Understanding CARES Act & Paycheck Protection Program
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Brian Calley, president of the Small Business Association of Michigan (SBAM), joins us to answer questions about the Paycheck Protection Program and CARES Act recently passed by Congress. Discover how SBAM and Consumers Credit Union can help you navigate this difficult time with these emergency programs and emergency banking options today! Money, I’m Home!
00:06 Lynne Jarman-Johnson: Money, I’m Home, from finance to fitness. Welcome Money, and I’m Lynne Jarman-Johnson with Consumers Credit Union, and we have a special edition of Money, I’m Home today, with a very special guest. Brian Calley is the president of the Small Business Association of Michigan. And right now, we are all staying safe and staying home. And Brian, you’re one of those that’s leading the charge in that.
00:28 Brian Calley: Yeah. First of all, thanks for having me on, thank you for the important and critical work that you do. So many of us seen other …Well, for everybody, everything about our lives has changed. And it’s so important, especially for our financial institutions, to provide that level of stability and confidence that I know that Consumers Credit Union is really up for the challenge of accommodating and changing in order to meet the needs of people today that are radically different than they were just a few weeks ago.
01:03 LJJ: You know Brian, we have a partnership that we value so much with the Small Business Association, and I thank you because you are really helping us guide our members too. What were the steps that you started to take to lead us to where we are?
01:20 BC: Our role at the Small Business Association had to change pretty much overnight because the way that business owners operate and the way their businesses operate and whether or not they could operate, all of a sudden was put into question. And so, our job turned into almost like a compliance team. We started shifting more and more of our team over to helping our business owners understand what they’re supposed to do right now, whether they can be open, if they’re open what are the rules. And so, it’s been ramping up to where now we have reassigned literally every single member of our staff, and there’s 27 of us, every single member of our staff is just working on this. We put every single bit of the rest of the work that we do on hold, and we’re just helping our members through this crisis. But now it’s also accessing government programs, understanding how to comply, getting ready for a resurgence or for an entry back in the market when it’s safe to do so. So, this has changed the face of our organization, but I’m proud of our team because they really have been up for the challenge. They’ve never been asked to do anything like this before and yet as I look across the landscape, I don’t see another association anywhere in our state or anywhere, frankly, around the country, that is as close to our membership and as relevant to our membership at this time as we are.
03:00 LJJ: Yeah. Give us a little bit of background in what the Small Business Association of Michigan is all about. Because I know that right now your website is so up-to-date with the changing landscape and all of the new regulations and rules of being able to apply for disaster funds and for the CARES Act. What is it that you have done in the past to get you to be able to really become so impactful for members now?
03:27 BC: Well, part of it is just having an experienced team that has relationships inside of every level of government. So, we know who the decision makers are, and because I personally served in public office and served through public emergencies including Public Health Emergencies, I’ve been able to provide a certain amount of insight, and I’ll say intelligent guesses, to give our members a heads up and things that they should expect or anticipate coming up. And, that’s allowed them to, for those that are tuned in closely with us, it’s allowed them to be a little ahead of the curve in understanding what’s coming down the pike, even if it hasn’t arrived yet. But, our association was really built on business services to our members, so we’ve got a team that does covert administration, we do consolidate in insurance billing between all the different types of insurances that businesses have, but we do best practice education and also a lot of compliance work as well.
04:30 BC: And then, advocacy on the law front, lobbying. We work with public officials that make policy decisions to make sure that they are keeping small businesses in mind. So, we took all of those people that do all that different type of work, and we’ve just put them on this. They really have created a robust system of collecting, and I’ll say curating information and siphoning out or sifting through it to find the stuff that small business owners need to know. And then, we’re providing answers or at least guidance on how to look at things, even in cases where the government is either unwilling or unable to provide guidance. They’ve got capacity issues too, so in some cases it’s our best guess, and we tell our members that we don’t have absolute answers on everything, so let’s just talk through this, compare it to the rules and regulations that we know, and try to make an informed and intelligent decision on what to do from here. That type of consultation is I think what sets our organization apart from the role that most associations can play.
05:45 LJJ: Well, Brian, one of the things that I found most interesting when you go to your web is the very clear, concise information about the CARES Act which everybody’s talking about, the paycheck protection, disaster relief. What is it that you’re saying that everybody should do first off, is it take a deep breath?
06:06 BC: Definitely take a deep breath, and don’t let the prospects of accessing a government program overwhelm you before you get started. So sometimes you look at this, and say, “Man, I just don’t know. I’ve never done this before. I’ve never had to access anything like this before. It’s just probably not for me.” What I’m hoping is that every small business in Michigan will take the opportunity to investigate the Paycheck Protection Program through the Small Business Administration. So, we’re the Small Business Association, so we’re a private sector association of 28,000 small businesses, but the Small Business Administration is a government entity, it’s a government agency of the United States, and they do guaranteed loans.
