID-19 pandemic. PPP loans may be forgiven when borrowers meet certain conditions and provide appropriate documentation. Check with your SBA lender to clarify how both programs work to ensure you make the proper decisions for your business.

 

Q I’m trying to save all my employees’ jobs. Does the CARES act help employers with loan reimbursement through the SBA and forgiveness of loans for that purpose?  

A Reimbursement is related to the Families First Coronavirus Response Act (FFCRA), which provides COVID-19-affected employees with paid sick leave and paid family leave. For wages and payments made in accordance with the FFCRA guidelines, that is for qualified reasons, the employer will be reimbursed through a tax credit. Forgivable loans are related to the Paycheck Protection Program (PPP) offered through the CARES Act. Click here https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf for more information.