Monday, July 6, 2020

19. Convince me a PPP loan is not for you.

Jovita Carranza, administrator of
the Small Business Administration
Calling all roasters who have not already applied for a Paycheck Protection Program (PPP) Loan - please convince me, 'why not?'

Over the past month, the U.S. Treasury has made several dramatic changes which, in my mind, wipe out almost every good excuse I've heard so far about why a roaster would not apply for a PPP loan.

A. H.R.7010, the Paycheck Protection Program Flexibility Act of 2020 passed on June 5. This made the application for forgiveness of the loan much, much simpler. (There is now an EZ form similar to the EZ form for your taxes.) See our blogpost on that act.
B. The PPP Flexibility Act act also clarified many vague technicalities that had some companies worried - including the 8 week "covered period." In short, the government recognized the 8 week period was irrelevant for most businesses and offered a second option, the 24 week covered period.
C. On July 3, the PPP Extension Act was signed into law, extending the deadline for application for a PPP loan out another month, to Aug. 8, 2020.

These changes and clarifications eliminate excuses for roasters who hesitated because, "what if I can't bring back my people until September or October?" Now that will be fine. I also heard the legitimate concern about, "will the loan actually be forgiven? I'm not signing up for a debt if the rules for getting out are not clear." Makes perfect sense. But now the rules are clear and they're not that hard to follow. If you find them confusing, no worries! Please contact us about our Loan Application Assistance for Roasters (LAAR) program!

Also, now it is relatively easy to find a bank that will work with you on your loan. Early on, it was difficult for some businesses to find a bank to make the PPP loan. Businesses cannot go directly to the Small Business Administration (SBA), they must apply via a bank. Now on-line banks like Paypal and Nav offer them, so almost every business can access the PPP, even if they have their business account at an isolated, small town bank.

Private-investment owners
The one excuse I've heard that does appear to be a show-stopper is when a roaster is part of a larger investment/equity group. There are prohibitions in the original law creating the PPP against lending to businesses owned by these groups. Data released on Monday, July 6, from the SBA indicates that many large restaurant groups did receive millions in PPP loans. However, the SBA is requesting these funds be returned.

"Companies applying for the money were required to certify that the money was “necessary to support the ongoing operations,” while taking into account “their ability to access other sources of liquidity,” the SBA’s website states. 

Industries receiving the loans
The new data released by the SBA this week indicates about half the loans went to five industries, according to a Washington Post report. They are:
12.9% health-care and social assistance industry received
12.7 % to professional and technical services; 
12.4% to construction; 
10.3% to manufacturing; and 
8.1% to hotels, restaurants and other food service employers.

My guess is many roasting companies belong to the latter two groups. If you have not already, consider whether now you have any excuse. With PPP you can essentially receive grants to help pay yourself and your workers and keep the specialty coffee industry alive.

Sunday, June 7, 2020

18. PPP's 8 week Period Becomes Much More Flexible

June 8, 2020
Last Friday, June 5, H.R. 7010, the “Paycheck Protection Program (PPP) Flexibility Act of 2020,” became law. This law will benefit roasters who have qualified for PPP loans because it makes sweeping revisions to the original terms of the loan. Forgiveness of loans is now so flexible, it's practically guaranteed.
Want to listen in on a webinar with up-to-date-details on how to apply for forgiveness of your PPP loan? Check out the free Small Business Association of Michigan (SBAM)'s webinar: Thursday, June 11, 10:00am ESTPPP Status, Updates and a Detailed Walkthrough of Forgiveness (Click here to register)
The most significant changes HB7010 incurs are as follows:
  1. Businesses have 24 weeks instead of 8 weeks to accrue expenses that qualify for forgiveness. Summarized, can you rack up enough expenses over the last 6 months of 2020 to match what you spent in the first 2 months of 2020? If yes, you've hit one of the two major criteria for loan forgiveness.
  2. The deadline for businesses to rehire workers, matching the headcount (full-time equivalent) they had at the end of February, has been extended from June 30 to December 31. Can you arrange that on December 31, 2020, you have matched or exceeded the number of employees that you had at the end of February 2020? If you answer yes, you've hit the second major criteria for forgiveness.
  3. The requirement that at least 75% of the proceeds be used toward payroll expenses has been lowered to 60%. Now up to 40% can be used for rent, utilities and mortgage interest. This is important for roasters for whom rent is a serious amount of their monthly expense.
  4. The original PPP rules allowed partial loan forgiveness if a company used less than 75% of the loan for payroll, but the bill as it passed states that none of the loan will be forgiven if the new 60% threshold is not met. The entire loan will need to be repaid if payroll expenses are less than 60%.
  5. The payback period on any unforgiven loan amounts can be extended from 2 years to 5 years. This would have been more important back when it seemed like some parts of many loans would not be forgiven. But now that almost everyone's loan will be forgivable, this improvement in borrowing terms is nearly meaningless.
  6. Bill 7010 also allows loan forgiveness recipients to defer their payroll taxes. Borrowers may defer the employer share of Social Security taxes (6.2%), regardless of whether the borrower receives forgiveness or not. 50% of deferred Social Security tax would be due in 2021, with the other 50% due in 2022.
Regarding Flexible Forgiveness:
The Small Business Administration (SBA) and US Treasury has recognized over the past weeks that the stipulation that the PPP's eight-week period must start the day the loan is disbursed, and end eight weeks later was overly restrictive. Now they are giving every business that qualified for a PPP loan 6 months to spend the loan disbursement on qualified expenses, and only 60% of those expenses have to be payroll. Up to 40% of the loan amount may be spent on rent, utilities (including phone costs) and mortgage interest. In other words, Treasury has basically made it pretty easy for businesses to get 100% forgiveness. 

HOW to correctly apply for that forgiveness is no longer clear, however, for many businesses. 
"When you change the rules of the game in the middle of the game, a lot of things become confusing."  ~ CPA Accountant commenting on HB7010
1. What if you finish using up all of your loan funds in a period that is more than 8 weeks but not 24 weeks? For example, you received the funds on April 4, and you finish using them on July 15? Can you apply for forgiveness and be done with it? Or are you forced to wait until after December 31st? Treasury has not yet issued guidance on this.

2. How do single-member LLCs calculate payroll for forgiveness now? Do they take 24/52 of the 2019 Schedule C net income? Previously they were required to calculate payroll as 8/52 of 2019 net income.

3. What if you hired back all your workers at the beginning of June, "playing by the rules" as they were initially written, and now you have to lay them off in July because you are still not open, and cash flow, including the PPP funds, have run out. Does laying them off like this count against your loan forgiveness?

Friday, May 22, 2020

17. New news from Washington DC on PPP

In case it's helpful, here are the 'rumors' I've heard about what may be coming
This week auto workers got back to work in Detroit.
down the pike from Washington D.C. in terms of the Paycheck Protection Program (PPP). 
  • Next week, May 28th, the Treasury is expected to issue more guidance on rules related to PPP forgiveness.
  • No new funding for the PPP program is expected right now. Once the current amount is gone, it's gone.
  • Personal protective equipment (PPE) may become a deductible expense for tax purposes for businesses.
  • The PPP forgiveness amount will hopefully soon be confirmed by Treasury as tax free.
  • SBA might extend the 8 week covered period into a 16 or 24 week period. They are taking into consideration how businesses may have a hard time bringing back all of their employees if there are still governor's executive orders keeping them closed.

16. Apply for PPP Forgiveness Like a Pro

This week the Small Business Administration sent out Paycheck Protection
Page 1 of the PPP Forgiveness Application
Program (PPP) forgiveness applications and more guidance on usage. You should have received this document from your lender. The 11 page document (see image of pg. 1 here) is basically a 1 page application with many pages of instructions to help you get the numbers right. There are 11 lines requiring numbers, with the 11th being the "Forgiveness Amount" for which you are applying.

This week the SBA also sent guidance about when the eight week "covered period" starts. The period no longer has to start on the day the loan was disbursed. Instead the employer may start the eight week period on the immediately following pay period. So if the loan was distributed April 24 and the next pay period starts May 1, the eight week period may start May 1.

1. The application provides a worksheet to help you calculate payroll costs. I would augment this with spreadsheets many CPA firms have already developed to assist with PPP payroll monitoring and reporting. CLICK HERE for an example prepared by Capocore Professional Advisors. The slide deck and webinar that goes with this spreadsheet are available on this Small Business Association of Michigan (SBAM) website.

2. CLICK HERE for a webinar from a month ago with a CPA company provided by SBAM on applying for PPP loan forgiveness. TODAY (May 22) the same CPA company is giving webinar on forgiveness using the new SBA application.

3. Get your documents together. For utility costs this can get cumbersome. Remember, getting government money for free takes an investment of time. For example, your phone costs can be counted as utilities. But you've got to provide (to your banker) phone bills and evidence (statements, receipts or checks) showing you paid those bills. For payroll, do you have a third-party payroll company? Their reports will usually be accepted by your bank. If you don't have a payroll company, get ready to make reports with details on each employee.

4. Are you using a work-share program? I.e. with your state, to allow employees to partially come back on payroll, and also get unemployment insurance? This, in many cases, is good for employees because they will still be eligible for the $600 additional per week, but it's not going to help you get more forgiveness on the PPP. That's OK - being good to your employees is the right thing to do.

5. The big two questions are, did you maintain your employee count and did you maintain wage rates? So the application walks you through calculating whether you reduced your "full-time employee" (FTE) number, which (ironically) can be a decimal. Then it walks you through whether you reduced wage rates. This gets confusing because the application was on a quarter basis (13 weeks) and the forgiveness is on an eight week basis. The instruction from the SBA is now to use annualized numbers for both numbers.

6. Understanding the term "Safe Harbor": This is referring to the fact that SBA said they want you to bring an employee back to the time and wage rates you were paying (pre-February 15) and you have until June 30 to do this. If you do not bring them back to at least 75% of full hours and full wages by June 30, the payroll for this employee does not count towards your forgiveness. For employees that ramp up their time and wage rates over the covered period (reaching at least 75% by June 30), a partial forgiveness amount is calculated. This "partial forgiveness" is the Safe Harbor.

7. How do you calculate FTE? Many CPAs thought that 30 hours/week would be considered 1 FTE. Nope! U.S. Treasury has now confirmed you must use 40 hours/week as the definition of 1 FTE. They do offer a simplified method such that anyone less than 1 FTE can be counted as .5 FTE. If you use this simplified method, you must use it throughout your application.

8. Exceptions to FTE for employees who refuse to come back to work: if an employee refuses to come back to work, or resigned, you do not have to reduce your forgivable amount for this employee's wages (as long as you did not replace them). So for the wages

9. Owners payroll calculation - owners of the business have their wages calculated separately from employees on Line 9. This is totally separate from Table 1 and Table 2 in the Schedule A worksheet. Owners' "pay" will be calculated as 8/52 of whatever was the net income on the owner's 2019 Schedule C. In other words, the pay used to to apply for the loan is the limit of the pay that can be used for forgiveness.

10. Do not rely on your bank to catch calculation errors - this is like doing your taxes. The SBA will come to you, not the bank, with questions.

Thursday, May 7, 2020

15. More Guides on Safe-Return-To-Work

We are excited that conversations are turning more and more towards how to return to work safely. Hopefully, this is a sign that both the health crisis and the economic crisis are beginning to ease. Here in Michigan, the governor announced today that manufacturers (including the big three - GM, Ford, Chrysler-Fiat) can restart safely as of Monday, May 11. See EO 2020-77 here

The Small Business Assoc. of Michigan (SBAM) has created a handbook to help all small businesses think through the range of issues related to safely operating in our new COVID19 world. Click here to download the handbook. Or, as mentioned in the previous post, go to the "Get Back to Work Safely" page on SBAM's website to browse a slew of related resources. 

Today's tip from Brian Calley, SBAM's president, was that every employer should be prepared to be required to take employees' temperatures on a regular basis. The details on how often and what requires a worker to go home are not clear, but buying a lot of thermometers is likely part of the future for any cafe-owner.

Wednesday, May 6, 2020

14. PPP Loans - It's Not Too Late

For any roasting businesses that have pursued, but not received a PPP loan yet, I have some tips from a small business briefing today.

1. As of May 6, $183 billion of the latest $310 billion has been spent. So there should still be some money out there.

2. PayPal comes through! A lot of companies have been successfully switching away from the first place they apply when the first institution isn't able to help them. Today, one story was conveyed of a Michigan business where the owner got started late, just this week, because it was only this week that a customer failed to renew a contract. He started on Monday, May 4, went through three banks where he had relationships, and all 3 said they couldn't help. Then he went through Paypal, and got approved within 24 hours!  Click here for more info on PayPal PPP loans.

3. Another "online bank" that I've heard is helping businesses get PPP loans is NAV.

Monday, April 27, 2020

13. Get-Back-To-Work Resources for Roasters

@lineacaffe and Pinhole Coffee in San Francisco
  • What are the new OSHA requirements as I re-open?
  • What is HR best practice for messaging and managing bringing employees back from stay-home work or non-work?
  • Can anyone help me find PPE supplies?
If you're a roasting company considering opening soon, these are critical and important questions. Check out this new page on the Small Biz Assoc. of Michigan (SBAM) website with many answers and resources:  CLICK HERE. At least in Michigan, a documented "preparedness and response plan" is part of the governor's latest executive order. SBAM believes having this written plan is a good idea. In addition, they recommend writing a communication plan for messaging you will give to both employees and customers.

Also, do not wait until the day before! Start preparing now, so that lack of supplies, facility changes or staff do not hinder you opening by even one day! People need your coffee!!
No longer allowed! Even for take-out, baristas need masks!

Especially challenging is the question of health screening employees as they come back to work. This topic is addressed also on SBAM's page, (click here, then scroll down a bit).

Tuesday, April 21, 2020

12. Roaster Experiences with PPP, EIDL and other grants

Today we'd like to share a few of the roaster experiences we've heard.

Small roaster in SE Michigan has 1 cafe and 15 - 17 employees. All but 4 of them were laid-off at the beginning of the crisis. This business owner (so far) has chosen to:
* Applied for the EIDL Advance grant (no word on that yet)
* Applied for a Wayne County small business emergency relief grant and was awarded a couple thousand from this fund. This was a great relief as it basically paid one more month's rent. Her landlord was unwilling to consider any forgiveness or delay of the rent schedule.
* Did NOT apply for the PPP. Finds the benefit may not be worth the hassle on a number of levels. Not sure about loan forgiveness. Not sure about rules regarding bringing back employees when she's not sure she can employ them safely. Not certain the 8 week forgiveness period is long enough for her to put them on payroll if they are not working.

What impresses me about this roaster, like many I have talked to, is the agility she has shown adapting very quickly to the changing situation. She innovated continuously for weeks, for example, creating a contact-free take out window and beefing up on-line ordering operations. After the store fully shut down, they promoted a weekend take-out event that was very successful.

Another small roaster, south of the Detroit metro area, has one cafe. They remain open for take-out with reduced hours staying open only from 8am - 1pm. On April 14 they launched a web-store for their bags of beans for the first time. The owner's daughter helped him get that launched. The owner applied for and received about $5,000 from the Michigan Economic Development Corporation's emergency fund which are state funds.

A roaster with two cafes, one in Detroit and one in a northern suburb, chose this path:
* Applied for the EIDL and have received the $10,000 advance.
* Applied for the PPP but have not received funds from that one (yet).
* Applied for city-level grants and successfully received funding from those.
* Has been able to make arrangements for some leniency with landlords.
This roaster commented that while his spending is way down now, he's only now getting through paying for bills incurred in March just before the "shelter-in-place" orders were issued.

A St. Louis roaster with three locations has one of them open for pick-up, 8am - 3pm, and the other two are temporarily closed. The situation is dynamic for them, as with everyone, but when we talked on April 7th, the status was:
* Applied for the PPP
* Still considering applying for EIDL and local business emergency grants.
* Considering other SBA loan programs, not just the emergency loans, to help the business expand.
I was struck with this roaster's determination to not give up on business development plans. Slow down, perhaps, but not give up! They also promoted a Saturday take-out event at a store that sold out three hours before they had planned to end!

A New York roaster with 20 stores across Manhattan and Queens has about 200 employees. All stores have been closed and all but a core team of about 5 - 7 people had to be laid-off, which was "devastating" they told me. On top of that, their head of human resources moved to a different company in March and has not yet been replaced. They are still roasting for their wholesale accounts and on-line sales. The representative I talked to was confident that all government programs were being considered for possible fit, but was not aware of which, if any, SBA programs were being accessed. He shared that the company was serious about offering all employees job security. They've sent repeated messages to the laid off staff that the company will hire them back as soon as circumstances allow.

We hope this summary of economic and business realities of different roasters gives some reassurance, "you are not alone"! Pull up those boot-straps!

Monday, April 20, 2020

11. Great Resources and Unanswered Questions

Today we're sharing links to great resources we've found for roasters on the "small business"
Ken Pargulski at Espresso Royale in Whitmore Lake, MI
management front.
  • CPA firm's Q&A on the PPP loan. See especially the section towards the bottom on forgiveness. CLICK HERE  . For a spreadsheet to help you calculate your forgiveable amount, CLICK HERE -- created by CPA firm Capricore.
  • For questions about the weekly $600 additional unemployment benefit, and your costs as an employer, see this website's overview of the DoL guidelines.
  • Comment: the $600/week benefit remains an especially relevant issue for cafe-owners. Several times the advice has been given that you as the employer have the right to essentially threaten to remove that benefit from them, if you prefer to have them come back on payroll. You would do that by offering your employees a job, encouraging them to come back to work, and if they refuse, you need to be sure they refuse in writing. Then you file that with your state and the employees are no longer eligible for the UI benefit. The unanswered question, of course, which worries cafe owners is, "what is the "right" thing to do, not just what is my "right" as an employer?"  Add your comment below on how you will answer this question!

