NEW Hennepin County Forgiveable Loans
Hennepin County is offering up to $10,000 in forgiveable loans to businesses located in the county with 20 or fewer employees and under $1 million in annual revenue. The deadline to apply for these funds is May 8.https://www.hennepin.us/economic-development/programs/Emergency-relief?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=
Watch Out For Fraud
With additional funding sources opening up, and online lenders approved to work on federal programs, the opportunity for fraud has also increased. Don’t provide information to anyone reaching out to you, unless it is a banker you have a direct and existing relationship with (and then verify it is really them by calling them back on a number from one of your official statements). Always verify who you are talking to before providing any information to them. Google them, ask for local references. If they say they can process applications for you faster, whether free or for a fee, know that it is probable too good to be true. If you have encountered any fraud or schemes. Please contact the local SBA office via email at Minneapolis@mn.sba.gov
Sign up for their regular updates at SBA.gov/updates, and watch their social @SBA_Minnesota
NEW Funding Information for Independent Contractors and Solo Business Owners
There’s been confusion on whether or not independent contractors and solo business owners can apply for assistance. Please know that the federal government has opened up their programs to be available to you. You can apply for PPP and EIDL, and will qualify for forgiveness as your income counts as payroll for you (see forms for calculations). In addition to these programs, the federal government authorized Pandemic Unemployment Assistance to provide unemployment funding for those who do not qualify for regular unemployment benefits. The state and federal governments are working hard to get this newest program up and running, and expect it to be available by the end of April at the latest. MN DEED is encouraging you to apply now if you believe you may qualify for these benefits at uimn.org.
As an independent or solopreneur, you can count your income for payroll up to $100,000. Calculate all income for 2019, divide by 12 to figure out an average monthly income, then multiply by 2.5 to determine how much you can apply for (and have count as payroll expenditures).
In addition to the federal aid programs, existing low-interest loans are available from the state and the City of Minneapolis.
Help with Emergency Loan/Funding Applications
There are several resources out there for mentors who can help you through the process of selecting and applying for assistance. Government officials are advising that you connect with your regular bank as many of them are SBA partners and can advise on the best avenue for your business. Officials are also encouraging all businesses to take advantage of as many of the federal programs as possible. As we identify resources, we'll add them here:
Minneapolis Emergency Fund
You've likely seen information in the news about Minneapolis' new emergency fund. The fund does earmark dollars for local small business, but the City has set the program up to provide funding only to businesses in designated geographic areas that have the highest concentration of businesses not likely to qualify for any other assistance programs. As of right now, there are no areas within the Southwest District that qualify for this program. SWBA and your district Council Members are advocating to find funding to offer additional assistance to businesses in our district that are still in need. We'll keep you updated as information is made available
Community Response Fund
Minneapolis has an opportunityNeighborhood organizations, cultural organizations, nonprofits, businesses, places of worship and faith organizations are invited to apply for grants of up to $15,000 for COVID-19 response activities to take place between May 15, 2020 and December 31, 2020.
Projects can be focused on direct response, support efforts or other byproducts of the pandemic such as food, shelter and health (mental or physical) and safety needs. The intent of the COVID-19 Community Response funds is to support community-led strategies. With that in mind, applicants are encouraged to propose activities that reflect their own expertise, experience, and knowledge and that focus on the specific issues identified within their areas or communities.
- To apply, please review the COVID-19 Community Response Fund request for proposals (RFA) for the application and detailed information.
- Submit your application by email to firstname.lastname@example.org by April 24, 2020 at 11:59 p.m.
- Local, regional, or state government entities are not eligible for funding under this RFA.
- For more information about the City of Minneapolis' COVID-19 response, visit Minneapolismn.gov/coronavirus.
Minneapolis Low Interest Loans Go to 0%
In an effort to support local Minneapolis businesses, the city has made adjustments to its regular low interest loan program. The interest rate is dropped to 0% for COVID relief, and working capital is now included in eligible expenses. The city is working to update its site to reflect these changes. The City also announced a new Gap Funding program for small business relief, but it is being made available for specific geographic areas within the city with the most need. For now, Southwest does not qualify. We'll update you if that changes.
Minneapolis Low Interest Loans
CARE Act FAQs
Our partners in the West Bank neighborhood have staff with grant funding that are equipped to offer advice and assistance in selecting and applying for funding assistance. They've put together a great FAQ to explain the options available from the federal government, and information to help you select the best solutions for you and your business. This was sent in an email on 4/2 to all businesses we have email addresses for.
CARE Act FAQ Forbes Summary Article
Paycheck Protection Program (from SBA)
This prioritizes millions of Americans employed by small businesses by authorizing up to $349 billion toward job retention and certain other expenses. Under this program, eligible recipients may qualify for a loan up to $10 million determined by 8 weeks of prior average payroll plus an additional 25% of that amount. Loan payments will be deferred for 6 months. If you maintain your workforce, SBA will forgive the portion of the loan proceeds that are used to cover the first 8 weeks of payroll and certain other expenses following loan origination. SBA's Paycheck Protection Program website.
- Loans up to $10 million determined by 8 weeks prior average payroll + additional 25%
- Use to pay payroll and certain other expenses
- Deferred payments for 6 months
- Amount used to cover payroll for first 8 weeks forgivable if criteria met
PPP Recommendations and Notes
- Have your documentation ready. Tax forms are by far the best. Bank records or other official records that show income can fill in any gaps
- You and your employees income (read payroll) is eligible up to $100,000 per individual
- If you have applied for funds through multiple institutions, check in with each of them and let them know you have multiple requests in. Make sure you don’t accept more than 1.
