The CARES Act: Small Businesses & Nonprofits Adapt To COVID-19 | New Hampshire Public Radio

The CARES Act: Small Businesses & Nonprofits Adapt To COVID-19

Apr 14, 2020

A business in downtown Portsmouth.
Credit Dan Tuohy; NHPR

The CARES Act, a record-setting federal stimulus package, is funneling $2 trillion into the U.S. economy, including hundreds of millions for small businesses and nonprofits hurt by the coronavirus pandemic. We look at how the package aims to help these organizations get through the next few months. 

Click here to read all of NHPR's coronavirus coverage. 

Air date: Wednesday, April 14, 2020. 


GUESTS:

Additional Reading and Resources:

The Small Business Administration (SBA) Guidelines and Resources for Small Businesses For Coronavirus-related Funding 

"How small businesses can get money from the stimulus package," by Li Zhou.  

New Hampshire Business Review had a webinar last week to help small business owners with the new stimulus package. You can watch the webinar here. 

Transcript:

This is a computer-generated transcript, and may contain errors. 

Laura Knoy:
From New Hampshire Public Radio, I'm Laura Knoy and this is The Exchange.

Laura Knoy:
The two trillion dollar federal economic relief package known as the CARES Act includes roughly $350 billion for small businesses and non-profits, and that was welcome news for these organizations in New Hampshire. But accessing the money hasn't always been a smooth process and many, many questions remain so, today on The Exchange, we try to answer some of them as we find out what this act includes for the Granite State.

Laura Knoy:
And we're going to start today with the national picture. Joining us for that is Li Zhou. She's a reporter for Vox based in D.C. and she's been covering the ins and outs of the CARES Act. And Li, thank you very much for being with us.

Li Zhou:
Thank you so much for having me.

Laura Knoy:
Well, and we'll talk details in a moment. Li, we'll have two New Hampshire guests later in the hour, sort of hashing out the details. But first, the big picture, please. What's the scale of the problem, Li, that this small business package aims to solve?

Li Zhou:
The problem is huge. I think what we've seen so far is that since the coronavirus response has taken place, there has been huge economic fallout. Whether you're measuring map by the unemployment claims we've seen or the number of applications at these loan programs are currently experiencing. I think for context, it's helpful to know that there are millions of small businesses that exist in the U.S. and thus far they've approved roughly over a million loans. So that's just a fraction of the entities that currently operate and likely will need funding like this.

Laura Knoy:
Well, and we all see the impact in our local communities. And you're right, it's important to remember that those communities are all over the country, from what you can tell, Li. Is there enough money available to help all the small businesses that might need it?

Laura Knoy:
That's the biggest question right now. And the conclusion that lawmakers, both Republican and Democrat, have come to is that there is not enough money and that these programs are definitely going to have to be replenished likely in the next package that they try to pass in the next couple of weeks.

Laura Knoy:
Wow. So even though the scope of it sounds so huge, $350 billion out of a 2 trillion. They're saying they might need more. Li, that's what you're telling us, right?

Li Zhou:
And I think Marco Rubio, who is the chair of the Senate Small Business Committee, has been posting these regular updates on social media. His sense is that the money could burn out as soon as this week for this program. So it's really go going quickly.

Laura Knoy:
Wow. The money could run out as soon as this week. Okay, well, that's something we'll return to with our New Hampshire guests a little bit later for sure. You mentioned Republicans and Democrats. Li, and I'm curious what the politics of this were on Capitol Hill. It seemed to me to pass pretty quickly.

Li Zhou:
The small business portion had pretty strong support from both sides of the aisle. Right now, however, what we're seeing is a slightly different approach in how to do it next time around. In the past two weeks, there's actually been this ongoing fight over whether they should just approve about 250 billion more dollars for this paycheck protection program. And Democrats have held it up not because they don't support that money, but because they think that there needs to be certain restrictions on how it can be handed out. One reason for this is because the existing money has been given to a lot of major banks. But banks like Bank of America, for example, have limitations on who can apply for these loans. So you typically have to be an existing customer to benefit from a loan program, and that shuts out a ton of people who might not already have accounts with these institutions.

Laura Knoy:
Oh, that's interesting. So small businesses here. Great. I can apply for these, you know, forgivable loans. This is wonderful. They call up one of the big banks and the big banks say, uh-huh, right.

Li Zhou:
Exactly. So where do they go? So the sense is that a lot of community based banks or more regional banks are more open to taking on some of the newer customers. And on top of that, recently, the Treasury Department has approved new lenders that are financial tech companies like PayPal and Square. And in some of those have a broader base of customers that they might be able to reach beyond your traditional banking institutions.

Laura Knoy:
Wow. So in the brief time, Li, since this program was announced just past about two weeks ago at the end of March, how strong has the response been from small employers?

Li Zhou:
The response has been huge. And I think when we talk about the money running out, especially, that's probably one of your best indicators for how much demand there is from people. And I think the issue on the government side is that a lot of the system better in place currently aren't prepared to deal with that wave. I think before the average was the Small Business Administration would approve 800,000 loans a year on average. And now we're looking at a scale that's much bigger in a much shorter timeframe.

