I hope this letter finds you, your family and your work family safe and healthy. I can’t express how much we appreciate everyone who is working through this unprecedented situation. We owe a huge debt of gratitude to our first responders, our health care professionals and all those keeping our essential business operating.
There have been a number of stimulus programs established over the last few weeks. There are so many programs and so many people discussing them that it becomes difficult to separate fact from speculation. Today, hopefully, I can help clear some of this up for you. Understand that there are still many details not yet finalized. We are closely monitoring that progress and will provide additional details as they become available.
One or more of the programs outlined below may be very beneficial to you or your organization. I would recommend that you pause and take time to understand the pros and cons of each program. This is, or could be, debt and you will need to understand how that fits into your future cash flow. I would also recommend that you consult with your accountant to ensure you understand the details.
SBA Economic Injury Disaster Loans (EIDL)
- Who is eligible?
- Small Businesses (typically less than 500 employees and includes not-for-profits, independent contractors, and other businesses typically excluded from SBA).
- What is the EIDL Program?
- EIDL’s are lower interest rate loans, typically with principal and interest deferment available for up to 4 years. These loans are meant to help cover expenses which otherwise could have been met had the disaster not occurred, including payroll and other operating expenses.
- How do I apply?
- EIDL’s are applied for directly with the Small Business Administration (SBA) at https://covid19relief.sba.gov/#/
Coronavirus Aid, Relief, and Economic Security (CARES) Act - Payroll Protection Program (PPP)
- The details of this loan program are still being finalized by the SBA
- Application for these loans will be made through Blackhawk Bank
- These loans are part of the SBA 7A program
- There is the potential for a portion of these loan proceeds to be forgivable, however:
- There is much detail that still needs to be developed and communicated
- Development of eligible loan amounts requires calculating average payroll costs
- Calculations for requests to forgive a portion of these loan proceeds will involve detailed calculations of eligible expenses
- All costs must be documented, certified by borrower, and approved by bank
- To prepare for this application process now, you may wish to:
- Identify and compile records for the expenses that can be covered in the program
- Organize the typical documentation needed for an SBA loan application
- Last 3 years of federal tax returns for the business
- 2019 payroll information
- 2019 and YTD 2020 Income statements and balance sheet
- Current organizational documents (bylaws, operating agreements, etc.)
- Current liability insurance documentation
- More detailed information on this program is available at https://www.blackhawkbank.com/business/sba-payroll-emergency-loan-program
Northern Illinois Community Development Corporation (NICDC) - COVID-19 Loan Fund
- The NICDC has put together an emergency loan fund to help businesses in Winnebago County, Illinois meet short term cash needs
- This program will make loans up to $50,000
- This program is intended to provide quick funding for businesses that have applied for SBA Disaster Relief funding
- For Additional Information or to Make Application: Contact the Rockford Local Development Corporation at 815-987-8675 or e-mail Andrew Jury Andrew@rldc.us or John Phelps John@rldc.us
- Additionally, there are specific programs being offered through Illinois Department of Commerce and Economic Development (DEOC - https://www2.illinois.gov/dceo/SmallBizAssistance ) and through the Wisconsin Economic Development Corporation (WEDC - https://wedc.org/programs-and-resources/covid-19-response)
We understand the challenges that you are facing and we are here to help you. Our hearts go out to those suffering medically, economically or emotionally from this pandemic. We will get through this together. Be safe.
President & CEO