How You Can Use The CARES Act To Help Your Family, Business, Or Nonprofit:

For Individuals & Families

  • Most will probably will receive check in mid-April
  • Those on Social Security, Supplemental Security Income, or Veterans Benefits are eligible for a relief check
  • Tax filing and payment has moved to July 15th but second quarter estimated taxes are still due June 15th as of now
  • Annual income phase out limits: $75,000 to $99,000 individuals / $150,000 to $198,000 married filing jointly

What should I do with my stimulus check?

For some families, there just won’t be many options. Sometimes you just have to do what it necessary, not what is best. Here, I am just trying to provide some good, long term, fundamentals to think about doing.

  1. Fill up your Primary Checking Buffer.
    It is a great idea to have 1 month worth of expenses in your checking account. It is a buffer to avoid potential overdrafts.  It helps smooth out a lot of financial wrecks into road bumps.  It is also immediate access in case you need the cash. Cash can often get you better deals than credit cards. 
    Tip: Use your credit card for a most purchases. Credit cards have better fraud protection than debit cards and don’t give a thief direct access to your money buffer. Just remember to pay it off every month, or better yet auto-pay. 
  2. Keep up on your bills, and make minimum payments on debt.
    Missing payments can rack up fees and hurt your credit score. If money is tight, proactively contact the companies to see if any alternative payment options are available. Banks ave been strongly encouraged by the FDIC to reduce or eliminate fees. Most places are offering leniency with payments, mortgage, utilities, student loans…
  3. Pay off any high-interest debt.
    Put any extra stimulus money towards high-interest debt that you currently hold, such as credit cards. Paying off even a little high-interest debt can help you reduce your monthly expenses.
    Tip: If you have high interest Student Loan Debt, then you need to talk to an Advanced Education Planner or a Certified Student Loan Planner.
  4. Grow your emergency fund.
    On top of the buffer in your checking account, you need between 3 to 12 months of expenses in a savings account. It needs to be held in a low-risk, immediately available, type of account that yields form 1 to 2  %.  Check savings rates here.
    Tip: It is important not to get into the emotional habit of hoarding money in a savings account. If you don’t invest the amount above you emergency fund somewhere, your money will start to lose real value to inflation.
    Examples: If you work for the federal government, your spouse is a tenured professor, you have no kids at home, and you can both work from home: then you probably only need a 3 month emergency fund. If you are a small business contractor, with a single family income, and you have young kids; then you probably need closer to 12 months worth of expenses on hand.
  5. Fund your long term buckets. 
    My favorite bucket, for most clients, is the Roth IRA. It can be used for your kids education expenses, your retirement, and health disasters.
    You have to invest at a level of risk you are comfortable with, and that is a complicated thing best talked about with a CFP® Professional. 
    Setting that aside: globally diversified, low fee, target-dated, index & mutual funds are a great place for someone to being investing.
    Tip: I usually recommend Betterment to my Pro Bono clients.
  6. Help someone or something you value.
    Gratitude and community are some of the fundamental elements of feeling safe and happy. That is why it feels so great to help out.
    How could you help your family, neighbors, or friends in need?
    Are there locally-owned small businesses and restaurants you love, who are especially affected by the outbreak?
    Are there charities you value focused on coronavirus aid and relief?

If you need a little help, I have doubled my available Pro Bono hours.
Just email or use my call calendar to schedule a conversation, it’s the same level of privacy as my paying clients. 
You can do this, and there is a lot of hope.
Daniel L. Bishop
Advice-Only CFP® Professional

For Business & Non-Profits

The Coronavirus Aid, Relief, and Economic Security (CARES) Act has a lot in it. Fortunately, there is some real help for small businesses. This is an overview of what you programs you might want to consider as we are all trying to weather the economic desert storm. I hope you find it helpful, and find some hope for the future. If you need help understanding anything, or just need to talks to another business owner for a few minutes; feel free to schedule a call, email me, or message me on Linked In or Facebook.
Daniel L. Bishop
Advice-Only CFP® Professional