Laura Knoy:
We are talking about the small employer portion of the huge federal CARES Act, the big stimulus package that the government approved about two weeks ago to try to help the economy not go into complete freefall. If you run a small business or a non-profit, tell us how your organization has been hit by all the coronavirus shutdowns and what questions or experiences have you had and trying to access this federal help? We're talking right now with Li Zhou. She is a reporter based in D.C. for Vox. She's been covering this stimulus package extensively. A little bit later in the hour, we will talk to two New Hampshire guests who've been working with many, many clients on this.

Laura Knoy:
So, Li, we're focusing, as I said, on the small business and nonprofit piece of this 2 trillion dollar package, who's eligible and who isn't For this small business portion?

Li Zhou:
They have tried to make the eligibility relatively broad for this. So both small businesses and nonprofits can apply. And the threshold is usually around five hundred employees or less. So that varies a bit on industry. And the Small Business Administration has more details that businesses can check out to see if they qualify. On top of that, self-employed people and independent contractors are also eligible to apply. So you have kind of a wide range of folks who can try to obtain these loans.

Laura Knoy:
Yeah, and that's new for some of these federal programs, right? Li, independent contractors, workers from the gig economy and so forth.

Li Zhou:
Right. Exactly. This is intended to cover as many people as possible who might need this aid right now.

Laura Knoy:
Well, a lot of people listening here in New Hampshire will be happy to know that this applies to nonprofits because we have a very robust nonprofit sector. It employs a lot of people. Are they treated pretty much the same as private sector, small businesses?

Li Zhou:
They are. I think in when it comes to this program, specifically, the guidelines that are included for both businesses and nonprofits are pretty much consistent.

Laura Knoy:
In order to get aid, Li, organizations, of course, have to show that they were economically hurt by virus related shutdowns. How hard is that to prove? What do they have to show?

Li Zhou:
They have to show that they are facing some form of economic uncertainty, which is a bit broad. But I think what that means is, you know, if you're talking about just seeing less sales at your business, less revenue coming in, anything that can demonstrate that is a helpful piece of paperwork or documentation that would, you know, be good to bring in when you're applying for this program. In general, the purpose of this paycheck protection program, as the name indicates, is to help businesses cover payroll costs. And so the main driving force behind it is that businesses can get these loans completely forgiven if they don't lay off workers or they rehire workers that they've already laid off before the June 30th deadline set in the program.

Laura Knoy:
So there are some parameters to add to the loans in terms of the peopIe the paycheck protection program. Tell us a little bit more about that. Li?

Li Zhou:
Yeah. There are things that are definitely good to keep in mind because I think when you talk about something that's totally forgivable, that sounds just like very accessible from the right. It is important to know that there are restrictions. I think one of them is that 75 percent of the loan is needed to be used for payroll costs. So like other aspects of it can be used to cover things like rent interest on your mortgage or utilities. But a big chunk of that has to be shown that it was used for payroll. And the way that they're trying to calculate how much companies are getting is the estimate is 2.5 times your monthly payroll cost. So being able to offer that calculation and have that information ready when you apply is also important.

Laura Knoy:
Ok. So the first part of the PPP, these are the payroll protection program that says basically you either need to promise that you're not going to lay anybody off or if you do have to lay people off, you have to promise that you'll hire them back. So that's a pretty big stipulation there.

Li Zhou:
It is a big stipulation. And I think there was some debate about whether that is too restrictive because a lot of businesses likely had to make certain decisions during this downturn, given how quickly it's happened. So there was, I think, questions about whether that was too limiting. But the intention is to keep as many people employed as possible throughout this time.

Laura Knoy:
I'm thinking of a business that, you know, may reopen but may meet customer traffic may be still down 50 percent from what it was before. So can they really justify hiring that full sales force? That's force that they used to need. You know, so there are some different parameters that may emerge once businesses reopen. They may not be ready to hire everybody back. So I just wonder about that, Li. That seems like what you're saying.

Li Zhou:
Yeah. Yeah, exactly. And I think a lot of the economists that I've talked to and read about regarding this downturn have said the ideal scenario is for us to be able to just like freeze everything, like keep everyone. And, you know, like even though people might not be able to do the work, they typically do that everyone continues to get paid. So as a result, when the economy gets started again, we don't have a lag of we need to rehire a ton of people or we need to, you know, kind of make all these changes. So this program, I think, was one of the pieces aimed at trying to keep that going.

Laura Knoy:
Oh, that's a really good analogy. So the hope is that this kind of just freezes everything. And then when this is all over, we go back to where we were. But it's not going to be like that. Every single business person I talked to, health care official, spiritual leaders, educators, everyone says when things start to open up again, it's not going to be like it was. So I just wonder about the flexibility of this program to address that.

Li Zhou:
Right. And I think that is certainly a worthwhile piece of it. That could be worth just considering for businesses that are looking at applying to this. I think another thing to talk about, too, potentially is that there are other programs out there offered through SBA. And also, I believe at the state level for different states that help small businesses as well. And the other major national program is the economic injury disaster loan, where people can get a $10000 forgiveable grant if they applied it. And that's similarly based on whether you feel like you've been economically affected by the corona virus pandemic.