- If your bank offers you less than the 2.5 months worth of funding through this program, and you need more. Its recommended that you apply through another organization rather than accepting the lower amount. You can only accept PPP funding once, regardless of the amount.
- The point of PPP money is really to allow you to keep your employees on the payroll and receiving paychecks through the closure. There is no mechanism to delay the start of the payment and the schedules that it triggers.
Common Mistakes to Avoid
- Don't use the wrong numbers for your calculations! Use Gross Payroll for the payroll amount (not including employer portion of FICA)
- Don’t include contractors and sub-contractors. This goes on a separate application
- Make sure you cap any individual compensation at $100,000
- Recommend you use numbers from April 2019 to March 2020 to calculate rather than 2019 calendar year
- Forgiveable income will not be taxed at the federal level. Most states are following this lead
- 2 tests you have to pass. What is the max you are able to apply for – at 8 weeks after loan originated, keep super track of payroll, rent, utility payments. At least 75% needs to be spent on payroll. 2nd, they’ll look at your employee head-count. If you’ve reduced pay or number of people employed, your forgiveness will be reduced. BUT if you immediately bring back employees you had previously let go, as long as you keep them on through June 30th then you’ll qualify
- The forgiveness determination will be made on the 8-week period from the first disbursement of funds. Your bank has a maximum of 10 days from SBA approval to close on the loan and make the first disbursement to you. The 8-week period starting from your first received funds is what the program will base your loan forgiveness determination on. You must spend at least 75% of the amount received on payroll to receive full forgiveness of these funds.
- The amount of loan forgiveness will be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000
- Federal guidance says that your forgiveness will be reduced if you decrease your full-time employee headcount. It also states that you have until June 30th to restore your full-time employment and salary levels for any changes made between Feb 15th and April 26, 2020. But, remember that your PPP amount and the 8-week timeline immediately following first disbursement will be used to determine your forgiveness calculation.
- Even if you don’t receive forgiveness in part or full, it can still make sense to use these funds. The terms are currently at 1% and come due in 2 years. Whether this is favorable for you is something you will have to determine.
Straight from the SBA: PPP FAQ PPP Fact Sheet
New Main Street Lending Program
Under the CARES Act, the government is facilitating banks making loans to businesses under 10,000 employees. These funds will be provided through normal banks and institutions, but the Federal Reserve will “buy” 90% of the loan from the banks, reducing the bank risk and encouraging greater funding. This program should be available within a week. Funds from this program can be used in addition to PPP and EIDL, depending on your needs.
SBA Debt Relief
Provides a reprieve to small businesses as they overcome the challenges created by this health crisis. Under this program, the SBA will pay the principal and interest of new 7(a) loans issued prior to September 27, 2020, and current 7(a) loans for a period of 6 months. SBA Debt Relief Site
Minnesota's small businesses are now eligible for the SBA Economic Injury Disaster Loan Program and can apply for a loan on SBA's website.
- Low-interest loans of up to $2 million
- Use to pay fixed debts, payroll, accounts payable, and other bills
- Interest rate is 3.75% for small businesses, 2.75% for non-profits
- Repayment options, up to a maximum of 30 years.
Forms to fill out FIRST
Here's a list of documents you'll need to provide to complete the application.
Preparing these documents before you go to SBA.gov/disaster will save you time and streamline the process.
IMPORTANT NOTE: The SBA highly recommends you complete your application online, rather than mailing it in.
More Info on Economic Injury Disaster Loan (EIDL) Program
- These loans are only intended as working capital loans utilized to assist with impact caused by the coronavirus emergency efforts.
Loan applications will be evaluated by SBA loan officers. Criteria includes:
- Credit history acceptable to the SBA
- Repayment abilities
- Eligibility - business must be headquartered in a declared state and suffered working capital losses due to the declared disaster (not a general downturn in business due to the economy or other reasons).
For more on SBA programs for the coronavirus, please visit www.sba.gov/coronavirus and sign up for updates as they become available at sba.gov/updates
Forbes Compiles Funding Sources for Small Businesses
Forbes Magazine has pulled together a comprehensive list of government and private/nonprofit companies that have loans or grants available to small businesses impacted by COVID19. They're updating this list as additional sources become available.
MN DEED Loans
Authorized to Issue 0% Forgivable LoansTerms:
- Range from $2,500 to $35,000 and be based on firms economic injury and financial need
- Be Interest Free
- Paid back monthly over 5 years, with first payment deferred 6 months with potential partial forgiveness
- Only available to Minnesota-based businesses
- Must be able to demonstrate direct and adverse impact by the conditions that precipitated the emergency declaration in Executive Orders 20-04 and 20-08
- Be current on financial obligations as of March 1, 2020
- Be existing small business operating in MN for at least 1 year
- Willing to provide collateral or personal guarantee for at least 20% of the loan
- Been denied credit by a lender and sought or be in process of seeking an SBA EIDL assistance loan.
- Pay-off the emergency loan if financing is received from alternate sources subsequent to loan approval.
Learn More and Apply for MN DEED Loans
Facebook Small Business Grants
Facebook has announced that they will spend $30 Million in Grant funding for small businesses. They are in the process of developing the program, and will be taking applications. We highly encourage all of you to visit the program page, and sign up for updates so that you'll be notified directly as soon as the program is available.