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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.

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

Fewer Americans Behind on Credit Card Debt, but Average Balance is High

The number of credit card holders who have not paid their bills in the last 90 days has decreased in 2012. For Q1, the total number of delinquent cardholders dropped to 0.73 percent, from 0.78 percent for the last quarter of 2011. In addition, The Wall Street Journal reported that consumers continued to pay throughout May, despite worries from some experts that delinquency would increase in part because of continued high unemployment.

However, while delinquency has decreased, nearly half of cardholders who haven’t been able to pay for the last three months are using their cards out of necessity, such as to pay rent or buy groceries. In addition, balances are still high, with average cardholders carrying just under $5,000 in their balances.

Credit Card Settlements

One of the reasons for the low number of delinquent cardholders is that credit card companies were issuing cards to only those with high credit scores in the wake of the recession. However, from January to March, approximately one in four new cardholders were considered non-prime, higher-risk consumers.

In addition, for those who have carried a balance for years, it can be difficult to even make interest payments on the balance. For consumers who are struggling, credit card companies have been more willing than in previous years to allow a more reasonable payment plan under a credit card settlement agreement.

Credit card debt negotiation can help a cardholder avoid paying too much in interest (or even any at all), stop paying late fees and most importantly, allow the cardholder to regain control of his or her unsecured debt.

If you have credit card debt and are struggling to pay bills, you should contact an experienced debt relief attorney to discuss your options. Credit card companies can take attorney-led negotiations more seriously, and having an experienced negotiator on your side can allow you the maximum benefit.

U.S. Mortgage Delinquency Rate Shows Modest Improvement

Recent statistics suggest a glimmer of hope for the still-struggling U.S. housing market: According to the latest reports, mortgage delinquencies dropped to 5.78 percent nationwide during the first three months of 2012, down from 6.01 percent at the end of 2011. A mortgage is considered delinquent if the homeowner is at least 60 days past due on his or her payments. Despite the recent improvements, however, the U.S. mortgage delinquency rate remains well above historical averages. In 2006, before the U.S. housing market bubble burst, the delinquency rate was approximately 2 percent nationwide. It peaked at 7 percent in 2009.

While the recent decline in mortgage delinquency rates is an encouraging sign for the national economy, the fact remains that near-record numbers of Americans are still struggling to make ends meet. Many distressed homeowners across the country owe more on their mortgages than their homes are worth, and foreclosure rates remain far above normal.

Fortunately, there are several options that may be available to help distressed homeowners prevent foreclosure. Depending on the circumstances, potential alternatives to foreclosure may include conducting a short sale, renegotiating the mortgage, or obtaining a deed in lieu of foreclosure.

Chapter 13 Bankruptcy and Second Mortgages

For some struggling homeowners, Chapter 13 bankruptcy offers another alternative to foreclosure. Also known as reorganization bankruptcy, Chapter 13 bankruptcy allows an individual to keep his or her home while paying off certain debts according to a three- or five-year payment plan approved by a bankruptcy judge. The payment plan focuses primarily on paying off high-priority debts like home mortgages, car loans and back taxes. At the end of the repayment period, any remaining unsecured debts, such as medical bills or credit card balances, will be discharged.

Chapter 13 bankruptcy can be particularly helpful for people with second mortgages, because – unlike a primary mortgage – a second mortgage may be treated as unsecured debt. Therefore, a second mortgage may be completely discharged through Chapter 13 bankruptcy, or may be paid off at the same rate as other unsecured debts.

If you have fallen behind on your mortgage payments and are facing the loss of your home to foreclosure, contact an attorney to discuss your options and plan a course of action that is right for you.

Benefits and Protections that Personal Bankruptcy can Provide

Connecticut residents know paying bills can be difficult in today’s economy. Filing for personal bankruptcy is an option that many people consider. Bankruptcy can eliminate certain debts and offer a fresh financial start.

When is bankruptcy the best option?

Bankruptcy is an option that can help many people who are struggling with debt. However, bankruptcy may not be the best solution for everyone. An individual may want to consider filing for bankruptcy if any of the following things occur:

  • Income decreases due to job loss, layoff or unforeseen illness
  • Assets substantially decrease in value
  • Stress levels escalate due to financial issues
  • Creditor harassment is no longer bearable
  • Creditors are garnishing wages or levying bank accounts

Benefits of a personal bankruptcy

Depending on a person’s circumstances, there may be several benefits to filing for personal bankruptcy. One advantage is an automatic stay of all collection activity. The automatic stay is a court order that goes into effect once a bankruptcy is filed. The automatic stay means that all creditor collection attempts must be stopped immediately.