Laura Knoy:
Well, glad you mentioned that because we've been talking about this paycheck protection program. But you're right, the E I D L what you just mentioned is another piece of this small business assistance package. So how is this different? You were going there, Liebert. Give us a little more.

Li Zhou:
Sure. Yeah. The thing that I've heard most from experts working on this is that this might be a quicker way potentially for people to get money. Although the I guess, caution, I would argue there is that it has also seen a huge demand. So there are delays on that front as well. But the main difference in the offering is that the grant is $10000. Businesses and nonprofits can apply to it. It's completely forgivable. One of the strings that they've started to attach for some businesses now is that they're limiting the amount to a thousand dollars per employee of that business. So if you have a three person business, you wouldn't be eligible for the full ten thousand dollars, you'd only be eligible for three thousand dollars. So that's something to keep in mind. But the upside of this is that ideally it would get processed more quickly and that you get a grant to help cover immediate costs in a way that, you know, it's the PPP is taking more time. You might want to do something like this either instead or in conjunction with an application to the other program.

Laura Knoy:
So it sounds like people need the help of a banker or financial advisor kind of figuring out which string to pull on this whole thing. You mentioned this earlier. But I'd like to ask you again. So what has been the role of the banks in these loans?

Li Zhou:
So for PPP, everyone is applying directly through either their bank or other types of lenders. So banks have a central role in trying to figure out approval of the business and nonprofits that apply. And I think that's where we've seen a little bit of a holdup and confusion because some of those initial qualifications are unclear. And the tool that banks were using to communicate with SBA wasn't working great from a tech standpoint. But now that we're, you know, two to three weeks into this program, some of these issues are being figured out a bit more interesting.

Laura Knoy:
And you mentioned earlier that some online financial services companies like PayPal have also gotten involved. So that's probably sped things up there. Two last questions for you, Li. And again, we really appreciate your time. What kind of fraud protect protections has Congress put in place? Because anytime you have these giant amounts of federal money, some Americans may be tempted to cheat.

Li Zhou:
Yeah, and that is another big concern. That's a bit of an answered question as well, because the process has been moving so quickly. When you apply for these programs, there are a slew of questions to ask you to demonstrate. Some of those things we talked about, including need as well as the actual costs that you need. By the loan, so that documentation is intended to help provide some kind of guardrail for when banks are trying to approve the people that they think should get them. I would say the flip side to that point we were talking about earlier of banks only helping out their existing customers is that for many of these customers, they already have a ton of information about them. So they can quickly try to suss out, you know, this person has a reputation and has a track record that I can rely on and evaluate when I'm deciding whether or not to give them this loan.

Laura Knoy:
Sure, it makes processing that loan really easy if you already have a 10 year business relationship with that bank. Last question for you, Li, please. What is the one element of this whole small business and non-profit assistance package that you think a lot of people just aren't understanding that keeps tripping people up?

Li Zhou:
I think one of the issues has just been access to these programs. And that's the biggest challenge that the government faces as well. When you look at both the limited number of lenders that the program started with, as well as just the backlog that people faced when they tried to get these applications. I think we're seeing SBA, you know, senators, all of those really working to try to address that issue. And I think that's the biggest piece that needs to continue to be improved going into the next round of funding as well.

Laura Knoy:
Well, and good luck covering that next round and I hope we can tap your expertise again. This has been really helpful. Thank you so much.

Li Zhou:
Thank you so much for having me.

Laura Knoy:
That's Li Zhou. She's a reporter for Vox who's been covering the CARES Act extensively. Now, coming up to New Hampshire, experts in business and finance join us with their thoughts and advice to get your questions ready.

Laura Knoy:
This is The Exchange, I'm Laura Knoy.. Today, the federal stimulus bill known as the CARES Act and what it hopes to do for small businesses and nonprofits. We've heard the national picture on this. Now New Hampshire focus. And for that, we turn to Rusty Mosca. He's managing director at Nathan Wechsler Accounting and Business Advisors, where he works with small businesses and nonprofits. And James Gallagher, he's senior vice president and commercial loan officer for Merrimack County Savings Bank. And Exchange listeners, as always, let's hear from you. If you run a small business or a small nonprofit, how has your organization been affected by all the shut downs? What experiences have you had and trying to access this federal money? What questions do you have about accessing it? And Rusty, to first, please, what's your workload been like since this program was approved back in late March?

Rusty Mosca:
Well, good morning, Laura. I will say that our focus normally this time a year or that time was let's get some tax returns out and let's deal with everybody's business returns or financial statements. And all of a sudden, like everybody else, we were thrown into this new world where our clients were calling us with very simple questions on how do I create a cash flow statement, how do I get my business in a position, what should I do with my vendors? So we're in a new world of finance where everybody was sort of saying taxes take a backseat right now.I want to just make sure I have enough money to pay my bills and enough revenue stream coming in. And what are the things I could do?