06:53 BC: But they’re saying, “We’ll give you a loan for a couple of months of payroll, rent, interest and utilities.” So, they give you a couple of months worth of those main operating expenses. And they base it on your historical payroll and expenses, the size of the loan. And as long as you spend it on those four things I just mentioned, you’ve kept up your end of the bargain, you’ve kept your people employed, you paid ’em the same amount that you paid ’em before, ’cause you got this loan to do it. You paid your utility bills, and you paid your rent and interest, if you do those things, you don’t have to pay the loan back, it gets converted into a grant.
07:38 BC: And this is huge, they’ve never done this type of help for small businesses. All they’ve ever done before are loans. In this case, yes, it’s a loan, but if you spend it on those items, keep your team employed at the same level, same rate, same number of people employed with this payroll loan, then it’s forgiven at the end. That’s something that every small business owner needs to know. That’s really the policy goal is through small businesses to keep more people employed, to keep your teams together so that when they come out of this crisis, that your employees aren’t scattered to the wind. They want the economy to snap back because everybody kept their employees together, you kept people on. You don’t have to ramp up and do more hiring and train new people, you’re just ready to go. That’s the policy reason behind this. I know it’s hard to believe because it seems like it’s too good to be true, that, “Okay, they’re going to give me a loan, and they’re not going to make me pay it back as long as I pay the expenses that I’ve got to pay anyway?” That’s what the deal is.
08:39 BC: So, I would say that you don’t have to figure it out on your own. We’ve got a lot of good resources on the SBAM website, that’s sbam.org S-B-A-M.org. You can check it out. But then, also, call your lender. So, anybody listening to this, your credit union is an SBA certified lender. And so, I recommend that you just give the person that handles your account at the credit union, give him or her a call and say, “I would like to apply for a Paycheck Protection Program Loan.” And what they can do is walk you through the particulars. They’ll say, “Okay, I need to collect some payroll data from you, from last year. What you paid your people, how many people that you paid them, or how many people that you paid, and then we’ll calculate the loan size you can get, and then we’ll talk about and make sure you understand how you have to spend that money.”
09:35 BC: And then, as long as you do that for the next eight weeks, about two months, for the next eight weeks, as long as you spend all the money on payroll, rent, interest, and utilities, then you’ll come back to the credit union at the end and you’ll show how you spent the money, and then the credit union will let the Small Business Administration know that you held up your end of the bargain, and the Small Business Administration will send the money to pay off the loan and you won’t have to. You’ll still have to pay the interest, but get this, the interest is only one-half of 1%. This is really something that I feel very strongly every small business needs to know. And please don’t put it off, because Congress only appropriated $350 billion. Now, I feel silly saying that because I’m from a little town called Portland in the center part of Michigan.
10:24 LJJ: Absolutely.
10:25 BC: Yeah. $350 billion sounds like a lot of money to me, but this is for the entire United States of America, and there are millions and millions of small businesses. I don’t think that that money will last very long. I think that the businesses that are right on top of it and they apply right away are going to get it, and those who wait even one week are going to find out that the money ran out. So, I would encourage people to look into this very, very quickly.
10:53 LJJ: Now, the CARES Act that is part of the paycheck protection, also has a lot of other components built into it. Are there any that you want to highlight?
11:03 BC: There is also a retention tax credit, which is pretty significant, too significant to get into detail on this podcast, but that’s also, if you’ve got the cash flow to retain employees, that’s another way that you can get support, but you’d have to wait until you file your taxes to get it. So, that’s just one thing to keep in mind, to talk to your CPA about. The other thing is there’s a separate SBA disaster loan, which is a regular loan, you have to pay it back, but it has very favorable terms. You can put off your first payment for 12 months, and you can borrow much, much more than the Payroll Protection Loan, but it is a regular loan. You have to pay it back except for on the front end, they’ll give you an advance of $10,000, and that part of it does not have to be paid back. So, that’s another thing to consider.
11:57 BC: And the final thing is that the unemployment system is being changed temporarily to allow sole proprietors and 1099 contractors to file for unemployment. You’ve never been able to do that before. It’ll expire this summer, and you won’t be able to do it after, but during this time, you’ll be able to. You’ll get $600 a week. That’ll be kind of an across the board flat amount that is available to those who didn’t previously qualify. But the state has not yet amended or adjusted their systems. So, it’s probably going to be another week or so before you’ll be able to physically file, but that’s just something to keep in mind, that it’s another option. If you don’t get the Payroll Protection Program, if you don’t get in on that, if you don’t do it fast enough and the money’s all gone, business owners can actually file for unemployment help.