The automatic stay can benefit people in a number of ways. For example, it means that creditors must stop garnishing wages or levying bank accounts. In certain circumstances it can also give people time to catch up on their mortgage payments and prevent a home foreclosure. Additionally, bankruptcy may be an ideal option for individuals facing debt from a motor vehicle accident because it can prevent suspension or revocation of a driver’s license.

The purpose of an automatic stay is to allow the bankruptcy to progress properly. Creditors who violate an automatic stay are subject to penalties such as fees and contempt of court charges. Utility companies are forbidden from turning off services and are required to turn any already shut off back on.

Another main benefit of filing bankruptcy is that most debts can be completely eliminated. This can give people a fresh start because any wages or property acquired after a bankruptcy is protected from creditors.

Which debts can be eliminated in bankruptcy?

Most types of unsecured debt can be eliminated by filing bankruptcy. However, a bankruptcy will not eliminate most secured debts, or debts for which a person pledged a specific piece of property as collateral if you want to keep that property. If there is nothing the creditor can take back or repossess, the debt is unsecured and can be discharged in bankruptcy. The following are types of debt that can usually be eliminated by filing for personal bankruptcy:

  • credit card debt
  • medical bills
  • personal loans
  • utility bills

The following are examples of debts that typically cannot be eliminated by bankruptcy:

  • student loans
  • income taxes which are less than three years old
  • child support and alimony

Secured debts such as car loans are dischargeable but if you want to keep the vehicle, you have to continue making your payments. Additionally, money owed for violations of the law such as criminal or traffic fines are not dischargeable. Any debts not listed in the bankruptcy petition, or any debts acquired after the bankruptcy filing also do not qualify for discharge.

A bankruptcy filing stays on a credit report for up to ten years. However, it is still possible to obtain credit cards, car loans or even a mortgage after bankruptcy in order to build better credit.

An individual considering filing for personal bankruptcy can benefit from consulting with an experienced bankruptcy attorney. The attorney can provide knowledge and guidance and assist with finding legal solutions for financial and emotional relief.

Bankruptcy is a Solution to those Struggling with Medical Debt

When you think of people with high amounts of medical debt, you may think of the uninsured. Although it is true that those without insurance often struggle to pay their medical bills, even those with comprehensive health coverage often find themselves in the same situation. Copayment, deductibles, prescriptions, out-of-pocket expenses and, not to mention, the ever-growing number of procedures that are not covered can cause an insured’s costs to skyrocket.

Although the passage of the Affordable Care Act will likely reduce the number of uninsured across the nation by half, experts say that it is likely to exacerbate the problem of underinsurance. Underinsurance occurs when people who are insured cannot afford to pay for their healthcare costs, because even after the insurer has paid its portion of the bills, the amount remaining is still too high to be affordable.

Bankruptcy can offer a solution

Unfortunately, medical debt is one of the top reasons why many people file for bankruptcy in the United States. For many, bankruptcy can offer the relief from unrelenting debt that they are seeking. In general, most individuals have two options when filing for bankruptcy protection: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy can offer many advantages for people who have few assets that are not exempt from liquidation, such as a second home or many motor vehicles. In this type of bankruptcy, a trustee is appointed by the court to sell assets that are not exempt from liquidation to pay the claims of creditors, in whole or in part.

As most people in a position to file for bankruptcy do not have many nonexempt assets, most Chapter 7 filers do not see any of their possessions sold during the bankruptcy process. Once the Chapter 7 bankruptcy process has been completed, filers receive a discharge excusing them from repaying most of their debt they owed when they filed for bankruptcy, including credit card and medical debt.

Conversely, Chapter 13 bankruptcy is better for those who either own nonexempt assets and wish to keep them or those who have a regular income and can repay a portion of their debts. Chapter 13 works by consolidating the filer’s debts into a payment plan. The debts are repaid in whole or in part by affordable monthly payments over a three to five-year period. At the end of the repayment period, the filer receives a discharge of most remaining debts that were unpaid by the payment plan.

A bankruptcy attorney is invaluable

The type of bankruptcy or debt-relief option that would be right for you depends heavily on your personal situation. If you are struggling with debt, it is helpful to consult with an experienced bankruptcy attorney to learn which debt-relief option will best protect your income and assets.