Rusty Mosca:
So. It was very interesting in terms of how our world was turned upside down. That then led, as you know, in New Hampshire, where a majority of the businesses that we deal with for sure and James is going to pipe in as well are closely held businesses. They're small businesses. They hit this category of what this money and the programs out there are trying to achieve. And so, quite frankly, it's been a whirlwind. And we just immersed ourselves in how do we help our clients? What are the things we can advise them on working with local bankers? I think we hit it on working with your your community banks, banks like Merrimack County Savings Bank, where James and I actually worked together, collaborated on a specific customer and making sure we could help them guide them through the process so I could go into more details. But generally speaking, it has been total chaos.

Laura Knoy:
Yeah, well, and everyone I talked to over the last couple of weeks, whether they're in health care or, you know, education or business, no matter what, everybody kind of says the same thing, Rusty. This happens so quickly all at once. And it's taken people a while to get up to speed on what they are supposed to do, no matter what field they work in. So I totally appreciate what you're saying. And James, to you. What has it been like for you at Merrimack County Savings Bank since these new loans and all these programs were announced?

James Gallagher:
We've all got long beards and droopy eyelids.

Laura Knoy:
I can relate. Well, minus the beard, but. Yes.

James Gallagher:
I can tell you that the bank, first, I'd be remiss that thank I leadership by executive leadership. Really helpful in supporting us as well as the big three at the head of the holding company and all the other banks. We've worked very diligently together from early on in that process. We're really trying to figure this out because they think it came out so quick.

James Gallagher:
And the first thing we thought, you know, we're thinking, you know, we're coming out of an economy that has just been growing. And, you know, the delinquency level of borrowers across the banking industry has been extremely low. And then all of a sudden, you know, the economy stops, it comes to reaching halt and where there is a shortage of workers.

James Gallagher:
Now you have businesses asking, how am I going to pay these employees that are on my payroll when I can open up my business or there's no demand for my product anymore. But now you're faced with going from I can't find somebody to fill that spot. You know, I have to lay people off. And, you know, our role has been to to help these people through the BPP program, the loan program, the the payment protection program, so that they can keep these people on their on their payroll so they don't have to lay people off. What's at the end hopefully will help the economy recover back to where it was more quickly. So we've been working right now with our customers. I think we've done close to 400 applications with. 400 existing businesses. And I just, I can't even fathom how many people they've been able to help keep a paycheck as a result of this program. It's just been it's been tiring, but at the end of the day, it's been worth it. And I hope it'll be really worth it. You know, three months down the road.

Laura Knoy:
Well, I've a lot more questions for both of you, but I know our listeners do as well. So, again, I want to invite you, exchange listeners to join us. Now, if you run a small business or a nonprofit or if you work for one. Tell us what your experience has been with all the shutdowns we've seen recently. And if you have any questions or again, experiences in trying to access this new federal help, we'd love to hear from you two again. And Rusty and James, John is calling in from Nashua. Hi, John. You're on the air. Welcome.

Caller:
Good morning, Laura. The kind of comments, kind of questions. I've been reading as much as I can about this program and I operate a business that requires it relies completely on the ability to gather in large groups, particularly functions catering less than business. You know, the two questions that I have for businesses and bankers that haven't been able to answer anyone you've touched on a little bit earlier is what happens in the end of June when you've got one arm of the government saying that large groups are still not, you know, suggested or are not legal? And another, I'm seeing you need to rehire all your employees. And my second question that I presented to some bankers is that nobody seemed to be able to answer is we have such a large group of employees that are paid by the customers through tips rather than through paychecks. And how does the program address that issue?

Laura Knoy:
Yeah. John, thank you. And I want to let you guys know, Rusty and James, that just like a doctor can't diagnose somebodies health problem on the air, you guys won't be able to address all the specifics of everyone's call today. But, James, to his point, businesses are getting conflicting advice from, you know, health authorities and the state and the federal government and so forth. So it's really hard for them to figure out what to apply for and how much to apply for. And I just wonder what you think about John's column. Thank you, John, and good luck.

Yeah, thanks for your question. I would say that. You know, at the end of June, I think everybody is going to have to go back and kind of reassess where we are. It will be slightly different world than what we left when the virus impacted us and we shut down. What I would say to start is that, you know, I would encourage the caller to go to his bank and and and and apply for the for the payment protection program loan proceeds. I know they're probably getting close to the point where that first $350 billion has been exhausted, but it sounds like they will have another an additional increase to that, too. So that's my first recommendation, is keeping people on your payroll by applying for the PPP loan. And as long as you can, talk to your CPA like a Rusty and help have them help you through it. That's my first piece of advice, John.

Laura Knoy:
Sounds like you've got a second piece, James, or no, that's initial an initial start.

James Gallagher:
Well, I guess I guess that that's kind of the initial start, I guess. And my just my overview. What do I need to do with small business? Because I think they'll find that if he's got. You know, he's got employees, obviously, that need to continue to get paid. And he's forced to shut down because there's a lack of demand or he can't have a large gathering because of the virus. He can continue to pay these people through a payment protection program long issued by the FDA or through the bank, through the SBA. John needs to do that, I think right from the start.

