Free Consultation: 858.450.1040 Payment | Client Login

MENUMENU
  • EDD
  • IRS
    • IRS Notices – What They Mean
  • About Us
    • MEET THE TEAM
    • PRACTICE AREAS
    • CONTACT US
  • TAX LAW & EDD RESOURCES
    • SMALL BUSINESS OWNERS TAX LAW GUIDE
    • EDD & IRS AUDITS
    • CRIMINAL TAX
    • SAN DIEGO TAX ATTORNEY
    • Orange County Tax Attorney Services
    • TAX BALANCE
    • INNOCENT SPOUSE RELIEF
    • OTHER TAX LAW MATTERS
    • SALES TAX AUDITS
    • UNFILED TAX RETURNS
    • OFFERS IN COMPROMISE
    • CALIFORNIA INCOME TAXES
    • INTERNATIONAL TAX
    • TAX COLLECTIONS
    • CORPORATE | BUSINESS TAX
    • PAYROLL TAX AUDITS
    • TAX LEIN
    • FAQs
  • SBA Loan Resources
    • PPP FORGIVENESS DENIAL APPEAL
    • SBA Criminal Defense
    • FAQs
  • RESOURCES
    • Blog
    • VIDEO LIBRARY
Home > Blog > What CPAs need to know about CARES

What CPAs need to know about CARES

April 22, 2020

For CPAs, one of the most important parts of the CARES loan package which has brought $2.3 trillion in loans to households, businesses, and state and local governments is the Main Street Lending Program, which provides for up to $600 billion in loans to small and midsize businesses. The Fed will also supply liquidity and certain regulatory relief to financial institutions in an effort to bolster the effectiveness of the U.S. Small Business Administration’s (SBA’s) Paycheck Protection Program (PPP).

The Main Street Facility fills a need for mid-market business funding not covered by the PPP, which was authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to make $349 billion in forgivable loans to businesses with up to 500 employees and is being refunded at the end of April to provide an additional $310 Billion to that same demographic. 

The Main Street loan program is available to U.S. companies with up to 10,000 employees and less than $2.5 billion in 2019 revenue that were in good financial standing before the COVID-19 crisis sparked widespread stay-at-home orders and stalled the American economy, leading to nearly 17 million people filing new claims for unemployment benefits over the past three weeks.

Start the application process today

As with PPP loans, businesses seeking Main Street funding will need to apply through banks and other lenders authorized to process the loans. The opening of the PPP application window on April 3rd prompted a large number of small businesses to seek funding through SBA-authorized lenders. The large amount of applications—as many per day as the SBA usually receives in a year—resulted in delays within the agency, within banks, unprepared for the influx of applications online and in Fintech which was well-positioned to process large numbers of digital applications. 

If you haven’t already, firms should start gathering the information clients will need to apply to the Main Street program. This will be particularly urgent for clients that were ineligible for the PPP, though eligible companies can receive funds from both the PPP and the Main Street program.

Pay attention to the fine print

New Main Street loans range between $1 million and $25 million (or an amount, when added to the borrower’s existing outstanding and committed but undrawn debt, four times the borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (EBITDA).) 

Main Street loans added to existing loans must be at least $1 million and no more than the lesser of $150 million, 30% of the borrower’s existing outstanding and committed but undrawn bank debt, or an amount that, when added to the borrower’s existing outstanding and committed but undrawn debt, does not exceed six times the borrower’s 2019 EBITDA.

The Main Street program requires companies that borrow the funds to make “reasonable efforts” to maintain their payroll and retain their employees during the term of the loan. Borrowers also must commit to not using the funds to repay or refinance pre existing loans and lines of credit.

Watch for changes

Due to the evolution of the outbreak and its impact on the global economy, provisions are being made to these loan programs near daily. Over the last week alone, the Fed has already taken actions to help bolster the effectiveness of the PPP. The Paycheck Protection Program Liquidity Facility (PPPLF) will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value. 

In addition, the Fed, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. issued an interim final rule permitting banks to not include PPP loans made under the PPPLF with any of their required capital ratios, meaning that the loans won’t be counted against the banks when examiners review their books.

In addition, the Fed said PPP lenders would not be held liable for representations made by borrowers in connection with a borrower’s request for loan forgiveness under the PPP.

Milikowsky Tax Law’s team of legal experts are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed about potential business implications. Visit our COVID-19 Resource Center for more news, tools, and insights you need to know in these uncertain times.

Filed Under: Blog, COVID-19, CPA, News Tagged With: Business Owners, Coronavirus, COVID-19, CPA, CPAs, payroll, Small business, small business management

Archives

Search

Categories

Questions About
Tax Audit/Controversies?

A representative will be in contact within 1 business day
PRIVACY POLICY

Get Monthly Updates on Important Tax Law Matters



Milikowsky Tax Law is located at: 4250 Executive Square, Ste. 650, La Jolla, CA 92037
o. (858) 450-1040 | m. (858) 212-0542 |
Privacy Policy

DISCLAIMER:
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

Milikowsky Tax Law © All Rights Reserved. Clear1099.com | Cal1099.com | California1099.com © All Rights Reserved.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT