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Small Business Paycheck Protection Program

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The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.

Fully Forgiven

Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

Must Keep Employees on the Payroll—or Rehire Quickly

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

All Small Businesses Eligible

Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries.

When to Apply

Starting April 3, 2020, small businesses and sole proprietorship can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap.

How to Apply

You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether
it is participating. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.

The Paycheck Protection Program is implemented by the Small Business Administration with support from the Department of the Treasury. Lenders should also visit www.sba.gov or www.coronavirus.gov for more information.

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Paycheck Protection Program (PPP) Information Sheet: Borrowers

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The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.

The loan amounts will be forgiven as long as:
 The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
 Employee and compensation levels are maintained.

Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

Loan payments will be deferred for 6 months.

When can I apply?
 Starting April 3, 2020, small businesses and sole proprietorship can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
 Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
 Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

Where can I apply?
You can apply through any existing SBA lender or through any federally
insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit www.sba.gov for a list of SBA lenders.

Who can apply?
All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorship, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries (click HERE for additional detail).

For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the SBA’s Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.

What do I need to apply?
You will need to complete the Paycheck Protection Program loan
application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. Click HERE for the application.

What other documents will I need to include in my application?
You will need to provide your lender with payroll documentation.

Do I need to first look for other funds before applying to this program?
No. We are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources (i.e., we are waiving the Credit Elsewhere requirement).

How long will this program last?
Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.

How many loans can I take out under this program?
Only one.

What can I use these loans for?
You should use the proceeds from these loans on your:
 Payroll costs, including benefits;
 Interest on mortgage obligations, incurred before February 15, 2020;
 Rent, under lease agreements in force before February 15, 2020; and
 Utilities, for which service began before February 15, 2020.

What counts as payroll costs?
Payroll costs include:
 Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
 Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group
health care benefits including insurance premiums; and payment of any retirement benefit;
 State and local taxes assessed on compensation; and
 For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

How large can my loan be? Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.

How much of my loan will be forgiven?
You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

You will also owe money if you do not maintain your staff and payroll.

Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

How can I request loan forgiveness?
You can submit a request to the lender that is servicing
the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

What is my interest rate?
0.50% fixed rate.

When do I need to start paying interest on my loan?
All payments are deferred for 6 months; however, interest will continue to accrue over this period.

When is my loan due?
In 2 years.

Can I pay my loan earlier than 2 years?
Yes. There are no prepayment penalties or fees.

Do I need to pledge any collateral for these loans?
No. No collateral is required.

Do I need to personally guarantee this loan?
No. There is no personal guarantee requirement.
****However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.

What do I need to certify?
As part of your application, you need to certify in good faith that:
 Current economic uncertainty makes the loan necessary to support your ongoing operations.
 The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
 You have not and will not receive another loan under this program.
 You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
 Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
 All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
 You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.

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Offering Help During this Difficult Time

At any other point in time, this post would seem more than a little weird. But, as we all know, these are different times. We here at The Hamzy Law Firm, like many people in our communities, have been looking for ways to help others during this difficult period. So, when we were ordering office supplies from WB Mason, just for ha ha’s, we looked to see if they had any paper goods. Surprisingly they had paper towels. So, we bought some extra rolls.

   Having never done this before, we have no idea what the right way or what the wrong way is to handle this, however we would like to give away 20 of these rolls to people who honestly need them. CNA’s, clinical workers, custodians, people who have been laid off, etc… If you have a need, please call our office and we’ll give up to 2 rolls per family.


   Due to the Stay at Home order issued by the Governor, DO NOT COME TO THE OFFICE WITHOUT CALLING FIRST. If you call & there’s no answer, please leave a message. We’ll give these away starting tomorrow (3/25). Thanks and thank you to all of the people who are helping all of us get through this difficult time.