Laura Knoy:
Well, here's a question. And Rusty, I'll throw this to you that John's call raises for me. And I've heard other business people kind of struggling with how do businesses figure it out, Rusty, whether it's worth keeping everyone on payroll under this payroll protection program or temporarily laying their workers off and saying, you know, I really hope to see you guys again. But in the meantime, take advantage of some of those generous unemployment benefits from the state. So, Rusty, how does a business figure out what the best path is for the overall business and for their workers?

Rusty Mosca:
And I think that is the absolutely best question to be asking right now, and I think an analysis of of how your business works and what's the likelihood that you'll be back to business as usual at a point in time before June 30. And so one of the things that that everybody looks at when they're looking at this program is how much of this loan will be forgivable. And there's different elements on how this loan becomes forgivable, forgivable. But the largest portion of it is that. And I think Li alluded to this earlier. Seventy five percent of the loan proceeds has to be utilized on payroll, which includes in John's case, he did the ask the question about tips. Cash tips or past tips are tips are included as part of the forgiveness and part of the loan proceeds. So that is a payroll cost. But for a business, they have to analyze a do they want it? Do they want to borrow money with a 1 percent loan for 2 years through the SBA to help them? Or do they want to be able to forgive as much and not have a loan balance knowing that they utilized it, they kept their key people in places of employment.

Rusty Mosca:
And when will they be back to business?

Rusty Mosca:
We do a lot of work in the construction industry and as we know, some things are working, Some things aren't, and they're determining. You know, once I get my money and James can speak to this, but the best knowledge I have in that program is that a lender has 10 days to distribute the money to a borrower. And at that point in time, the borrower receives the money. They have an eight week window under the current rules. And these rules, law change daily.

Rusty Mosca:
I looked at something yesterday that helped discuss everything for self-employed individual versus a corporation. And because the rule is going to continue to come out, the issue becomes what are the rules that are going to be in play? And can I for can I get the forgiveness on this loan so I don't not only have a business that is less strong today because of the economy. And now I've created debt even at 1 percent. I still have to pay the money back. You really have to look at will I be able to generate some sales, get myself in position where it makes sense for me to hold on to these people. And also, will I be able to utilize the forgiveness rules so that I can at least look at my total proceeds and know that I've got 75 percent of it covered with these folks. So we haven't calculators for that.

Laura Knoy:
Well, and again, we talked about this with Li. You know, sort of the assumption behind some of these Small Business Administration programs that we're talking about are, as she so aptly put it, to freeze the economy where it was before. And then once it's all over, you know, boom, you can melt it again. But things aren't going to be the same. Businesses and nonprofits are not going to operate the way they did before. So to just keep everybody on payroll and hope that it's all the same as usual. Rusty, seems to be a risky bet.

Rusty Mosca:
Absolutely. And I and I couldn't agree with you more. And I think that in some cases and I will look at some non-profits, for example, if you're an arts organization that has venues and that will have you won't be able to have performances because people they won't be coming to the performances and you're not able to have them. It may not be the right program. It may make more sense to keep people to some other program through unemployment, through work share programs, through unemployment that would keep them on part time basis because you're not going to be able to generate the revenue. And so the analysis really is is difficult. And, you know, it can't really get into the the deep really details and the mechanics of it. But if you're not going to be able to generate a not a lot of business in. By June 30, and unless the SBA and the rules say we're going to extend that 8 week period of time to 12 week period of time to give people a better utilization of forgiveness, it becomes difficult to to really put the analysis together. And you really do need to seek advice and talk not only to, you know, your CPA or your financial adviser, but also with the bank to see if there is a better program. There are other programs out there, but this is the best program when we look at small business in terms of actual forgiveness of a loan.

Laura Knoy:
Well, John, good luck to you and thank you very much for calling. And James and Rusty, let's take another call. This is Jay in Wilmot. Hi, Jay. You're on the air. Welcome.

Caller:
Thank you very much. I'm a pastor of two churches. And like other non-profits, I worry a little bit about applying for the program and diverting money to us. We need it, but we perhaps don't need it as bad as some of our other small businesses. So could you just talk a little bit about where the pot is coming from and whether by applying whether we displace others who might actually need the money more than we do?

Laura Knoy:
Well, it's really thoughtful of you, Jay. Thank you for calling, James. What do you think?

James Gallagher:
So that's a great question, Jay. You know, you're not the first one to ask that question either. I'm sure you can imagine. I actually had a conversation about that earlier. I actually was at the end of last week. And I I think what might my advice is that. If you have employees that you're paying and but you can't have them come in.

James Gallagher:
As a result of the virus, and the alternative is to lay them off and have them collect unemployment claims or to apply for the PPP program, loan the payment protection program loan and receive a loan from your bank that will continue to pay their wages. That that's the way you want to go. And in my opinion is you want to apply for that loan because the government is specifically, I think, use that program to keep people on payrolls that would otherwise be laid off during the shutdown period and file for unemployment. That way, you're not going back trying to hire the same position. Within two to three months or so. So my recommendation again is to go to your bank. Apply for that program and the moral obligation piece of it. I guess if you're if you're if you're forced to shut down or you're forced to keep these people out of work. I think he's doing them a favor by getting the money from the PPP loan, because you're going to continue to pay them their typical pay, their typical pay during the period.

