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SBA Loans for Pandemic Rollout

As a small business owner you no doubt jumped at the chance to get your employees back to work and get your business up and running. And you were probably at your computer reading your application the instant CARES Act loans were available.

And now. Wait.

As banks scrambled to make their policies line up with Congress’ guidelines for the loans, they were also inundated with an unprecedented number of applications. Banks struggled to handle the volume even as they awaited clearer guidance and needed forms from the SBA.

As details of how to approve, how to deliver, and how to forgive are hammered out between the SBA and lenders, money will most certainly run out. Congress is currently attempting to pass a bill for more funding.

As this week has unfolded, details about the various programs have emerged. The Economic Injury Disaster Loan Emergency Advance (EIDL), the up to $10,000 available to small businesses, is considered an advance and there are limits. The advance is on the Paycheck Protection Program – so the amount that a business is funded in the EIDL will be subtracted from the amount distributed after approval. The limit is, according to a report by INC, $1,000 per employee. Unfortunately, the emergency response time of three days has been delayed because of overwhelming response.

The upside is that advance can be rolled into the PPP loan and forgiven in full or part. Current information from SBA site states that what will be forgiven of the loan are payroll costs, interest on mortgages, rent, and utilities – at least 75% of the forgiven amount must have been used for payroll. What will happen if businesses don’t meet the 75% threshold or if part of the loan is used for product, say for a restaurant, to get up and running is unclear.

There are also limits as to what payroll is covered. Current advice says businesses can use the funds for payroll as far back as February 15, 2020 but that businesses can use their own date on the application. And funds must be used to hire back employees or replace positions that were vacated due to the pandemic.

Cannabis Industry Pummeled

The road after legalization for recreational use of cannabis in California has not been paved with gold. Strangling excise taxes, license uncertainty, vape crisis…

Already uncertain industry manages through uncertain times

When California decided that dispensaries could remain open as an essential business there was, no doubt, a collective sigh of relief in the already fragile industry. With the stay at home order in mid-March there was an initial spike of sales, and there have been bumps since but overall sales are down. Reduced hours undoubtedly have had an impact. But the industry is surviving.

Even though Gov. Gavin Newsom declared marijuana an essential business, the State has been deferring to local governments to determine the restrictions needed to enforce social distancing. Meaning, some localities have made sales permissible curbside only or via delivery, which, if a dispensary does not have a relationship with an entity that has a license to deliver, or possess their own, it could take months to be approved.

In counties where the “delivery only” order has come down, like Santa Clara, the industry has been able to rally and get reversal. The Bureau of Cannabis Control is currently backing the new rules local governments are putting out but that brings uncertainty, in a time of great uncertainty, to a industry that was already filled with uncertainty.

Economic Impact Payment

There has been a lot of speculation in the news about when the stimulus checks will arrive. After almost a month of sheltering in place, and many being unemployed for as long, when those payments will arrive has become a vital piece of information.

According to Larry Kudlow, director of the U.S. National Economic Council, and an economic adviser to the President, the checks will start being sent out as early as this week.

Approximately 175 million Americans will receive stimulus payments. When they will arrive is unknown exactly. Treasury has said that any qualifying taxpayers who recently used a bank for direct deposit on their tax return will get them first, automatically into their account.

And if you are wondering exactly how much you will get you can refer to IRS.gov for more information. If your adjusted gross income is less than $75,000 for single filers, and $150,000 for married filers you will receive the full payment of $1200 per adult, $500 per qualifying child.

What is the money? According to the American Enterprise Institute the checks are technically an advance on the refund you would receive on your 2020 tax return. But, so far, it looks like if you do not qualify for a refund you will not be required to pay it back. And it is very likely that Congress will create some sort of disaster relief package for tax filers due to the pandemic in 2020.

CARES Act – Now What to Do

No doubt you have heard about the resources that Federal, State and local governments are making available to individuals and small business in this time of cornonavirus. So, now what? Go to the source. It may not be one stop for all resources but you may be able to avail yourself of many of the aid programs at this time.

Check the IRS site on coronavirus help to find out about what tax relief might be available to you.

The U.S. Small Business Administration is facilitating the aid offered in the CARES Act for small businesses who have experienced the negative affect of the coronavirus pandemic. There are a couple of options including the Paycheck Protection Program, Loans to pay employees and Disaster Relief Loans.

The CARES Act has also extended unemployment benefits for employees who have been laid off or furloughed from their jobs during this crisis. Contact your state’s unemployment office to apply for benefits.

The Families First Coronavirus Response Act allows those who become ill or have to care for an ill family member to received extended sick leave benefits.

There are even creative ideas circulating like the Small Business Relief Fund that small businesses may be able to avail themselves of.

And don’t forget to reach out to your local government. They may have programs in place that could help you at this time.

Contact your accountant or tax professional for help navigating the many programs and services.

Marijuana Industry Recession Proof?

Could the marijuana industry be essential?

We all know grocery stores are open – because, well, everyone has to eat. And with the orders to social distance all over the country in place, states do have some leverage when considering what essential business looks like.

Even as grocery stores have stayed open to feed us, businesses like gas stations, convenience stores, and even home improvement stores remain open in some locations, though with now limited hours.

But what of marijuana dispensaries? California and Colorado as of this writing have deemed them essential, along with liquor stores. Some states, like Michigan, have allowed the continuation of medical sales only.

After the initial stay at home orders began coming down cannabis sales spiked. But with limited hours and more people unemployed sales began to dip a few days later.

But even with the downturn some analysts in the industry predict that marijuana, like alcohol, will remain somewhat recession-proof. With record high unemployment all industries will invariably see negative impacts. Whether benefit from the CARES Act recently passed that will infuse money into the economy will trickle down to the cannabis industry is to be seen.

SBA Loans for Pandemic Rollout

Cannabis Industry Pummeled

Economic Impact Payment

CARES Act – Now What to Do

Marijuana Industry Recession Proof?

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