SBA Loan Update

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Dear Vacaville Business Owner,

The City of Vacaville would like to thank you for making Vacaville your business home. We are so privileged to have you in our city and are thankful for the great service you provide to the Vacaville community. With that, there is some recent news on federal loan programs I want to share with you.

The Small Business Administration (SBA) has started accepting applications again for two forgivable loan programs: The Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP).

Last Friday, Congress added new funds to both programs, but it is possible these programs will quickly run out of money again. Please do not wait to apply!

To apply for the EIDL, apply directly through the SBA here. To apply for the PPP, download an application form here and take it to your local bank. You may get faster service for the PPP loan from

You can receive up to $1,000 per employee under the EIDL. Please count yourself as an employee. So, if you don’t have any employees, the most you can get is $1,000. Money received from this loan is forgivable, meaning you do not have to pay it back.

PPP will pay you for up to eight weeks of eligible expenses, including payments for your lost income.  The maximum amount you can receive from the PPP depends on your average monthly profit as indicated on your 2019 Schedule C. Here’s the maximum amount you can receive based on your 2019 profit. If your profit was:

  • $10,000, you will receive $2,083.
  • $20,000, you will receive $4,166.
  • $40,000, you will receive $8,333.
  • $60,000, you will receive $12,500.
  • $80,000, you will receive $16,666.

This money received from this loan is forgivable, meaning you do not have to pay it back.

What about unemployment?

It is suggested by most federal loan program experts that all providers apply for unemployment benefits. If your unemployment benefits are less than the money you receive from either SBA loan, you will come out ahead by receiving the loans. If your unemployment benefits are more than the money you receive from the loans, you can always turn down the loans without consequence. Therefore, you should apply for both unemployment and the SBA loans.

The rules regarding unemployment are complicated to say the least! Unemployment benefits vary widely from state to state.  Here in California, there is the Pandemic Unemployment Assistance Program (PUA). https://www.labor.ca.gov/pandemic-unemployment-assistance-pua-program/   

Covered Individuals in California include:

  • Independent contractors
  • Self-employed
  • Individuals without sufficient work history
  • Individuals who have exhausted their regular and any extended UI benefits
  • Must self-certify to be able and available to work except are unemployed due to COVID-19 related reason

Amount of Benefits

  • Minimum weekly benefit amount of $167 (but weekly amount may be higher and equal the amount provided under regular UI, depending on proof of prior earnings)
  • PLUS $600 for weeks between March 29, 2020 to July 25, 2020.**

When Benefits Start

Benefits can be retroactive to weeks starting on or after February 2, 2020, depending on your last day of work due to COVID-19 and regardless of when you submitted your claim application. The effective date of your claim will begin the Sunday of the week when you last worked and became unemployed due to reasons directly related to COVID-19.

How Long?

Up to 39 weeks (minus any weeks of regular UI and certain extended UI benefits). Last week is week ending December 26, 2020.**

** Under the CARES Act of 2020, the $600 additional benefits are available through 07/31/20. However, the U.S. DOL has issued guidance to clarify that, for most Californians, the last full week of benefits will end on 07/25/20. Similarly, the PUA program has a legislative end date of 12/31/20, but for most Californians the last full week of benefits will end on 12/26/20.

IMPORTANT: You can apply for both loans and unemployment. If you find out that unemployment will give you more money than either loan, you can always refuse to accept the loan without penalty. If you find out that getting the PPP loan will give you more money for eight weeks than unemployment for eight weeks, you simply report your PPP money as income and let your state tell you that you are ineligible for unemployment for those weeks. Then reapply for unemployment after eight weeks.

California is also putting $50 million toward a new Microlending program through the California Infrastructure Economic Development Bank (IBank). The program is aimed at businesses that might not be eligible for Small Business Administration loans or the U.S. Treasury Department's new Paycheck Protection Program.  The state is also creating a $50,000 "bridge loan" and a one-year reprieve from paying sales taxes for small businesses. The policy would allow businesses to defer paying their sales taxes without penalties, fines or interest for a year. Applications are available at https://covid19.ca.gov/.

Admittedly there is a lot of information in this e-mail.  And of all this can be daunting.  Please know that you are not in this unprecedented period alone.  It is vitally important that businesses who intend to apply for any and all of these programs do so immediately.  Time is of the essence so please do not hesitate in applying.

Thank you for making Vacaville a great business community. 

 

Best Regards,

Tim Padden
Economic Development Manager
City of Vacaville