Laura Knoy:
Well, Jay, it's good to hear from you. Thank you for calling in. And a couple of times, James, you and Rusty have said talk to your banker. What do people do who don't have a long term business relationship with a bank? Somebody either who was just starting out or somebody who's an independent contractor. How do you access the assistance of a bank at this time when you guys are so busy? James, if you don't have a previous relationship.

James Gallagher:
I mean, many, many, many businesses do have a banking relationship. There are some small independent contractors who have that. We've actually fielded applications from who have accounts with the bank, but they've never had a loan relationship. So again, I mean, we're working ten to twelve hours. I had one of my staff members. They work 14 hours today.

James Gallagher:
We'll field the phone call and we will talk to people.

James Gallagher:
I think there is a logjam that I think a lot of banks have experienced that throughout the entire country, I'm sure, with existing customers applying for further PPP loans. And that's been kind of our first focus is to take care of our existing customers. But we feel that phone calls. And we've we've talked to people so that we can offer advice. Independent contractors. If you have a ten ninety nine, you can apply for a loan as of Friday last week and you can get you can get a loan. I mean, for two and a half times your average monthly pay from last year.

Laura Knoy:
Wow. Rusty, do you want to jump in on that point?

Rusty Mosca:
I did. I actually first want to go back to to to Jay's question. And one of the things that the SBA came out with is something known as the interim final rule that talks about the entire program. And there's some interesting it has some interesting questions and answers and why the program came up. But one of the things that they laid out here, just to to to get back to what James said as well, is consistent with Congress's overarching goal of keeping workers paid and employed. That's the purpose of the PPP.

Rusty Mosca:
And so that helps when people if people are looking to say, do I really need it? If you're going to lay off people, most likely you're achieving what Congress and what the program's all about. So I just wanted to add that to it into the point. The question about how to reach somebody, I agree. All our clients, there's many of them that have loans and relationships with banks because they carry debt and they have inventory in buildings and all that. And so they already have those relationships. But other small businesses that are schedule seize or or never needed debt have relationships with the bank. And into James's point, all the community banks and the customers or our clients have said have been very helpful in leading them down a path that would say, here's what you need to do, here's how to apply. And here's the best way to do it, even though they don't have a direct commercial relationship with a banker. And so I you know, I think New Hampshire is, in the banking community, has done a nice job of of reaching out to those. I'm sure it's not like that for everyone's experience, but I think it's important to know that people are all looking to to help people through this and see if there's a way to help them understand the process.

Rusty Mosca:
I will also say, and I do want to make sure that this is understood. There is a cap in terms of how much of a self-employed person can receive. And it is capped at you know, they had what I call a means test throughout this of saying annual compensation that is included as part of the proceeds for any one individual cannot exceed a hundred thousand dollars on an annual basis. And that was purposely put in there so that there wasn't a lot of loan proceeds for high earners that, you know, you would say or to the benefit of potentially the owners and other key people in an organization.

So if you're a Schedule C, you know, you're max that you can get if your income is over. A hundred thousand is roughly about fifteen thousand three hundred eighty five dollars. That is your loan amount. And there's some other things to it. But I think it's important to know there are some rules in here. And the best way to understand these rules, if you if you want to spend some time, is on the U.S. Treasury site where when you go right on there, there's a link to a bunch of tools and documents. And I know some of them were lengthy, but we'll help you at least figure out some of the things if you want to do your first pass on that. It's very helpful. And they've done a nice job of putting some things together. That's where I spend just every morning. When I when I come to work, I go onto that site and see what's new under this program.

Laura Knoy:
Right. Well, in the Small Business Administration Web site, too, is helpful. I spent some time there this morning. Lots more questions for both of you in just a moment.

Laura Knoy:
We're going to take a quick break and then I've got a couple of really interesting e-mails to share with you, including someone who works in New Hampshire's tourism industry, which again, is a little bit different than someone who, you know, basically goes to an office and works all all year long.

Laura Knoy:
This is The Exchange, I'm Laura Knoy. this hour. The Federal CARES Act and what it does for small businesses and nonprofits. We're talking with Rusty Mascha. He's managing director at Nathan Wechsler Accounting and Business Advisors. He works with New Hampshire small businesses and nonprofits. Also with us, James Gallagher, senior vice president and commercial loan officer for Merrimack County Savings Bank and exchange listeners. We'd love to hear from you if you run a small business or nonprofit or you work for one. How has it been affected by all the shutdowns and craziness that we've seen in our economy? What would you like to know about accessing some of this new federal help? So Rusty and James, Lowell wrote us and says, I run a theater touring company. All my business happens in December and this year it may be nothing or limited. I'd like to support the artists I hire every year. And of course, for myself, is there any support for a business like mine?

Laura Knoy:
I'm so glad you wrote because again, I think this gets to some of the anxiety gentlemen that people who work in sort of non-traditional jobs. You know, it's busy one. One season it's. It's slow one season. They don't hire people full time. But boy, they really like their people and they really like to hire them for that one month like law. How do you, James, to you first? How applicable are some of these loans to organizations that don't fit that traditional mold?

