The CARES ACT - What's In It For Startups?
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The $2 trillion federal coronavirus relief package signed recently, officially known as the CARES Act, includes the nearly $350 Paycheck Protection Program to help small businesses affected by the Coronavirus Pandemic. The new loan program is designed to help small businesses with their payroll and other business operating expenses. The Small Business Administration (SBA) will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest. The SBA and the Department of Treasury have released the information that will guide the programs. To help entrepreneurs better understand how can they benefit from the program, we created the webinar in partnership with the SBA, Cambridge Trust and the law firm Nutter to answer questions including: Who are eligible for a Paycheck Protection Program loan? How do businesses apply? What information is needed? How much money can a business receive through the loan program? When will the loans be available? What’s the interest rate? What does the payment schedule look like? How does the Affiliation Rules affect VC-backed startup’s eligibility? Can the loan eventually be forgiven? What’s the eligibility for loan forgiveness? What if the PPP Loan does not cover a business’s needs? What are the other options under the CARES Act?
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The CARES ACT - What's In It For Startups?
- 1. CARES Act: What’s in it for Startups? thecapitalnetwork.org @TCNUpdate
- 2. @TCNupdate Fundraising is hard. You don’t have to do it alone. Designed for entrepreneurs, by investors. The Capital Network (TCN) is a non-profit that provides workshops, events, mentorship, office hours and a network to support you, the founder. Let TCN guide you through the fundraising process. Your future investors will thank you. TheCapitalNetwork.org 2
- 3. Agenda ● Webinar instructions: Use the Introvoke Box to type in Questions when we get to the Q&A portion ● Introduction of the speakers ● Overview of SBA Disaster Assistance for Small Business ● CARES Act - Paycheck Protection Program ● FAQ ● Other SBA programs to support small business ● Q&A
- 4. CARES Act: What’s in it for Startups? SBA: Norman Eng Public Affairs Specialist at U.S. Small Business Administration (SBA) Lender: Scott Chamberlin SVP, Head of Innovation Banking at Cambridge Trust Lawyer: Joshua French Partner at Nutter, McClennen & Fish LLP
- 10. FAQ - Clarity on Affiliation rules for VC backed Startups - What do I need to do to make the certification that “current economic uncertainty makes this loan request necessary to support ongoing operations”? - How do I show economic injury when my startup is pre-revenue? - How does the forgiveness part of the loan work? - What counts as payroll costs? Can wages from 1099 contractors be used in the calculation of payroll? Our company only has 1 official employee. The others are part time contractors. - How long it will take for loans to roll out? - What kind of documents/materials do I need to provide?
- 11. Economic Injury Disaster Loan ● Low-interest, long-term loan (not to exceed 30 years) for up to $2 million to small businesses and nonprofits. ● The interest rate on EIDLs may not exceed 3.75% per year for small businesses and 2.75% for non-profits. ● The first payment is deferred for 12 months. Apply: https://covid19relief.sba.gov/
- 12. Emergency Economic Injury Grant (EIDL Advance UP TO $10K) ● If you apply for that Economic Injury Disaster Loan – during the online application process you will be prompted to request an “Economic Injury Disaster Loan Advance” for UP TO $10,000 as part of the application. ● If approved for the advance you can receive the funds to pay for payroll and other operating expenses; the advance amount only will be FORGIVEN. ● To access the advance, you must first apply for an EIDL and then request the advance which does not need to be repaid. Learn more HERE.
- 13. Small Business Debt Relief Program ● Provides immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. ● SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. ● This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law (3/27). Learn more HERE.
- 14. Express Bridge Loan ● Designed to supplement the Agency’s direct disaster loan capabilities and authorizes SBA Express Lenders to provide expedited SBA-guaranteed bridge loan financing on an emergency basis in amounts up to $25,000. ● A loan program for small businesses with an existing banking relationship with SBA Express lenders as of the date of the disaster. Learn more HERE. Lenders list HERE.
- 15. Counseling & Training ● Small business owners needing a business counselor to help guide you through this uncertain time can turn to your local Small Business Development Center (SBDC) ● Center for Women & Enterprise, or SCORE mentor chapters. To find a local resource partner, visit www.sba.gov/LOCALASSISTANCE
- 16. QUESTIONS?
- 17. Resources: COVID-19 Resources SBA Coronavirus Relief Options (any questions for SBA, email: disastercustomerservice@sba.gov) Nutter COVID-19 Task Force and Resources Cambridge Trust COVID-19 Resources The Capital Network COVID-19 Resources
- 18. Resources: Paycheck Protection Program Paycheck Protection Program Borrower Application Form Paycheck Protection Program Information Sheet: Borrowers SBA: PPP Interim Final Rule SBA: Affiliation Rules for Paycheck Protection Program SBA: Lender List to find Express Lenders SBA: PPP Participating Lenders Nutter: Steps Private Equity and Venture Capital-Backed Companies Should Consider Taking for PPP Eligibility Nutter: 3 Steps (and a Calculator) to Help Determine Forgiveness for Your PPP Loan
- 19. Our Commitment to Founders in These Challenging Times Contact us: team@thecapitalnetwork.org 19 @TCNupdate More on: https://thecapitalnetwork.org/COVID-19/ COVID-19 RESOURCES FOR FOUNDERS Our team is paying close attention to the evolving COVID-19 situation and its significant economic impact on entrepreneurs. We remain committed to supporting entrepreneurs during these challenging times. Check out our COVID-19 RESOURCES page for more info on what new programming TCN is creating and resources for your company on emergency funding, fundraising & business growth.
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- 21. On a tight budget? Access TCN for FREE! Contact us: team@thecapitalnetwork.org 21 @TCNupdate More on: https://thecapitalnetwork.org/membership/ CITY OF CAMBRIDGE & LOWELL GRANTS Live or work in Cambridge, MA or in Lowell, MA? Learn More about the Cambridge Entrepreneur Assistance Program & Lowell Entrepreneurship Assistance Program