Welcome to our new series called Chamber Conversations: Trusted Advice in Challenging Times. Chamber Conversations are direct, simple conversations between the Frederick County Chamber of Commerce and experts in various industries for the purpose of providing valuable information and insight to our community.
Our first guest is Shabri Moore of Moore Wealth who discusses with us financial challenges and situations associated with COVID-19 and current financial resources available to business owners as a result of the pandemic.
In this interview, Shabri talks about…
- CARES Act
- Paycheck Protection Program, EIDL loans
- PPE loan forgivability
- The importance of your local banker in the process
- The application process and timing
Transcription edited for readability:
Rick: I’d like to introduce our first guest for our first Chamber Conversation, my good friend Shabri Moore, of Moore Wealth. After a successful career in the life sciences industry, Shabri has built an incredibly successful wealth management advisory firm. Moore Wealth’s clients include sole proprietors, small business owners, and companies with hundreds of employees. These companies are very diverse, and they include minority-owned and disadvantaged businesses, professional services, health care, allied health concerns and even government contractors.
Shabri isn’t just a dedicated and focused financial expert, although she is that, she’s also heavily involved in this community. She’s a committed volunteer having served on the Chamber Board of Directors, The Women’s Giving Circle, The Community Foundation, The Rotary Club of Frederick and one of the first board members of the Frederick Innovative Technology Center, Inc., FITCI. So you can see, she knows her business, she knows our community and she has a heart to serve and we are thrilled and honored to have Shabri join us on our first ever Chamber Conversation.
So Shabri, I’d like to start by asking some questions if I could and these questions all kind of relate to the environment we’re in right now. We’ll continue to do these Chamber Conversations in the future and I’m hoping you’ll agree to come back at a point in time in the future where we can talk about something that doesn’t have anything to do with COVID-19 or SBA or economic industry disaster loans but let’s start with that.
So what kind of relief generally is available for small businesses through the Small Business Administration and through the Federal CARES Act?
Shabri: Hi Rick, thank you so much for putting this together. The Chamber and you have provided such great leadership to our community and I’m thrilled to be a part of this project that you’re doing. Our business community in Frederick is vibrant and it’s a wonderful place to be but right now a lot of businesses are struggling. It’s very appropriate that you’re hosting something like this now. So to your question, the kinds of relief available through theSmall Business Administration or the Federal CARES Act are really two fold. First, the CARES Act created two programs, the first being the Paycheck Protection Program or PPP and second the Economic Industry Disaster Loan or EIDL.
The act appropriated about 360 billion dollars to be administered to these two programs, and it looks like there is going to be about 250 billion more that will be allocated as well.
The PPP or Paycheck Protection Program was really intended to help businesses cover their everyday type of expenses so payroll, rents and any cost associated with that, any mortgage interest and so forth, and it was intended for that period between February 15th and June 30th.
The EIDL loans are the ones through the SBA. These are typically used when there is a declared disaster and COVID-19 is certainly a declared disaster. So the initial understanding was if you applied to one of these online, that you would immediately get a $10,000 loan. The reality, however, is that it didn’t happen quite that quickly. Everyone is working as fast as they can, government, bankers you name it. However there are always going to be little glitches along the way. Those loans are going to be available, just not as quickly as we initially thought.
Rick: Yeah that fuels a lot of the fear and uncertainty and confusion. This is an undertaking on the scale of World War II in terms of the mobilization of resources. And while our leaders in Washington wanted to do something, unfortunately they didn’t really understand how that ‘something’ was going to translate to the local lenders who have to pay at least the PPP loans. So who is actually eligible for a PPP opportunity?
Shabri: So the CARES Act provides a very broad definition of a small business, and this includes any business that operates with 500 or fewer employees, or a size standard set by the industry.
Interestingly, a lot of people believed sole proprietor and independent contractors would not be eligible however they actually are. So if you’re a sole proprietor, independent contractor, are self-employed or even a gig economy employee, you are eligible for these loans.
Rick: So I never really understood the companies that are defined in terms of a gig economy. I think that’s added to the confusion associated with these programs, opening them up.
Shabri: Absolutely, and you bring up a great point, Rick. A lot of times people believe if they are a sole proprietor or a 1099 employee, they’re not eligible. In this situation, they are ALL eligible. So in the case of someone who has a business where they are a sole proprietor and they have 1099 employees, the way they work with this is their 1099 employees then apply for their own loans and the sole proprietor applies for his/her own loan.
Rick: Typically applying for a SBA loan is an incredibly complicated process. There is a lot you need and a lot you have to prove. Can you generally describe how this is maybe different in this situation?
Shabri: Again, great question. An SBA loan is typically very intensive in terms of collecting paperwork and so forth. Because this is a disaster loan, some of this has been simplified. Your best friend right now is probably your banker. That person is going to give you a list of different types of documentation you’re going to need. The loan process itself has been simplified, the application is considerably shorter than it has ever been and the types of documents you’re going to need have been reduced.
Now let me clarify for a minute. With that EIDL loan, a portion of that is an emergency loan. Specifically, it’s more just a good-faith promise on the part of that small business owner to say ‘I need this and I need this immediately.’ So it is literally about a page and a half of documentation you need, nothing in terms of tax returns or all that. Now for the bigger loan, you will need some tax documents, you may need a profit and loss statement, it’s a little bit more involved however it still has been streamlined tremendously.