  • Small Biz Assoc of Michigan's (SBAM) COVID19 resources page is curated and updated daily. It's a valuable resource because they add the recordings of all the webinars and daily updates videos they are doing. If your state doesn't have a small biz association that's well organized, check this out! A lot of what they are recommending and sharing is relevant for small businesses across the country.

  • Friday, April 17, 2020

    10. PPP Tips: Covered period vs. Forgiveness Period

    "Speaking to you" today from the state that ranks fifth in the country for cases and fifith for the number of deaths per million residents. Testing remains in the bottom fifth, (read: public health crisis). Michigan also has the third highest unemployment rate in the nation, (read: economic crisis)! Telltale headline, "Detroit hospitals say they've begun storing bodies in refrigerated trucks to handle the surge."
    Jamie Lopiccolo, CPA at Capocore, gives small biz advice.

    With that grim reminder, it was helpful earlier this week to hear a few tips on how to operationalize your Paycheck Protection Program (PPP) loan, should your roasting company be lucky enough to get one! Yesterday we learned the first $350 billion allocated for that program has been spent. Companies are being asked to wait for congress to approve more.

    It appears there are two key time periods to understand. One is the "covered period" and the other is the "forgiveness period." We attempt to clarify below:

    "Covered Period": Feb. 15, 2020 - Jun. 30, 2020 is the 4.5 month period in which qualified business expenses qualify to be used for the loan proceeds. Qualified business expenses are payroll, rent, interest on loans and utilities.

    "Forgiveness Period": the eight weeks that commence on the day you receive your loan funds. Let's assume you receive loan funds on May 4, so your forgiveness period will be May 4 - Jun 26, 2020. This means that qualified business expenses in this period can be reported and if approved, that amount will be forgiven. The PPP regulation states that not more than 25% of the amount forgiven can be for non-payroll expenses. In other words, prioritize using PPP funds for payroll. That is the intent of the program.

    On this SBAM webpage you can find the link to a recording of a great webinar given by CPA firm Capocore, titled: "What You Need to Know About Spending & Tracking Your PPP Loan." (Presented in partnership with the Michigan Association of CPAs April 13, 2020)

    Tuesday, April 7, 2020

    9. CPA Advice for Small Roasters

    April 7, 2020
    We are NOT a CPA! But today's blogpost
     includes a link where you can listen
    to one!
    Today's SBAM daily briefing was excellent! They had the Michigan CPA Association (MiCPA) on the call, advising  small business owners as if they were their client. A great resource for small businesses with limited access to such professionals.  CLICK HERE to listen to the recording. The CPA is interviewed in the first 20 minutes of this 30 minute briefing.

    James Lopiccolo (CPA) said they're telling their clients, "maximize the funds you can get on PPP." Even if you don't have enough payroll during the 8 weeks to have your loan 100% forgiven, you can prepay with no penalty if you truly do not want any debt.

    If you can stomach the debt for 2 years, the advantages you have are:
    1) first payment deferred for 6 months 
    2) an unheard of low interest rate of 1% with so few hurdles (guarantees, ineligibility for other credit, etc.)

    Other news today for government programs:
    • U.S. Congress is considering another large aid package. This is a relief, as it takes off some of the pressure on banks and businesses to be "the first" to get their Paycheck Protection Program (PPP) loan application completed. (Click here for info on PPP.)
    • I learned the state programs that have been funneled through the Economic Development agencies (like SPARK in Ann Arbor, MI) are then turned over to county economic development offices. While I am in Michigan, I can imagine this may be true in many states. I applied for Michigan's "Resiliency Fund" last week. Today I was contacted by email and then phone by a county administrator requesting further documentation. I was skeptical at first, being concerned about scammers looking for my tax information, but everything checked out. Indeed, it appears the county government is expected to follow through on finalizing state-level "Resiliency Fund" applications.

    Keep at it everyone! There's relief coming. You've got this.

    Monday, April 6, 2020

    8. LAAR webinars continue this week!

    Sign up today for tomorrow's Loan Application Assistance for Roasters (LAAR) webinar!
    Just click here for our contact page and send a message saying you'd like the call-in details!

    LAAR Webinar - Tuesday, Apr. 7, 11 am EST. Use the CONTACT page to request call-in details.

    Can't make it on Tuesday, join us...
    LAAR Webinar - Thursday, Apr. 9, 11 am EST. Use the CONTACT page to request call-in details

    The two webinars we held last week were uplifting, interactive sessions with the handful of roasters on the call. Everyone finishes the hour feeling more confident about the right next step for their business.
    "I could have spent half an hour digging into some rabbit hole on a government website to get to just one tip out of the dozen good pieces of advice Artisan shared during this webinar." ~ Andrew Timko, Blueprint Coffee, St. Louis, MO
    Can't make any webinars? Click here for easy resources from the SBA of Michigan (which is doing an excellent job of updating small businesses across the country).

