COVID – 19 Updates:
FLORIDA EXECUTIVE ORDER and
CARES ACT – Benefits for Individuals and Small Businesses
See below for an updated overview and clarification of these critical programs, including PPP updates. We are watching developments very closely. We welcome your questions and comments, and hope everyone stays safe during this challenging time.
FLORIDA SMALL BUSINESS EMERGENCY BRIDGE LOAN PROGRAM
Governor DeSantis activated the Florida Small Business Emergency Bridge Loan Program which is administered by Florida’s Department of Economic Opportunity (DEO) in partnership with the Florida SBDC Network and Florida First Capital Finance Corporation. Up to $50 million has been allocated for the program to provide cash flow to businesses economically impacted by COVID-19. The short-term, interest-free loans help bridge the gap between the time the economic impact occurred and when a business secures other financial resources, including payment of insurance claims or longer-term Small Business Administration (SBA) loans. Small business owners with two to 100 employees located in Florida affected by COVID-19 can apply for short-term loans up to $50,000. To be eligible, a business must have been established prior to March 9, 2020, and demonstrate economic impacts as a result of COVID-19. The application period ends May 8, 2020. The caveat with these loans is that they become fully due and payable at the end of one year and then bear interest at a rate of 12% per annum. The State reserves the right to turn these loans over to collection at the end of the year.
CARES ACT – BENEFITS FOR SMALL BUSINESSES
The best single reference for information on these loans is The Small Business Owner’s Guide to the CARES act published by the US Senate Committee on Small Business and Entrepreneurship. Here is a link to the Guide. See below for updates.
Paycheck Protection Program (PPP)
The SBA issued an interim Final Rule late on April 2, 2020 which modifies some of the information contained in the Senate Guide. A copy of the Rule may be found at this link: The PPP provides forgivable loans out of a $349 billion appropriation in the CARES act. There will be a huge demand for these funds. The terms of the loans are the same for all applicants.
Businesses with fewer than 500 employees (with some exceptions) are eligible, including sole proprietors and independent contractors. If there are independent contractor/1099 workers on the payroll, they are not eligible to be counted as part of the wages for calculation of loan amount or forgiveness.
The basic rules are:
- It is a temporary type of SBA Loan created specifically for COVID-19 relief, available for a limited time.
- Loan size is equal to 250% of the employer’s average monthly payroll, not to exceed $10 million. This calculation is based on the average payroll costs for the last twelve months. It cannot include individual employee compensation over $100,000/year ($8,333/month.)
- The loan can be used to refinance recent SBA Disaster loans. (EIDLs)
- There are no personal guarantees and no collateral is required.
- Loan Forgiveness – The total amount forgivable equals what you pay in eligible payroll costs during 8-week period starting on the loan origination date. These costs are payroll, rent, utilities and payments of interest on any covered mortgage obligation. The non-payroll costs cannot exceed 25% of the total forgiveness amount.
- For any unrelieved amount there will be a 2-year maximum term and a 1% interest rate.
- These loans are to be applied for through your local financial institution. This is a first come – first served loan, so apply early. Wells Fargo announced on April 6 that they were no longer accepting applications.
- There will be no fee to apply and no pre-payment penalties.
- Additionally, the document requirements may differ with each financial institution.
SBA Economic Injury Disaster Loans (EIDL) and EIDL Loan Advance
The EIDL is a low interest loan of up to $2 million with principal and interest payment deferment of 6 to 12 months. These can be used for any business expenses that could have been met had the disaster not occurred. They are available to businesses that include sole proprietorships, independent contractors, cooperatives, employee-owned business and private non-profits, even if they are not 501(c) (3)s. You can apply for both an EIDL and a PPP. A link to the application is here.
The EIDL Loan Advance is a grant of up to $10,000 available as a rapid advance that does not have to be repaid. It is available within three days after you apply for an EIDL.
Small Business Debt Relief Program
This program provides immediate relief to any business that has a currently outstanding SBA 7(a), 504 or microloan. The SBA will cover all loan payments on these SBA loans for six months.
CARES ACT –BENEFITS FOR INDIVIDUALS
The CARES act also provides several benefits to individuals. Here are the highlights of some of the most important, but possibly least understood options.
Direct Cash Payments: Most individuals earning less than $75,000 will get a one-time cash payment of $1,200 for an individual, $2,400 for a married couple filing jointly and $500 for each child. They are based on either your 2018 or 2019 tax filings. If you receive Social Security benefits and don’t file taxes, you should still get a payment. The recovery rebate is reduced by $5 for every $100 of adjusted gross income (AGI) above $75,000 for
individuals, $112,500 for heads of households, and $150,000 for married joint filers. Consequently, the rebate is not payable to individuals (with no eligible children) with AGI above $99,000 or married joint filers (with no eligible children) with AGI above $198,000. A married couple with two eligible children is ineligible for the rebate with AGI above $218,000.
Protection from Eviction/Foreclosure: The CARES Act codifies protections for some homeowners against foreclosure and some renters against eviction. If you are experiencing financial hardship due to the coronavirus, you will be granted forbearance on your federally backed mortgage loan for up to 60 days, with the potential for up to four 30-day extensions. Foreclosures may not begin for 60 days from Mar. 18, 2020. No fees, penalties, or added interest may be charged on delayed payments.
If you are a landlord with a federally backed mortgage on a multifamily home, you have similar protection that allows a 30-day forbearance on payments and up to two 30-day extensions.
If you are a renter in a multifamily home with a federally backed mortgage loan, you may not be evicted solely for failure to pay rent for a 6-month period. You also may not be charged fees or penalties for not paying rent.
The major cautions are that to be eligible for these protections, the mortgage must be federally backed whether you are a renter or owner. This can be determined by going online Here is the link.
Other mortgage lenders and landlords may also provide relief at this time but are not mandated to do so. Everyone seeking forbearance or rent relief should contact their lender or landlord immediately. It will not happen automatically.
Extra Unemployment Compensation: The CARES act expanded eligibility for unemployment assistance, increased the benefit amount and allowed for a longer collection period. It provides an extra benefit of $600/week on top of the base benefit for four months. It also adds an extra 13 weeks of basic unemployment insurance coverage. Also, there is the Temporary Pandemic Unemployment Assistance program that allows people who are self-employed, free lancers, independent contractors and gig workers to collect unemployment compensation.
FLORIDA FORECLOSURE AND EVICTION SUSPENSIONS
Florida Governor DeSantis suspended and tolled all foreclosure actions and all residential evictions for non-payment of rent for a period of 45 days, beginning on April 2, 2020.
The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Patrick Neale & Associates. The reader should not act or refrain from acting based upon the information contained in this article without first contacting an attorney. The hiring of an attorney is a decision that should not be based solely upon advertisements or this article.