12:50 LJJ: Well, these are just awesome options. And I’ll tell you, in the short amount of time that this all has taken place, it kind of make your head spin. We’re talking on a WebEx, which normally we would be able to be face-to-face. There must be some things and stories that you’ve heard that really have been awe-aspiring for you. When change happens, leaders really come forward.
13:17 BC: Yeah. We’ve seen some of our members really pivot toward the healthcare response. It’s been just extraordinary to see, a new generation that is faced with a challenge that is unprecedented. We’ve never ever seen anything like this before. Back in the late 1930s, but especially in the 1940s, when the World War II war machine was kind of ramping up and the United States was being pulled in, it was Michigan industry that turned around the consumer product know-how and basically made the equipment that helped our troops win the war. And so, what’s happening now is our industry is transforming, from the very big players all the way to very small local players, they’re transforming to meet this healthcare response, they’re calling it “the arsenal of health.” So, we have some members, even some of our board members. You might know the company, Stormy Kromer, that makes the hats with the ear flaps, they’re known all over the world.
14:21 LJJ: Yes.
14:22 BC: Yeah, they’re up in the UP. They have now converted their production to make hospital masks, those face masks that were in short supply, and they’re supplying hospitals in Michigan and Wisconsin, and I think it’s going to go much wider than that, too. We have Akervall Technologies over in Washtenaw County that they make mouth guards for sports, but they were able to convert from making mouth guards to making face shields. And now, they’re making them and shipping them out. We’ve got distilleries that have gone from making spirits and brews and all from an alcohol focus over to hand sanitizer and making thousands of gallons of hand sanitizer that is needed by the general public and by the healthcare system. So, small businesses are playing a huge, huge role in this healthcare response.
15:19 LJJ: Well, I’ll tell you, so is the Small Business Association of Michigan. Brian, if there’s maybe two points that you really want our small businesses in Michigan to really take home today, what are those points?
15:34 BC: The first thing is; contact your lender about the paycheck protection program. It’s the most substantial thing the Federal government has ever done for small businesses. Small businesses are usually the ones providing help, not the ones that need help. And in this case, please don’t feel guilty about it. Take advantage of it. This is like the backbone, the foundation of the economy first forever, since the beginning of our country. It’s not a luxury to have small businesses get through this, it’s a necessity for the survival of our economy. So please, do take advantage of that. And then the second thing is to do whatever you can to take care of your team and check in on them. I know a lot of small businesses have made tough decisions. They’ve had to make layoffs, but I think it’s just really important, whether you’re open or you’re not, to continue to check in on those team members that you have, making sure that they’re okay, and doing whatever you can to help them meet their needs. Because you’re really worried about your business, they’re really worried about their families, and it’s just an attitude. We’re all in this together.
16:45 LJJ: Well, and with that Brian, how are you? You mentioned at the beginning of the podcast that the team has really hunkered down and is working remotely. If you’re in your family situation, it’s so much of a different work environment, especially if you have children and dogs and you’re trying to work. How have you been supporting your family and your work team?
17:10 BC: Well, my family has, unfortunately, they’ve got a lot of experience in living through intensive situations. And so, whether it’s the health of my children, I have a daughter with autism, I’ve got another daughter who had open heart surgery because of heart defects. But also, because I was Lieutenant Governor of Michigan and faced all kinds of really intense situations. My family is, I guess I’d put it this way, they’re built for pressure. I couldn’t be more proud of them, but it’s a lot. It’s a different type of a scenario in being stuck in home. It’s a new thing. My family is not the kind of family that spends a lot of time at home, and it’s been a massive adjustment. We’ve eased up on some of the rules, about how much screen time they can get in on the iPhone or the iPad or watching TV. We’ve eased up on that a little bit. But also, have had to be very creative about creating a stimulating environment at a time when it just seems like there’s so many negative inputs. Finding ways to take a step back from all the negativity that’s happening to just search for and be intentional about creating normalcy around, just around the everyday aspects of life.
18:30 LJJ: Well, Brian Calley, thank you so much for joining us today, and we really appreciate your information and guidance on the CARES Act, on all of the changes that are happening to small business, but also, the changes that small businesses are bringing to our world. It’s just amazing. So, thank you for sharing.
18:50 BC: My pleasure. Thanks for all the work that you’re doing, and I look forward to working together to make sure that we all come out of this in a position to thrive again.
19:00 LJJ: Absolutely. Brian Calley, President of the Small Business Association of Michigan. Make sure you head to their website, sbam.org and also, consumerscu.org. We have a resource center for you to help you and to help us. Let’s stay connected. I’m Lynne Jarman-Johnson. Money, I’m Home! From finance to fitness with Consumers Credit Union.
We're ready to help you!
Our Business Development Managers are ready to help your business in this unique time. Reach out to us today!Click here to access your business resources.