State of Connecticut Business Resources

The State of Connecticut is continuing to take major steps to protect our businesses and residents during the coronavirus crisis. Here are some updates:

·     DECD’s COVID-19 Business Emergency Response Unit: The Connecticut Department of Economic and Community Development has created a COVID-19 Business Emergency Response Unit dedicated to assisting businesses navigate resources and develop new resources. A dedicated phone line is has been set up at 860-500-2333 to provide assistance to Connecticut’s small businesses for this purpose.

·     SBA assistance: On March 16, the U.S. Small Business Administration approved Governor Lamont’s request to begin offering disaster-relief loans to Connecticut small businesses and nonprofits. Companies in the state can now apply for loans of up to $2 million through a special page on the SBA website. SBA also has more valuable information for businesses.

·     Tax filing extensions: The Department of Revenue Services has extended deadlines for filing and payments associated with certain state business tax returns. Details are on DRS’s website.

·     Unemployment assistance: Workers directly impacted by the coronavirus pandemic no longer must be actively searching for work to qualify for unemployment assistance. And employers who are furloughing workers can use the Department of Labor’s shared work program, which allows businesses to reduce working hours and have those wages supplemented with unemployment insurance. DOL has more information about these and other changes.

·     Business Interruption Insurance: A business interruption insurance policy should list or describe the types of events it covers. Events that are not described in the policy are typically not covered. It is important to review the policy exclusions, coverage limits, and applicable deductibles with your agent, broker or insurer. The Connecticut Insurance Department has an FAQ that provides more information.

CLICK HERE TO ACCESS THE STATE’S WEBSITE

Alimony Tax Rules Changes for 2019

The taxation of alimony will change drastically starting in 2019. Here’s what you need to know:

New rules

Any divorce agreement effective after Dec. 31, 2018 will be subject to new rules for alimony, namely:

  • Alimony is no longer tax-deductible for the taxpayer.
  • Alimony is no longer taxed as income for the recipient.

That means alimony will be much less affordable for those paying it, while those receiving alimony will not have to claim it as income.

What you need to know

New agreements only. These new tax rules only affect divorce agreements completed after 2018. Tax treatment of agreements made before the end of 2018 or earlier won’t change.

Understand your situation. For pending agreements, the completion date will have major tax impact on both parties. Understand the implications for you.

Get tax help. Because this change is so drastic, taxes are going to be front and center in any divorce settlement. Please ask for help.

Gift cards: What to do when retailer files for bankruptcy

Earlier this month, creditcards.com posted an article on retailers filing for bankruptcy. Many consumers are left scratching their heads not knowing how what to do with gift cards.

As retailers ranging from Toys R Us to The Limited and Gander Mountain file for bankruptcy, shoppers are scrambling to figure out to what to do with their gift cards from those and other stores.

There’s no simple solution, but if a retailer is on shaky financial ground, use your gift card while you can. As holders of gift cards from The Limited discovered this year, gift cards were useless pieces of plastic once the stores closed. In the cases of Wet Seal, RadioShack and hhgregg, gift cards were honored only briefly after their bankruptcy filings.

Here are the seven tips they provided when dealing with gift cards and bankruptcy:

  1. Pay attention to the news: Gift cards can lose all value when a retailer declares bankruptcy.
  2. Use the card right away: If you have a gift card from a shaky retailer, don’t wait.
  3. Save your card purchase and activation receipts: A successor company may want you back as a customer, and honor the card.
  4. Report to state consumer agency: You could add pressure in the bankruptcy case to think of gift card holders.
  5. Follow the court case: Bankruptcy judges have sometimes offered gift card hodlers limited-time redemption options.
  6. Initiate a chargeback: If you used a credit card to buy the gift card, it could come to your rescue.

Note: Gift cards: What to do when retailer files for bankruptcy” originally was posted on CreditCards.com. Click link to read original story.

Equifax Data Breach

September 7, 2017 there was a massive data breach at Equifax, the credit reporting agency. Reports indicate that as many as 143 million consumers may be affected by this breach, which could potentially include sensitive information such as your name, birth date, social security number, etc.

