Blair Jackson 0:02
All right. Well, I’m here with my colleague, venerable attorney, Matt McMillan with Jordan law. And, Matt, I understand that you were on a very important phone call today. So maybe you could tell us a little bit about this small business bridge program that’s being proposed or initiated by the state of Florida.
Matt McMillan 0:25
All right. There, I was on a conference call for the group of local attorneys that are organizing a pro bono effort to assist small businesses in obtaining funding from the state of Florida through the disaster relief bridge loan program. It’s an emergency program that was already in existence. The for the form application is out there. It’s been used for hurricanes in the past, but the funds are available for the current kovat 19 crisis and Basically it can provide 50,000 to $100,000. In bridge loan, interest free for a year. Again, it’s alone. So it does need to be paid back. It is a bridge loan on the application, there’s an indication of how you intend to pay it back whether it’s through another loan Assistance Program or
or through operating revenue or
other bank loans, the basically the finance plan, but it’s pretty much a straightforward application that requires some documentation of the last two years 2017 2018 they’re not asking for 2019 yet of tax returns for the bit small business and the principal owners and you fill out the information and submit it to Tallahassee. It can be submitted by email or fax. And those funds are intended to help businesses that are really feeling the pinch of been shut down, and they just need that operating revenue to stay open until, you know business resumes.
Blair Jackson 2:10
So how do they How do they qualified to be a part of this program? Well, the the basic qualifications I guess that that a small business would have to meet.
Matt McMillan 2:21
Alright, well let’s well they have to have had
basically been impacted by the
have to have economic damages and they have to be able to describe and enunciate what their what their damages are, for example, it’s pretty obvious for some businesses if you’re in the event business, events are being canceled left and right so your calendars getting canceled. And you would you would present not only the past revenues of your of your business, in the in the document But you’d say, Well, this is what I ordinarily make. And this is I don’t have any revenue revenue for the foreseeable future. Until this the, you know, has passed. And that’s my economic damages and you would stipulate as to what your losses are, you still got to pay rent, you still gotta pay certain employees when I’m specifying how many employees you might have. And you’d submit a hasker document as well, as we progress and, you know, that was fun. We would help folks, it’s very proving that we impact damage from loss for those that would be excluded from from this and might what might be rejected would be if there are already if the past indications of the past tax returns are the business is already there is no damage here that the expenses are relatively low, there is a loss of revenue, but for the business in and of itself it would not affect the life of the business. But I imagine that the nature of this this current situation, that’s probably a relatively low threshold to meet. So, I can pull up a copy of the application quickly
see here, but
Yeah, the the applications here.
okay. $50,000 is the maximum with 100,000 for special special cases, the economic injury, loss of sales or revenues needs to be described. So if you can somehow show the prot, the your profit and loss leading up to march and then the evidence of statement of indication of the loss of sales and revenue because of the shuttering of businesses, people having to work from home, etc.
Then you have to stipulate
where your source of repayment is going to come from on the application, and that includes whether or not there’s also an SBA disaster. That’s a federal program that I’m that I haven’t looked at the details of yet, but that’ll probably take a little bit longer to process other federal aids insurance proceeds. If people are lucky enough to have insurance that covered This type of event, people would want to check, like indications from the conference call was that in the few in the experience of the few attorneys that have been that have been helping with this, it seems like the insurance policies tend to exclude pandemics. But I have no evidence for or against that. But you want to look in your business insurance package, if there is insurance proceeds, you could check this box and it would
help you whenever that claim is processed.
guarantee this loan, and then bank or other loan.
You need to forward this to Tallahassee, it gets signed. It is you are
basically making a sworn statement to the government. So you have to make sure that what you’re saying is true and correct. Is that you know there’s a risk of fraud But I mean, there are real damages here. And just because they’re hard to describe doesn’t mean you shouldn’t apply should get some assistance in describing the economic impact of the of the CDC orders.
GP eligibility requirements
strictly strictly stated on the application or that you have to be a for profit for profit, privately held small business that maintains a place of business in the state of Florida, and was established prior to March 9 2020. So they’re gonna be very young businesses that just started a few months ago, a few startups that may not have all the documentation of returns for the last two years for the business, although the owners would still need to submit that information. And privately held this is not for publicly traded businesses. It’s for small businesses. has to be a Florida business. The county designation on this form, it’s statewide, it’s been the state of emergency has. So anywhere in the state, it’s not just, again, this program was designed for disaster relief for hurricane areas. So hurricanes would hit particular counties. In this case, this shutdown is nationwide. So this is Florida helping Floridians a small business within two with two to 100 employees. So you need to have some employees.
Blair Jackson 8:40
One question, you’d want to have advice.
You can’t be a one man band and or a one person band, I should say.