In-Post Shortcuts

Coronavirus Air, Relief, and Economic Security Act (CARES Act)

Paycheck Protection Program 
-Loan program to cover cost of keeping employees

Small Business Debt Relief Program 
-Debt relief and loan forgiveness to keep up with payments on SBA loans

Disaster Relief & Economic Injury Loans
– Quick loan advances of cash to keep the doors open

Families First Coronavirus Response Act
-Paid sick leave, family leave, and childcare credits

Employee Retention Tax Credit (ERTC) & Deferral of payment of Employer Payroll Taxes
-Deferral of up to 50% of Taxes…
-Not available for those using Paycheck Protection Program

Useful Documents, Tool, & Links for Additional Reading

Coronavirus Air, Relief, and Economic Security Act (CARES Act):

  • Federally guaranteed SBA loans to businesses with 500 or fewer employees
  • Application process ends on June 30, 2020

The CARES ACT

Paycheck Protection Program: Forgiveness of up to 8 weeks of payroll based on employee retention and salary levels 

  • Loans are available through June 30, 2020.
  • Focus period of time from February 15, 2020 to June 30, 2020
  • Non-profits, Churches, and any other 501c3 organization that does not receive Medicaid is also eligible
  • Separate from the SBA Disaster Relief Fund 
  • Only 1 PPP Loan per enitity

Loan funds can be used to cover the following expenses: 

  • Salary or wages, payments of a cash tip
  • Vacation, parental, family, medical and sick leave
  • Health & retirement insurance benefits 
  • State and local taxes 
  • Mortgage, rent payments, utilities 
  • Interest on any other debt obligations that were incurred before the loan period
  • Limited up to $100k annual Salary/wage for each employee 

The loan amount shall be the lesser of the following: 

  • $10,000,000  OR
  • Total average monthly payroll costs for the preceding 12 months (March 2019 to February 2020) multiplied by 2.5

Notes on actions:

  • Lenders likely current banker. 
  • No loan payments under this program are due for one year. 
  • No fees are included in the loan.
  • Your company’s expenses for the eight-week period after the origination of the loan will be analyzed.
  • Businesses that let employees go before accepting the loan will not be subject to penalties
  • Rehire employees after accepting the loan, can receive additional credit to cover wages
  • Unemployment extended for laid-off staff: based on their date of filing unemployment.
  • Good Faith Certification: Support ongoing operations OR  Funds used to retain workers and maintain payroll or make mortgage, lease, and utility payments.  

 Loan Forgiveness

  • No personal risk for business owners or board members. 
  • Partially of fully forgiven
  • Portion of the loan used to for approved cost forgiven, dollar for dollar
  • Normal operating expenses like marketing, admin, travel, etc. are not included
  • ! Amount that is forgiven will be reduced for those that lay off employees during the first eight weeks following the loan.
  • ! Companies that reduce wages of employees who make less than $100,000 per year by 25 percent or more will also have the forgivable amount reduced by the amount of the pay cut.

Calculation of Loan Forgiveness & Full-Time Equivalent Employee (FTE) 

  • They want you to have equal to or more employees from February. 15, 2020, to June 30, 2020, as you did last year from February 15, 2019, to June 30, 2019. 
  • Average FTE from: February 15, 2020-June 30, 2020 Divided by February 15, 2019-June 30, 2019 = Percentage of loan forgivable
  • Every dollar your company spent on payroll, utilities, rent, or interest on mortgage debt will be added together. That amount will be forgiven, up to the total amount your company borrowed through the program.
  • Funds not forgiven have a 10 year loan maturity

      Small Business Debt Relief – first come first serve: relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans.

      Debt Relief:

      • Existing borrowers can defer payments of principal, interest, and fees for up to six months
      • Possible extensions, but not more than one year 
      • Available to new borrowers who take out loans within six months of the date bill was signed into law. 

        Disaster Relief Loans:  Economic Injury Disaster Loans & Emergency Economic Injury Grants

        Apply for Federally approved SBA loans for COVID-19 here: SBA Disaster Loan Assistance  OR  SBA Coronavirus COVID-19  

        • Emergency advance of up to $10,000. 
        • The advance does not need to be repaid under any circumstance
        • May be used with the PPP loan, but not stacking.
        • Funds can come within 3 days of successful application.
        • May be used to: to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments 
        • Economic Injury Disaster Loans are also available to residents in declared disaster areas. To view the full list of disasters, click here.

        Families First Coronavirus Response Act:

        Paid Sick Leave Credit – up to 80 hours/10 days (sick with COVID-19)

        • Up to $511 per day per employee
        • For Employee who needs to care for someone with COVID-19 or caring for a child because the facility is closed – maximum is $200 up to 10 days/80 hours.

        Child Care Leave Credit – up to 10 weeks

        • Equal to two-thirds of the employee’s regular pay – capped at $200 per day or $10,000 in the aggregate
        • Unable to work because the school or child care facility is closed

        How to get the credits (more guidance should be coming soon)

        • Retain an amount of the payroll taxes equal to the amount paid, instead of depositing to the IRS
        • The payroll taxes include withheld federal income taxes, FICA and Employer’s FICA

        Employee Retention Tax Credit (ERTC):  Deferral of up to 50% of Taxes

        Not available to employers receiving assistance through the Paycheck
        Protection Program.

        • Refundable payroll tax up to 50% of wages paid from March 13 to Dec 31 2020.
        • Maximum credit is $5,000 per employee / $10,000 wages paid per employee
        • Must have had shutdown order OR period of significant decline in gross receipts (50% decline from previous year)
        • More than 100 employees, ERTC applies only to who are not providing services

        Delay of Payment of Employer Payroll Taxes

        Not available to employers receiving assistance through the Paycheck
        Protection Program.

        • Allow taxpayers to defer paying the employer portion of certain payroll
          taxes through the end of 2020
        • Deferred amounts due in two equal installments, end of 2021, end of 2022
        • Deferrable taxes include: employer portion of FICA taxes and half of SECA tax
          liability.

        The power of believing that you can improve. Carol Dweck

        The power of believing that you can improve by Carol Dweck.
        Carol Dweck researches “growth mindset” — the idea that we can grow our brain’s capacity to learn and to solve problems. In this talk, she describes two ways to think about a problem that’s slightly too hard for you to solve. Are you not smart enough to solve it … or have you just not solved it yet? A great introduction to this influential field.

        Dan Sullivan & Strategic Coach

        Dan Sullivan is founder and president of The Strategic Coach Inc. A visionary, an innovator, and a gifted conceptual thinker, Dan has over 40 years’ experience as a highly regarded speaker, consultant, strategic planner, and coach to entrepreneurial individuals and groups.

        There is a lot of good ideas at: https://resources.strategiccoach.com/the-multiplier-mindset-blog

        And  https://www.youtube.com/channel/UCbJbJXwFLQ7JS54g7vfBKUg

        Here are two of my favorite concepts.

        Kolbe & the conative connection

        Kolbe measures your instinctive way of doing things and the result is called your MO (method of operation). It is the only validated assessment that measures a person’s conative strengths. Gain greater understanding of your own human nature and begin the process of maximizing your potential. Find what’s right about you. 

        Learn more here: https://www.kolbe.com/kolbe-a-index/

        Book Summary of The E-Myth Revisited by Michael Gerber

        Within the first 5 years, 80% of businesses fail. Why is it that when we live in the information age, with almost all of the information needed to succeed available for free, 80% of businesses are still failing?

        The E-myth is that most people who start businesses are entrepreneurs risking capital to make a profit. When in reality most people who start businesses are technicians, people who were good at an aspect of their job and decided to start their own show. The Fatal Assumption is that if you understand the technical work of a business, you understand a business that does that technical work. This is not true. There’s a lot that goes on with a business that a technician will not understand. The issue is that most people set up their businesses as people dependent when they need to be systems dependent. Which means setting up systems and procedures that require people with the minimum amount of skills to keep it operating at a high level.