James Gallagher:
Well, the SBA has given some guidance on seasonal businesses.

James Gallagher:
The question is, is interesting because it sounds like it is the business is actually busier, seasonal period of no.

James Gallagher:
Which I think is exclusive case. But specifically the SBA, what they've said is, is that if you have a seasonal business where most businesses that are operational year round, you're looking at your average monthly payroll costs to ultimately determine your loan amount and your average monthly payroll costs would be for the for 2019 of of that year for existing businesses. If. If you're a seasonal business, you're more likely to look at a period between February and June 30th of 2019. Keeping in mind that the impact it's time when the when the shutdown is taking place as a result of the of the current virus. So if you're busy. If if if the question suggests that first seasonal period is December. I'm not so sure she fits that bad, she would fit the box for where this is, where proceeds would be available. I'd have to look into that.

Laura Knoy:
Yeah. Well, it just shows you it's complicated. Yeah, go ahead, James. Do you want to finish up?

Rusty Mosca:
You like James? Yeah. Where you gonna kick it over to me, James?

Laura Knoy:
Let's kick it to Rusty. Rusty. I'm really glad Lo wrote. And you know, our earlier caller, John, too. I mean, a lot of people don't sort of, you know, begin their day at 9:00 and end at 5:00 and work Monday through Friday. New Hampshire has a vibrant sector of tourism related businesses and arts related businesses where it isn't sort of business as usual. So how accommodating are some of these programs to that sort of different framework, Rusty?

Rusty Mosca:
I think I think it is complicated and difficult for some of those businesses because, for example, in the business that I think we're trying to understand that has that performances and just the month of December around that area. For one thing, my guess is the people that are being paid or paid out on a ten ninety nine as an independent contractor. So the owner of that business will not get any relief to pay the ten ninety nine because those individuals who received the ten ninety nine will apply for their program on their own. I mean that was one of the rules that got laid out was very confusing at the onset.

Rusty Mosca:
When you're looking at your own business, you're looking at your own employees, but not people that have that are not considered employees of your organization or of your sole proprietorship or however you're set up because they work for such a limited time, mostly because they can apply for them selves as a self-employed individual under their own business, because if you're working for three or four businesses as an artist, you're receiving income and you really have your own business and you would apply that way or else you'd be kind of like a double dipping farmer. One person would and then they could. And that's not the intent. It's to keep your employees busy or if you're self-employed, to make sure that you're being covered. If you're one person or if you have employees, you could be self-employed and have four or five employees. The wages for those employees would be a covered part of the loan proceeds.

Laura Knoy:
You know, gentlemen, I've got a couple emails that refer to this question that we talked about earlier. Again, how employers are weighing whether to apply for the loans and grants and keep everybody on payroll or to temporarily lay everyone off and let them collect unemployment insurance. And I wanted to share these emails and see if you can help us out with this. So Donald writes, How do you rehire an employee when they are getting an unemployment check? Plus six hundred dollars from the government if they lose money, if they return to work. So I'm assuming that's a situation where an employee might make more from the unemployment package than they would make if they stayed on payroll. And Pam has a similar question. Pam says, So if I'm paying people to stay home and stay safe, wouldn't they be making more money under the current unemployment rules? Also, the people we have furloughed just temporarily and still on our payroll. Just with zero hours, we won't have to, quote, rehire them. They have still been able to apply for unemployment benefits. So, Pam and Donald, thank you. And I'm hearing from them and again on 21st Rusty, I think on this, you know, this struggle to decide what's better for the workers in terms of their finances and what's better for me, the business owner.

Rusty Mosca:
Well, I think if we go back to the intent of the program, if if it's better for the workers and you're gonna be able to rehire these people later when things turn around and you're not worried that they may decide to do something different or they feel like it's it's, you know, the people that are on unemployment are not receiving. In the case of health benefits that they could be receiving if they were still employed. And so there's different elements to it. I think it is a difficult situation. And the Congress actually debated that situation of making it sort of rich on the unemployment side that people would be in a in a better position to take unemployment. I think that was part of the you know, I wouldn't call an unfortunate consequence, but a consequence that real employers have to deal with because it is difficult for them if they have no work for them to do. And the timing of it, because ultimately they could be getting a loan to pay their wages, that if they don't, you know, if they keep them on payroll, that they should be forgivable. But they're they're going through a process that may not be worth it for them.

Laura Knoy:
Interesting. Well, Pam and Donald, good luck and thank you for writing in. And let's take a call. This is Robin Sullivan. Hi, Rob. You're on the air. Welcome.

Caller:
I've qualified or heard from my banker that I've qualified for one of these payroll protection plan loans. And if I've got an email last Saturday saying I'd be hearing from something called one span to finish my documentation and now it's four more days gone by and nothing's happened. And don't get a reply. I don't know if your banker online has an answer to that. Like, what is the turnaround time on these loans?