Matt McMillan 8:48
Right. This is indicating that you need to have employees so you’re your sole proprietors with a with a few contractors is not going to qualify for this, I would want to look a little bit more into detail about the definition of employees. Let’s see employees are defined as individuals who receive wages and salary, which employment taxes and income taxes are withdrawn. So if you’re if the arrangement in the small businesses to have a 1099 independent contractors doesn’t appear that they would qualify for this, as one of the requests that they have in the documents that we’ll get later is to attach the nine for IRS Form 949 40 ones and W threes from the employees that are affected. So if you’re doing 1099, you’re not going to have those documents anyway. So it is that is a good point. I’m glad you asked that question. I probably should have mentioned that earlier that this program is really designed to keep the business afloat and justified to make sure that employees, you know, keep their jobs. And downsizing a business when faced with a shock like this cutting employees is, you know, unfortunately something that’s, that cuts costs. And this helps stabilize the business to prevent job losses. And so that’s the two to 100 employees must have paid in full previous loans received from the state bridge loan program. any outstanding bridge loan must be repaid prior to submission for this event. So, I guess in the event that this, that small business that would otherwise qualify, still has a loan out from a previous hurricane, they would need to pay that off and then get it I guess, if they still had $10,000 to pay, they’d have to pay that off and then get apply for 50 and net out 40. But I don’t think that’s going to affect as many people during certain ineligible businesses and these are just major of the law, but our own application gambling activities, if one third of the gross annual revenue from the small businesses from gambling activities
in the business engage in any illegal activity.
Basically, it’s worth reading straight from the application here a business that presents live performances of an indecent nature or derived directly or indirectly, more than 2.5% of the gross revenue through sales of products and services are the presentation or depictions or displays of any decent sexual nature. So the adult industry would might be 2.5% is rather a small threshold there but there they seem to be excluded as well as massage parlors, hot tub facilities, escort services and a business that has a primary purpose of facilitating polyamorous relationships, so use me. So there’s some public policy exclusions there. Right, right. In the statute,
excuse me, the interest rates,
the loan will be interest free for the term of one year. And then the interest rate will be 12% per annum on the unpaid balance thereafter, until the loan balances are painful. So it jumps up to 12%. So
doesn’t mean that it’s immediately
after the one year.
But interest starts accruing, and that’s significant interest of 12%. So that really does put the incentive to refinance that if there’s some way to do that. Because honestly, the You know, the way where rates are now and they continue to cut rates in this crisis 12% is going to be really high. So there’ll be another loan that the business is assuming that the bridge loan is successful and the business recovers, which everybody expects the economy should be recovering from its current position in 12 months, so the businesses should be functioning by that point.
Blair Jackson 13:29
Right. And then Okay, so
Matt McMillan 13:35
if it’s not repaid in full by the maturity date will be considered in default defaulted loan, won’t call interest assigned to a collection agency. So you have to make arrangements to pay it so including potential for collection fees, etc. So definitely, for the first 12 months you know, try to get that paid. Now the required loan application documents in section three
On the application,
side, but the application needs to be signed by individuals who collectively own 51% or more of the equity of the business, as evidenced by the business tax statements. So you don’t have to get all the partners and all the small shareholders. Again, these are small businesses, but as long as you have, you know, three of the four partners or two of the three partners, they’re the only ones that actually had to sign. Okay. So the CIO and all those ones that sign are the ones that have to disclose their IRS Form 1040. So that’s important to consider. You know, as an attorney, if you have a partner for some reason that does not want to disclose their tax returns for this loan, their personal tax return, say You have four partners and one partner is adamant about never disclosing their tax return. You’d still could have that partner not sign the application. And the three other partners signed the application, you got 75% of the ownership that’s more than 51%. Those three partners attach their tax returns and then that meets the qualification of this application. So it’ll it it avoids that problem of what if you have hold a shareholder, you can’t a shareholder a partner, you can’t reach that doesn’t that is in the minority and doesn’t consent to the loan and doesn’t want the loan. Perhaps they wanted to liquidate the company anyway. So it only requires that majority to go forward and and and Those are the only ones that have to disclose. Because you might have also have a partner that just doesn’t have their records. Sure, either. And then you have to wait for them to get their records together. You can say, okay, you just don’t sign. Those of us who have our records together and our 1040s done. We’ll just go ahead and speed this through. So the business then that backing up, those are the individuals that are the owners of the businesses, the business tax return in and of itself. At a minimum, they want copies of the 2017 and 2018 federal income tax returns for the applicant including all schedules
a written explanation if the tax return is not available. So there is some reason
that a tax return can’t be prepared.