    7. MONDAY - Apr. 6 UPDATE for Roasters on SBA resources

    Last week was a hurried run-up to the April 3 deadline for "banks to be ready" to start accepting Paycheck Protection Program (PPP) applications. (See this blogpost to learn about the PPP program.)

    From what I've heard, some banks did start accepting applications on Friday but the federal SBA did not give final guidance to SBA lenders until Friday morning (Apr. 3rd). So the biggest banks postponed even accepting PPP applications until today (Apr. 6) or even tomorrow, April 7. I understand the big banks are creating website portals on which applicants -- LIKE YOU, IF YOU ARE A ROASTING COMPANY -- may use to apply for PPP funds.

    See this blogpost for the "steps to take as a roaster." But here are some further tips given what we've learned in the last few days:

    1. It is important to decide whether a PPP loan-that-turns-to-a-grant is right for your business. One roaster I talked to last week was thinking that for her small, single-location business, with 15 - 17 staff total, the Economic Injury Disaster Loan (EIDL) Advance grant, which is an $10,000 outright grant, was the best fit for her needs. (Click here to learn about the EIDL and why it has the confusing term "loan" in its name.)

    2. If your bank is not an SBA lender already, this is a major obstacle. That is actually the case for my business. So first, as advised in the paragraph above, I applied for the EIDL. Then I started calling banks and institutions where I had relationships with an individual loan officer because I had applied for business loans at their institution. I asked if they would help. All three flatly said "no." They are only helping current customers, with a checking account. It is understandable.
    • OTHER POSSIBLE OPTIONS for my PPP application and yours: 
    • My credit card is with Chase. I called Chase customer service on Friday and learned they are one of the big banks which will only be opening their portal on Monday or Tuesday (today or tomorrow) and the service representative had no idea whether I'd have access as a credit card customer. (I kind of doubt it, but I will try.)
    • A group called NAV serviced one of my student loans years ago and got in touch with me (by email) with links to their portal for PPP applications. Click here for their on-line application, but I suspect it is only for people that banked with them previously. My suggestion here is to broaden your search for a lender that will help you by even thinking about your student loan banker! In case it helps, check out NAV's SBA loan Facebook group 
    • A local SBA lending bank might consider taking your "non-customer" PPP application a week from now. I had one local bank in my town tell me this. This is nice, I must say, since 4 other banks flatly turned me down, but it is a tenuous offer and does not reassure me that my business would be considered before all the PPP funds are gone.
    The key is persistence, as is so often the case as a small business owner!

    Click here for easy resources from the SBA of Michigan (which is doing an excellent job of updating small businesses across the country).

    Friday, April 3, 2020

    6. What are roasters doing? Which SBA programs seem to apply?

    Eileen Tausch in Cincinnati, Ohio

    I've been talking to every roaster that will talk to me. The summary seems to be that roasters are all practically reinventing their business every week as the conditions change, sometimes due to governor executive orders and often also due to evolving circumstances with employees. Stressful and overwhelming for most, such that finding a clear path with these SBA offerings has been confusing. 

    I hear a lot of distrust of anything that smells like debt. But yesterday I was on a town hall call with Sen. Gary Peters who oversees the committee in charge of FEMA. He was absolutely adamant that the Paycheck Protection Program (PPP) (see this blogpost) loans are meant to be forgiven and your lender will have the tools to help you be qualified to have your loan turn into a grant.

    Where do you apply? At an SBA Lender. BIG NEWS today is that there is now a way to easily search for a lender new you! (This link JUST came on line today - thank you SBAM for dogging SBA to create this!)

    Would you consider joining the webinar we're having Tuesday, Apr. 7, 11am EST? There are usually only one or two roasters on the call and it is a great time of discussion among colleagues, as well as me offering insights on the 'loan landscape.'

    Join Zoom Meeting  
    Topic: Loan Application Assistance for Roasters
    Time: Apr 7, 2020 11:00 AM Eastern Time (US and Canada)
    Meeting ID: 810 838 5927

    Look forward to seeing you there!

    Wednesday, April 1, 2020

    5. How to Apply for the PPP -- get ready for April 3

    Roasters start your engines!

    U.S. Treasury has announced that the Paycheck Protection Program (PPP) will go live on Friday, Apr. 3. Now every small business support agency and bank which is an SBA lender has their deadline. They must be ready to serve you on April 3.