Laura Knoy:
I but this is a question a lot of people have. Rob, thank you for calling and good luck, by the way. James, can you enlighten us there?

James Gallagher:
Yeah. First Thanks for the question. I don't know what one span is specifically. It may be an operating system that they have that they use to issue the applications out as far as the turnaround time. There was some I mean, I think we keep putting into perspective, this program just started on the 3rd of April, which was a week and a half ago, though it feels like it's been about 12 months already.

James Gallagher:
I think just just being patient, understanding, communicating with your bank is an important piece of this. The guidance from the SBA has been I think, Rusty, you mentioned this earlier and is exactly right. Originally it was five days. And I think now they've said 10 days from the date that your application submitted to the SBA is approved, that the bank has to fund the loan.

James Gallagher:
So if you would applied on Friday, April 3rd, you should've been funded on on Monday, April 13th for the most part. With some wiggle room, I think they gave early applicants on certain banks, including ourselves. We'd jump on this as soon as we could find out.

James Gallagher:
But if your application has been approved by the SBA, I just want to remind businesses out there, if your bankers told you that your application since committed to the SBA and they've approved that and you still haven't received your money you use you will. There's significant certainty you will be funded because that's part of the allocation.

James Gallagher:
Because with the bank gets back is the piece of paper that says that this loan has been submitted and funded in the SBA's view. Now it's up to the bank to issue a no authorization and stuff like that so they can get it to the borrower. And to be honest. It took us about, you know, probably three or four days of long hours putting together a process that Merrimack County Savings Bank where people work, you know, 12 to 14 hour days to get that to work.

James Gallagher:
So be patient Rob. They'll get you your money. Just keep talking to them.

Laura Knoy:
All right, Rob, thank you and good luck. And Gail writes in from Dover. Please allow me to point out that some credit unions are positioned to take the PPP loan applications in addition to banks. And Gail says credit unions, along with banks, are working to provide support for small businesses in this time of need. And Gail, I really appreciate you pointing that out. A couple last questions for both of you. I talked to Li about this earlier, too, in our first segment of the show, even though the overall numbers involved in these programs, you know, 350 billion dollars for small businesses and nonprofits. Two trillion dollars overall in terms of this care stimulus package. Many in Congress, in banking, in business are saying this is not going to be enough. And Rusty, I wonder how you feel about that.

Rusty Mosca:
I will say that's absolutely true. The fact of our organization that, you know, we have roughly 50 people in this firm, every single client that I think that I talked to was applying for it. And so when you look at the magnitude of the people just within New Hampshire, and I will say people are getting loans of sizable amounts that you kind of multiply that out. And, you know, it's just New Hampshire. And there are so many businesses out there that the the 349 or 350 billion. And within days they knew that there's going to have to be a second part of this. And quite frankly, there will be. And there's there's no getting around it. I don't know how it all works at the other end, but I do know that it will be a challenge to think that this is all of it for now in terms of the federal debt and deficit.

Laura Knoy:
And that. Is that what you're referencing_? Yeah. That's definitely something that we need to talk about on this show at some point. But I know that's not your expertise, Rusty or yours, right? James, us set that aside for now. But what do you think, James? The word is already from Marco Rubio, the head of the Small Business Committee and others, that this is not going to be enough, that we need another phase of this.

James Gallagher:
I absolutely agree with Rusty. You need to have some kind of tail on this thing that increases that as far as the peopIe appropriate loan program goes. There's a lot of applicants that will likely miss the ability to get their funding. And then I think that what also needs to be considered is that there's a lot of businesses that are saying, OK, this is going to cover me, cover me for approximately eight weeks of my payroll.

James Gallagher:
Well, well, what happens, you know, in week nine? Right. There needs to be there's some discussion around whether or not the existing applicants have an ability to come back in. You can amend their existing PPP loan and have an increase if you know, because there's going to be a recovery period that we need to consider, too, because I think, you know, if this has been discussed on the show, it likely is not going to come back to where it was left off. It's going to take some time. And if we want to keep these businesses paying people, they're going to need the money.

Laura Knoy:
So don't assume that, you know, after eight weeks, the magic wand is, you know, waved and everything is fine. People go and get further extensions. James that seems to what you're saying. Yes. Well, both of you. Maybe we'll talk again once. Phase two or phase three or phase four of this all rolls out for now. We will wrap it up.

Laura Knoy:
I really appreciate you being with us, Rusty. Thank you very much.

Rusty Mosca:
My pleasure.

Laura Knoy:
That's Rusty Mosca. He's managing director at Nathan Wechsler Accounting and Business Advisors, where he works with New Hampshire, small businesses and nonprofits. And James, it was really good to talk to you, too. Thank you. Thank you. My pleasure. James Gallagher, he's senior vice president and commercial loan officer for Merrimack County Savings Bank. I want to remind our listeners that we'd love for you to share your stories about how the Corona virus and the related shutdowns has affected your life. Take our survey at NHPR dot org. We'd love to hear your stories. We'd love to reach out to you. And your input really does help shape our coverage. So go to NHPR.org. When you have a moment and fill out the survey there. You've been listening to The Exchange on New Hampshire Public Radio.