Perhaps it hasn’t been filed for some reason. I don’t know what 2018 wouldn’t be by now, but if for some reason those are unavailable and I think that’s in that in there because they want to For this in a hurry. And if it’s a hurricane that just hit, and it just destroyed your accountants office, and maybe they just can’t get a copy of it and they want to submit it, and they can prove that portion. You’d have supplemental documentation of another kind. Maybe that’s what that’s there for. But I really do think that the written explanation is for that purpose 2019 returns. They’re not required. But I don’t see why you wouldn’t want to submit those. There’s helpful supporting documentation later. And I would consider that something that would be quite helpful because it has the most relevant and timely information is that the team returned, chose what happened in the business at the end of the close of 2018, assuming they’re using a calendar year, which is well over a year ago.
Blair Jackson 17:53
excuse me, pause for a sec. I mean, I agree here.
If you’re like me it’s allergies. Probably more than anything else because off goes away, you
know so yeah, it’s it’s that and then it’s all all of a sudden, I’m speaking a lot
that’s driving my throat out.
Matt McMillan 18:19
But so the sole sole proprietorship, partnership, these are the different kinds of
your sole proprietors Incorporated, you don’t
you would just be filing the 1040 of the individual income tax return with the Schedule C, and the profit and loss which is the important portion went on there. For partnership form 1065. For partnership, including the schedule k one k one partners share deductions and credits for corporations, you know what your form 120 1120 whereas corporations form 1120 s And then if your LLC is taxed as a corporation, you’re going to want to have, depending on which box you check there, whether you want to 1120 1120 s, or form 1065 or schedule C, depending on how, how you’re reporting that LLC. And I mentioned this earlier, the employer tax documentations. They want because they’re looking for those two to two 100 employees, you’re gonna want to have one of the following either the annual federal tax return the form 940. The quarterly federal tax return form 941, that’ll be for one quarter, right, right, or w threes or w twos for minimum of two employees. So if you have the W three or w two information for two employees, you can submit those because clearly they’re not looking for what your total payroll is, how much whether you’re paying your payroll taxes, they’re looking to see if You have employees, and that you’ve reported them independently to the IRS to the W two and maybe three 940 or 941. They’re looking to see the economic impact of where this money’s going. Right? Right. Then individual tax returns I already mentioned, at a minimum copies of 27 and 2018. For an all scan, including all schedules, not just the schedule, see for each individual business owner, who completed and signed this application, so you’re getting you’re going for that 51% of owners. Those 51% owners not only are disclosing the business, they have to disclose their personal tax returns for the two years as well. Okay. So you want to collect all that information. And then you can also provide voluntary information, because remember, you’re also making a case as to why you deserve relief, because there is going to be a review procedure. to screen to screen applicants and
Blair Jackson 21:03
go into a little more detail than just coronavirus. I’m not making any money. But but not but you don’t have to write a novel about this either, right?
Matt McMillan 21:13
No, and you don’t want it to be too detailed or too long winded because you really are going to be have when you submit your application, there gonna be hundreds and thousands of other applications. And they’re going to be a, there’s gonna be an employee sitting down and looking at an application every two or three minutes, maybe every minute. And the sooner they can pick out what the facts are on your application, the easier they can move it along the line. So you want to say right at the beginning, this is the kind of business and industry that I’m in. And this is how I’m affected and this is how many employees I have. No, you don’t want to have the application list. I founded this. And I’ve been uh, you know, all all great information like I found it and I’ve been a great member of the community. for 15 years, and I’ve always paid my taxes and, and I’ve done community service and employee, that’s that’s not what they’re looking for. And, you know, the more it wanders around, the more likely that one, you know, get set aside for some other reason because there’s other information in there, that raises a question, etc. You really want to do the bullet point of this is that, you know, I was making x before I’m mixing, why before, why after, and I have a number of employees that are at risk, and I need this bridge link. Right? So, because that’s what you would want to put on there. And the other information because because of when in the year this is happening, I look at this, and they’re asking for 2017 and 2018. I imagine that this form gets revised in the summertime, or like six months from now. After the extension deadline, and it would be 2018 2019. They’d be looking for those 2019 returns which are norm, which are still due April 15, even though they’ve extended the payment deadline. And if people aren’t sure if finally extensions, but that inform a lot of people already have that information, you already have your 29 inch, a lot of business already have their 2019 information if they’re on a calendar year, so they can submit that they can set they can submit the year end financial statement for the past tax to tax years, any interim financial statements profit and loss for the current year to date, additional funding requirements, providing monthly sales figures, if you’re trying to make that as part of your case, and just want to show how severely they dropped off. And then any explanation of credit report concerns and issues. So this is a loan application. So if there are reasons on your credit report and you have a bad credit score And you want to address what that issue is to make sure you get the loan. You’d want to include that too. Because this is a loan application, if are there issues on your credit report that you need to explain? That would slow things up. Not only something that’s correct in your past history, but if there’s, you know, the credit reporting agency has something that’s wrong that’s been on there forever. You might want to attach a statement and explain that. So those are the those are those are the general instructions and then going through the form it’s very simple in terms of identifying the type of business the business name and trade name, the employer identification number from IRS. That’s important because not only is that used for your business tax or on your business tax returns, but it’s most importantly use on your employment tax returns and that’s why it’s called the empty employer identification number. And one of the criteria is that you have employees. So that number is very important because that’s how they’re going to pull that information from IRS from those statements, right. Then just your addresses, the type of business activity, number of employees and average wage day the business was established, because again, there was the requirement that it had to be established by March 9, which is that’s incredibly recent. And then there’s a little section for business financial summary, which basically just says, what your gross revenue in 2018 2020 of available revenues, a roll a roll. If you have a bank where you boost your banker and the different bank accounts you have the amount of estimated loss this it says is four impression. If I know so many I know this particular situation, you you could put a question mark,
on the forum, it’s got real estate, machinery and equipment, inventory. Those are three categories, and then leasehold improvements, loss of sales and other I imagine with this particular type of disaster, you’re not you lose, you’re not losing your real estate machinery, and maybe inventory.
