New Loan Program for DeKalb County Businesses

On August 8^th, the popular Paycheck Protection Program (PPP) stopped accepting loan applications. The focus has shifted from issuing loans to helping existing borrowers navigate the forgiveness process. In fact, just last week the Small Business Administration (SBA) allowed access to lenders to process forgiveness applications. While good news for PPP borrowers, it also means that businesses transitioning from survival to recovery have one less funding option available. The good news for DeKalb County businesses is there is a new business loan program, with a loan forgiveness feature, which will soon begin accepting applications. The DeKalb Better Business Loan Program offers qualifying businesses experiencing financial difficulties due to the COVID-19 pandemic access to low-interest loans. Like the PPP, borrowers are required to use loan proceeds to pay certain business expenses including payroll, business interest, rent, utility, and other business-related debts. There is also an employee retention requirement that must be met. To help clients, prospects, and others, Wilson Lewis has provided a summary of key loan details below.

About the Loan Program

The program was established to provide capital to DeKalb County businesses struggling financially due to the COVID-19 pandemic. The $10M for the program was taken from the County’s share of CARES Act funds received from the federal government. Citizen’s Bank will be responsible for administering the loan program including receiving applications, awarding loans, and managing the forgiveness process.

Businesses that are awarded a loan are required to spend proceeds in one of three pre-approved combinations, including:

• Payroll (gross federal wages)
• State Unemployment & Local Taxes
• Employee Benefits
• Business Property Rent Payments
• Commercial Property Utilities
• Interest on Other Business Debts

It is important to note payroll costs are capped at $100,000 on an annualized basis for each qualifying employee. During the first three months after loan disbursement, borrowers may be required to maintain payroll and employee levels equal to the three-month period of October 2019 – December 2019.

Program Eligibility

Businesses located in DeKalb County with annual revenues less than $1M and 20 or fewer employees that have been operating for a least 12 months prior to June 1, 2020, and did not receive PPP loan funds are eligible. Qualifying business types include sole proprietors, partnerships, C-corporations, S-corporations, LLCs, independent contractors, tribal businesses, veterans, and 501(c)(3) tax-exempt organizations.

Loan Amount

The maximum loan amount available is up to $40,000 per business.

Loan Terms

The loan term is 24 months with an interest rate of 1% and a deferral of principal and interest payments for the first three months. Borrowers may be eligible for loan forgiveness after the first 3 months. After the initial deferral period (assuming no loan forgiveness) 21 monthly payments will be due.

Loan Forgiveness

To qualify for loan forgiveness a borrower must use proceeds in compliance with outlined requirements and provide appropriate documentation. In the first three months, a borrower must meet the goal of 60% employee retention and a minimum goal of 60% of proceeds spent for the following purposes.

• Payroll (Gross Federal Wages)
• State Unemployment & Payroll Taxes
• Employee Benefits
• 100% of proceeds minus what was spent on the above expenses should be directed to business mortgage interest, business property rent payments, business utilities, or interest on other business-related debts.

Contact Us

The Better Business Loan Program represents an opportunity many businesses can not afford to miss. Application acceptance will begin on August 27^th and there is a requirement to attend a webinar on the program starting August 24^th.  Given the complexity of the application process, including the eligible loan amount, it’s important to consult with a qualified advisor to walk you through the process. If you have questions about the information outlined above or need assistance with another tax or accounting issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.