Equifax has setup a website for consumers at www.equifaxsecurity2017.com which allows you to sign up for a year free to their credit-monitoring service. It is recommended that you sign up to ensure your data has not been compromised. Note: That The Hamzy Law Firm does not endorse, or are held responsible for this program.

Another aspect to credit-monitoring services would be to freeze your credit. Placing a credit freeze on your account allows you to place restrictions on who can view your credit report. If you prevent from pulling your credit, it will in theory frustrate fraudsters who need approval to open your account information which is used to steal your identity.

For more information about fraud alerts and credit freezes visit The Federal Trade Commission Consumer Information Page on Credit Freeze FAQ’s.


The Hamzy Law Firm, LLC is a debt relief agency.  We help people file for bankruptcy relief under the Bankruptcy Code.  We also represent clients in real estate closings, commercial real estate, landlord/tenant, personal injury, estate planning and debt settlements.

Big Changes Coming on August 1st

The way that residential real estate closings happen is in for a big change on August 1 and it will affect anyone who is involved in the purchase, sale or refinance of a home. The Consumer Financial Protection Bureau (CFPB) is requiring mortgage lenders ensure the competency of all of the businesses with which they work to originate and close a mortgage loan. That includes the appraisers, the credit reporting agencies, the attorneys, etc…. It also is requiring that the disclosure forms which currently consist of a Truth in Lending and Good Faith Estimate be combined and given to the borrower within five days of making the application. The other major change is that the borrower has to be given the final closing document at least three business days before the closing.

While these changes may seem simple and not considered a big deal, the reality is that there are going to be some bumps in the road as the industry transitions to the new system. For example, in almost every closing, the buyers do a walk-through the new house either the night before of the morning of the closing. If there are issues, they are usually resolved either prior to the closing or at the closing table. Because of the new three day rule, if any of these issues affect any part of the loan, the closing will have to be postponed and a new closing document has to be issued to the borrower.

So, imagine the effect this is going to have on not just the buyers but also the sellers who may be buying a house of their own immediately following their sale. My advice to you is to make sure you work with a real estate agent and an attorney who is familiar with the changes which are coming on August 1. While this may not guarantee a problem-free transaction, it will be more likely than not. All of us here at the Hamzy Law Firm are working hard to familiarize ourselves with the new laws and regulations and will continue to do so in order to be able to represent our clients to the best of our ability.

William A. Hamzy, Esq.

Spring?

Author: William A. Hamzy, Esq.
Published in The Plymouth Connection

According to the calendar, it’s spring time in Connecticut. However, it certainly doesn’t feel like spring based on the weather pattern we seem to be stuck in. Spring is usually the busiest time of the year when it comes to real estate. Most people prefer to buy and move in to a home in the summer. This is due to many factors but it’s primarily due to the school schedule. As might be expected, parents don’t like to move while their kids are still in school. They’d prefer to have their children start the year in a new school rather than moving them mid-year.

If people are looking to move in the summer then they are signing contracts to buy homes in the spring. That’s because buying a home is not like buying a car. The process is much more involved. When buying real estate, not only do you have to look at many houses in order to find one you like but finding it is only the first step. You have to contact a home inspector to have an inspection done. You have to find a mortgage company and apply for a mortgage. If you own your own home, most people will have to sell it before buying the new one. If you rent, you’ll have to give notice to your landlord. Finally when the time comes to actually close, you’ll have to pack all of your belongings and do a final walk-through inspection of the house you’re buying.

The list I just made is involved enough but obviously there is much more that goes in to each of these steps. However, the entire process starts with the contract. As I’ve written before, make sure you fully understand each and every part of the contract before you sign it. The contract outlines the entire agreement between the Seller and the Buyer. If you’d like a real estate attorney to review the ontract before you sign, feel free to contact us. We’d be happy to help.

The Hamzy Law Firm, LLC
860-589-6525