leasehold improvements, I doubt
it’s loss of sales, that’s the most important one and other which could be if it’s not technically a sale, some other type of revenue
that’s listed on there. You would want to put
what your estimated losses and put a number if you don’t want to put a question mark go ahead and put the question mark because nobody really knows until after the fact how much they lost right? And and this has happened so fast you’d have to declare if you have insurance in the name of your insurance agent, you don’t have to in your policy number you don’t have to go through and figure out what I mean you’ve got whether it’s property insurance, business interruption insurance, or other if you have any of those listed. Just because you have insurance doesn’t necessarily mean you’re covered though this might be excluded
because this particular type of event
and then there’s a section for describe the type and extent of physical damage and or economic injury that your business has experienced as a result of the declared disaster attached photographs or other evidence of the physical damage. I don’t believe that we’re gonna see much physical damage from from the virus but
it is going to be mostly
mostly economic. Although you might be it might be pretty powerful if you’ve got, I don’t know, an image of an empty parking lot or an image of something that’s been physically shut down. Or Besides, or a big sign that says, you know, this parking lot is closed and this is where your businesses like the GM, I know that some of the local businesses or local jurisdictions are closing public parking lots to prevent card congregation or closing particular areas. Maybe if you have that indicate, here’s the sign with the police. Well, you know, having an order saying that you’re not supposed to be I think in Volusia County, I can’t. I’m only reporting what I hear on the news. So it may not be completely accurate, but I guess they’re actually enforcing on the beaches that are trying to keep groups of larger than 10 together and they’re closing some of the public parking lots in the beach districts where people congregate if somebody has a business there, if somebody has, I don’t know, like a food truck or a constant concessions business there, and they get their business because the public parking lot is there. And it’s not there anymore. That may not be physical damage, but there certainly is an opportunity to attach a picture here or something that might help make your case.
But it says physical damage and or economic injury. So
that’s economic injury, if there’s a big sign that says, Do not come here, right in front of me your bit signed by the government, right in front of your business, and I think that’s pretty powerful. So you might be able to get creative there, but don’t get too cheeky, just
It’s that that’s a powerful image, in my opinion.
go ahead. Go ahead. I just say then further down, there’s listing the owner applicants by name, Social Security date of birth, driver’s license, all of those for any individuals and then you designate which one is the contact individual, or if it’s a different person, if it is an attorney, or a representative that’s going to be handling it. And then you have each one of them
each individual signs,
and then they’re certifying that they intend to apply for and they intend to pay it back.
Blair Jackson 30:28
And and that’s it.
Matt McMillan 30:30
So it is fairly straightforward. But just a little guidance. I think that most people should be able to get this completed and
Blair Jackson 30:40
Okay. Well, that’s why we’re here at Jordan law Blair Jackson and Matt McMillan. I handle a lot of the the business cases that come in both litigation and transactional work and maths are tax guru In addition to doing some transactional work as well, so I believe we have covered pretty well there, again, to stress it’s a pro bono program. We are in the process of figuring out, you know, the volume of cases that we can take, but certainly, it would be a free consultation. And if we accept your case, if you otherwise qualify, then we can handle it for free. So, just to let you know, it’s a it’s a free program to help our small businesses in our community. And we’ll have more information posted on our website at www Jordan law.com. Matt, pleasure speaking with you, virtually. Hopefully, we’ll get together one day soon or be able to, and we just wish everybody you know, just be careful out there. Be as safe and healthy as you can. That’s the most important thing and just know that we’re available to help. So thanks again, Matt,
appreciate it. Thank you. Talk to you soon. Bye bye
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