Rick: For the EIDL does the business apply directly through the SBA and the PPP through an authorized lender or do both require the intervention of a banker?
Shabri: Both require the intervention of a banker, so you’re going to need the banker and I’ll clarify that in a minute. You are going to need a banker to help you through the majority of this. That emergency $10,000 loan, that’s one you can do online on your own, and I would encourage you to do that immediately. Now I do want to clarify that initially when this was first put out it made it seem as if you applied for that loan you were granted that immediately, you would get it within three days and you would get $10,000. There’s been some clarification now however, and it looks like it will be about $1,000 per employee and it could take several weeks to get that loan. That turn around is not as quick as people who were really trying to get the money out hoped it would be
Rick: Also, this thing has an element that I’ve never seen in terms of economic injury disaster loans from hurricanes and tornadoes and that is a forgiviebility component. Could you talk a bit about that?
Shabri: Of course. So the PPE loans are 100% forgivable. Now in order for that to happen you have to follow the rules of where the money can be used. So going back to the things we discussed, to cover payrolls and mortgages and so forth, the one caveat with this is at least 75% of the loan has to go towards paying for payroll costs. Because remember the reason these loans were put into place was to keep these small business owners afloat, but also to keep their employees on staff. That was the big impetus behind all of this.
Rick: So lets say I’m a small business owner and I have multiple channels and multiple businesses under my control. Am I restricted or can I apply for multiple opportunities?
Shabri: As long as you have separate businesses they are considered separate entities. And they must have separate EIN numbers. For example sole proprietors operate under their own social security number. You can’t have multiple businesses under the same social security number or tax ID number. But if they have different numbers then yes, absolutely they each qualify on their own.
Rick: So lets say I’m a business and I haven’t really suffered my loss yet but I’ve forecasted the next couple payrolls and I know where I’m going to be. So to be proactive I’ve reduced my workforce either through furlough or layoff. Would the person in that predicament qualify? Are they able to apply for or hopefully bring all or most of that workforce back and have most of or all of that loan’s obligations forgiven?
Shabri: So yes in fact, if you’re in a position where you can say, I’m okay right now so perhaps I shouldn’t apply yet and leave the money for someone who needs it, but I know that i’m probably not going to be okay if I forecast this out a bit. I would say definitely apply for the loan. If you are someone who has actually furloughed or let go employees you are still eligible, you just need to bring them back on board and make sure you’re covering their salaries because again, remember the main purpose is we want to keep people employed.
Rick: Yeah so is the best advice really to talk to your lender, the business banker you have that relationship with, because frankly they understand your cycles better than anybody else. Is that the best advice to contact your banker right away?
Shabri: Absolutely. The relationship you have with your banker should be a very strong one. And to your point, most banks are servicing their clients first so if you have a loan with that bank, or a depository account with that bank, they are more likely to work with you immediately. Newer clients are going to be put into the queue but they are going to be put behind all other current clients. Because so many people are applying for these loans these bankers are absolutely inundated. I’ll tell you Rick, just in talking to all the different bankers just in the area as well as in Baltimore, Montgomery County and DC, these guys are working pretty much all 24 hours a day, seven days a week, trying to get everything together for their clients and truly trying to help them out. But it’s that relationship, and if you think about what Frederick is all about and what the Chamber has done for Frederick, makes us very connected to each other and that includes having that strong relationship with your banker.
Rick: So how does one know if their application got processed or is accepted? How are they going to find out?
Shabri: There are phone numbers you can call but I’ll be honest with you they are so inundated with calls you’ll never get through. You will get an email letting you know if you have actually been accepted and the loan is going to be processed. They may ask for a few pieces of additional information but our understanding in talking to our clients and colleagues is people are starting to get emails saying their applications have been approved and things will start moving forward. Last week we were hearing virtually nothing in terms of approvals but over the weekend we started getting messages saying “yes I did indeed get approved and here are the three things I am going to need to submit in order to move forward.”
The process is beginning to work, we just need to be patient, and understand everyone is trying to do their very best with this.
Rick: Anything else you wanted to share?
Shabri: You know, I think that our community is so strong. Rick, you know I love Frederick and I love our business community and I think if we each reach out to help each other in any way that we possibly can that we’ll all make it through this and we’ll be stronger for it.
And we (Moore Wealth) also would like to offer anything we can in the way of help. We’re available, we’ve been working pretty much every single day trying to help our clients and anyone who picks up the phone and calls us. We’re happy to help in any way we can. Thank you so much for taking the lead on this, I think it’s critical.
Rick: Now this is just for anyone watching this to know why my heart is so full when it comes to Moore Wealth. That’s why we asked you to help us with our first conversation and for those of you watching I’m sure you can see why we thought we should begin our conversation on this topic and with Shabri as our inaugural guest. Shabri, I can’t thank you enough for your time, your wisdom, and your insight.
The community is justifiably anxious about our artificially-depressed economy, so just knowing that we have folks like you out there and willing to help is a real comfort in a very difficult time. So from the bottom of my heart, thank you for being our inaugural Chamber Conversations guest, and I’m looking forward to having you back when we can talk about something that isn’t quite so terrifying. Thank you again for your time, we really appreciate you being with us today!
Frederick Chamber Insights is a news outlet of the Frederick County Chamber of Commerce. For more information about membership, programs and initiatives, please visit our website.