On March 26, 2020, the chamber hosted its first ever virtual office hours, with special guests Chris Dunkin of ANB Bank. We discussed different equity injection options that businesses may want to consider while dealing with the COVID19 crisis.
As with many businesses in today’s climate, we had to innovate, and as a result, the Chamber created it’s first podcast!
Table of Contents
There are three main sources of funding for businesses right now:
- SBA Economic Injury Disaster Loans | Accepting applications
- Coronavirus Aid, Relief, and Economic Security Act aka ‘‘the CARES Act’’ | In progress – awaiting House approval
- Traditional business financial products | Speak with your local bank
SBA Economic Injury Disaster Loans
Details are located on the Business Resources section of our COVID sub-site
NOTE: This is currently a bill, not law, so it is subject to change. We will provide additional updates once the language is finalized.
The Senate has passed a stimulus package that includes a number of things that will be beneficial for individuals, families, and small businesses. The bill still needs to be approved by the House and signed by the President, but this expected to happen quickly.
One program in the Senate version of the bill that may be very helpful for our business customers is an SBA program designed to support the operations of a business. This loan may be fully or partially forgivable if certain conditions are met.
Local approved lenders
All banks listed below are approved lenders and some have delegated approval authority (meaning the bank doesn’t have to go to the SBA for final loan approval). This means our local banks can act quickly to help customers once the CARES Act Bill becomes law.
ANB Bank • Website
130 Robinson St, Basalt | Willits
Contact: Chris Dunkin
Delegated approval authority
Community Banks of Colorado • Website
255 Gold Rivers Court Suite 140, Basalt | Downtown
Contact: Kim Klingsmith at (970) 718-7002; Ellen Hoffman at the Basalt location (970) 927-0404
Delegated approval authority
Here is what we know from the preliminary version of the bill. UPDATE: Final details can be found in our latest blog post.
Loans will be available that are guaranteed by the government to help businesses weather this storm. Certain normal operating expenses like payroll, utilities, and rent/mortgage will be forgivable by matching the use of the funds to specific expense categories. Once the expenses are matched the loan will be paid off by way of a grant from the government. Payment will be deferred for the first 12 months to allow expense matching. We believe that this will work as a direct injection of equity into your business by the government without any financial outlay. Forgiven loans will not be taxable as income and these loans are non-recourse; in other words – no personal guarantees.
Purpose/Use of Funds:
- Payroll support, mortgage interest, rent, utilities
- Businesses and non-profit organizations with fewer than 500 employees and that were in operation on February 15, 2020.
- Sole proprietors and independent contractors may be eligible.
- Must certify that they have been impacted by COVID-19.
- Certain expenses are forgivable (see below) and we will qualify borrowers for the forgivable amount with very streamlined documentation.
- Loan amount may be increased above the forgivable amount, but more traditional underwriting will be required.
- Payroll costs, rent, mortgage interest payments, and utilities expenses over some period of time will be forgiven.
- It appears the forgivable portion of expenses will be no more than
- Forgivable amount may be reduced if number of employees is reduced.
- Payments deferred for up to 12 months
- No prepayment penalty
- No SBA Fees
- Collateral not required
- Personal guaranty not required
What businesses should do now
The most important thing you can do right now is get your business information in order so you can be into the funding pool on day 1. Banks will have to complete the Customer Information Program (CIP) that is normal in banking. Normal CIP documents are:
- Current registration with the Secretary of State – go online and make sure the business is shown as current
- Current business operating agreement, partnership agreement, corporate resolution or the appropriate doc for your type of business
- Proof of tax ID# – Preferably the original SS4 letter you received from the IRS when you filed for the EIN
Banks are not anticipating the need for financials as the goal of this program is to look forward not back. Please prepare a detailed and accurate budget for your business monthly expenses. We believe this will be the basis for sizing the loans, we want it to accurately match your real expenses during this time so that you get the full benefit of the program that qualifies for forgiveness.
Ideally you will have the documents in hand or compiled into an easily accessible folder so you are not scrambling to find them. There will be a short application (1-2 pages) and a certification of impact that are not yet finalized.