    Here are basic steps you should do between now and Friday:
    1. Contact the bank where you do most of your business, ask to speak to someone in the business loans department (an average teller may not know the answers), and ask the following questions:
    • Are you an SBA certified lender?
    • Are you participating in the Paycheck Protection Program - new SBA lending authorized by the CARES Act?
    • Is there someone who can help me understand what are the requirements to qualify, and the benefits for my business? (BTW - we at Artisan Coffee Imports can help you with these questions, too, to a certain extent. It may be wise to feel like you have a basic understanding before calling the bank.)
    • If I want to apply for PPP, what are the steps with your bank? (Most banks are opening an on-line portal where you will submit the application form and supporting documents.)
    2. Download the application form and fill it out. It's pretty short - more like a cover sheet only.

    3. Gather the supporting documents which are listed on side 2 of the form. Items 3 and 4 under "Certifications" give you a good idea of what type of documents you'll need to provide to your banker. Your banker will be the one to specify exactly what is required. The items may include:
    • Number of full-time employees on payroll at the time the loan is issued.
    • Dollar amount of payroll costs at the time the loan is issued.
    • Mortgage interest payments.
    • Rent payments.
    • Utilities
    Contact us to ask questions using the comment field below or the contact page of our website!

    OR join our webinar "Loan Application Assistance for Roasters" on Th., Apr. 2, 11 am EST, or Tue, Apr. 7, 11am EST. Contact us to register (CLICK HERE).

    4. PPP Application Link NOW AVAILABLE

     ***the following text is copied from an email from Michigan's SBA team, "SBAM".**

    The application for borrowers can now be found here.
    The Payroll Protection Program goes live April 3, 2020.

    The Paycheck Protection Program is designed to provide a direct incentive for small businesses to keep their workers on payroll by providing each small business a loan up to $10 million for payroll and certain other expenses.

    If all employees are kept on payroll for eight weeks, SBA will forgive the portion of the loans used for payroll, rent, mortgage interest, or utilities. Up to 100 percent of the loan is forgivable. Small businesses and eligible nonprofit organizations, Veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards. For a top-line overview of the program, click here.

    Please note that is processed through your local SBA lender. We recommend checking with your current financial institution first.
    Join a Loan Application Assistance for Roasters webinar! The next one is tomorrow, Apr. 2, 11am EST. Contact us via our contact page or use the comment field below to register! We'll review at a high level the key options offered by various government programs across the country and answer your questions. 

    Next week's webinar is Apr. 7, 11am EST

    Tuesday, March 31, 2020

    3. Which is better for a Roaster - Economic Injury Loan or the new PPP?

    The big news in the past few days has been the Paycheck Protection Program (PPP) coming out of the CARES Aid package. See yesterday's post to get an overview of that program. It is a loan that can be partially or totally forgiven (i.e. turned into a grant) at the end of the 8 week span, if (among other criteria) you document how all the proceeds were used and the bank verifies that all the expenses qualify.
    Seth Chapman at Water Street Coffee Joint in Kalamazoo, MI

    Roasters ask: "is the PPP better for me than an Economic Injury Disaster Loan (EIDL)?" Answer: Probably YES, because it can become a grant. But you need to make sure you understand how much of your loan will be forgiven at the end of the 8 weeks. If you are not able to hire all your employees back (your employees prefer the new beefed up unemployment insurance benefits), then you may be better off without the PPP.

    Roasters also ask: "CAN I apply for both the EIDL and the PPP, or are they mutually exclusive?" Answer: Yes. In fact, I would now encourage you to do both, if you need that much money. As long as you do not apply the proceeds to the same expenses, you are allowed to apply for both. In other words, if PPP covers all of your payroll expenses for April and May, you cannot also tell the banker that you need the EIDL loan to cover payroll for April and May. Same for utilities, rent, etc.

    • Bottom line: Apply for both if you can show that business expenses match the total amount for which you are applying.

    Roasters also ask: "Is the EIDL a grant or a loan?" A: There is a new part of the EIDL loan program that is a grant. So it is both! The grant part is called an "Advance" or the "EIDL Advance." You fill out the application for the EIDL loan (using access on the website) and at the end there is a checkbox question asking if you want to be considered for the EIDL $10,000 grant. There's a chance that you qualify for the grant, but not the loan, and vice versa.

    • Note: If you apply for EIDL and PPP and qualify for the EIDL grant portion ($10,000), this may just be given to you as part of the PPP. Bottom line, "go ahead and check the box for the EIDL grant" which is at the end of the EIDL loan application.

    Today's Note for Michigan Businesses: Some Economic Development Organizations (EDOs) have closed applications for the Michigan Economic Development Emergency Relief Grants - which are $10,000 grants. Bars and restaurants were the target beneficiaries for these.

    The main Q today: Which is better for a Roaster - Economic Injury Loan or the new PPP?
    Probably the PPP (as stated above), but lets look at a comparison. The EIDL, as I understand it, is more of a traditional loan. Your banker (who is an SBA contracted bank) will require a guarantor (the PPP does not), there is not a "forgiveness option" (like the PPP is offering). The interest rate is low, one lender told me 3.75%, and it can be used for business growth investments. That is a key difference to the PPP. With PPP you will be forced to only use the proceeds for on-going business expenses: payroll, health benefits, rent, utilities, interest on pre-existing loans, etc. With the EIDL, you can use the funds for other parts of the business. See Table 1 for a summary.

    TABLE 1: Comparison of PPP, EIDL Loans and EIDL Grants

    Funded by
    Old or New?
    Grant or Loan?
    Where to apply?
    Funds - proceeds
    Max. Amount
    Paycheck Protection Program (PPP)
    SBA National
    First a loan, can be forgiven on a sliding scale up to 100%
    Applications will soon be available at banks that are SBA lenders.
    MUST be used for qualified operating expenses, including payroll.
    2.5 x the average monthly payroll
    Economic Injury Disaster Loan (EIDL)
    SBA National
    Access application on-line at (Or ask Artisan) Submit to an SBA lending bank.
    May be used for a variety of operating expenses. Less restrictive.
    Up to $2 million
    Economic Injury Disaster Grant (“EIDL – Grant”
    SBA National
    Application is the same as an EIDL loan (see above).
    Targeting immediate operating expenses for businesses forced to close.

    Great new resources have come on line! We love what Michigan's SBA office is putting out there.

    Click here for a 1 pager summarizing three possibly relevant SBA loan programs for you:

    • PPP
    • Entrepreneurial Development Programs
    • Emergency Economic Injury Disaster Loans (EIDL)

    Click here for a 2 page document summarizing only the PPP.

    REMEMBER to contact us for assistance! Click here for our contact page or use the comment section below. We had one brave roaster on today's webinar. He left with a raft of tips and more confidence that he knows which directions and questions he needs to explore quickly, talking to his banker, his partners and his employees.

    Next webinar is Thursday, Apr. 2, at 11am EST.  Sign up today!

    Monday, March 30, 2020

    2. CARES Act for Roasters - Paycheck Protection Program

    Today we're learning more details and it seems the Paycheck Protection Program (PPP) will truly be a boost for many small business roasters. 
    Purpose of the Program: To keep good employees connected with their employers to create a speedy economic recovery once the COVID crisis ends. I.E. Don't loose your best baristas and staff to a sea of other choices or a forced move to another state!

    Benefits include: 
    • Receive up to 250% of your average monthly payroll initially as a loan. Once you have the loan, you have to bring your staff back onto your payroll, even if there is no work for them. 
    • The loan can be converted into a grant (i.e. the loan is forgiven) if criteria is met for the number of employees you have on payroll is still the same at the end of an 8 week period and you can show that the funds were used for qualifying expenses. This is an amazing, never-seen-before possibility! Look for a SBA in Michigan (SBAM) to share their recorded webinar on CARES Act details on Tuesday, Mar. 31, or join the webinar directly (click here to register).
    • Your business can defer payroll tax until the end of 2020. 
    How to Apply: Go to your nearest SBA lender! In Michigan, you find the SBA Michigan District Office Resource Guide and the long list of lenders starts on page 27. The lenders do not have the applications yet, but it is still good to contact yours today. "GET IN LINE" is the advice, as these loans will go fast. $350 billion seems like a lot, but it will be used up quickly.

    • Average monthly payroll is determined by the four months between these two key dates: Feb. 15, 2019 – June 15, 2019. The employer can include not only pay-check pay, but ALL the expenses that go into payroll. For example, retirement contributions and health insurance benefits are included.
    • Excellent 2-page info sheet from - click here to download!

    Friday, March 27, 2020

    1. SBA Gives Early Overview of CARES Relief Package

    This session with SBA officials from Michigan's SBA office gives a great early overview of the package and what it might do for coffee roasters -- in Michigan and beyond!  CLICK HERE. Worth a listen!

    FYI - SBA in Michigan (SBAM) is offering daily video updates. The next one is Saturday (wow!) at 3pm, and 3pm every day next week. for more info!