Thoughts From the Finance Factory

Is Your Business Taking Full Advantage of The CARES Act?

Nearly every small business—3 out of 4—say they are being negatively affected by COVID-19 in some way. Given the unprecedented reach of the virus, and the reaction too it, that statistic is hardly surprising. But the attempts to help business owners are unprecedented, too. By now, you’ve heard about the $2 trillion stimulus package, called the Coronavirus Aid, Relief, and Economic Security (or CARES) Act. But your focus may have been one of its most popular provisions: the Paycheck Protection Program. However, the CARES act did more to help business owners.

Paycheck Protection Program

This provision is the most popular part of the CARES Act for a reason—it provides potentially forgivable loans to small business owners to help them get through the more acute phases of COVID-19 response. However, there were many issues with its roll out, which we won’t get into here.

What’s important on this front is persistence. Just because you didn’t receive funds in the first round of PPP, doesn’t mean you won’t still qualify in the future. To prepare for this possibility, continue to apply for loans and make sure your bookkeeping and financial records are up to date. 

If PPP doesn’t work out, there are still options available, and this preparation will put you in a good spot. Moving forward, you still have options.

  • Economic Injury Disaster Loans (EIDL) Like PPP, the EIDL program was maxed out early on, but may still be an option. Congress has been applying additional funds, so staying prepared is important. For instance, as of this writing, applications were open to agricultural businesses. To better your chances of qualifying for this type of loan, try where possible to limit expenses and keep bringing in business.
  • Payroll Tax Credits If your business has been financially impacted by COVID-19, you may qualify for a payroll tax credit for up to 50% of salaries up to $10,000. The provision is meant to encourage employers to retain employees. To qualify, your business must be suspended by government order due to COVID-19 during the calendar quarter (partially or fully), OR your gross receipts must fall below 50% of the comparable quarter from 2019. 
  • Tax Deferral Federal tax deadlines have been pushed back for businesses as well as individuals. Specifically, employers can defer their employee tax deposit and payments through the end of the calendar year.
  • Traditional Small Business Association Loans 
  • Payment deferrals If you currently have loans and are experiencing a slow down you should call the bank and ask for a deferral on your loan payments. Every little bit helps when we are talking about survival. 

Not all of the relief provisions in the CARES act require you to borrow from a bank. You can also borrow from yourself, in the form of Coronavirus Related Distributions or CVDs. This part of the act allows you to borrow up to $1000,000 from a tax-advantaged retirement plan, like an IRA or 401(k) to help you weather the situation. Importantly: The government does not place restrictions on how you use the funds. As long as you repay the money within three years, there are no federal income tax consequences.

CVDs aren’t the only part of the CARES act focused on retirement accounts. The stimulus package also suspends required minimum distributions (RMDs) for 401(k)s, 403(b)s, 457(b)s and IRAs for 2020. Essentially, if you are 72 or older, you are not required to withdraw money from your plan in 2020 like you would be in a normal year. If you’re tempted to take these distributions anyway, remember that the prescribed RMD amount is calculated based on the stock market close in 2019. Since the market declined significantly in early 2020, withdrawing money based on the 2019 level would lead you to withdraw a much larger percentage of your nest egg than intended.

Ultimately, which provisions in the CARES act you choose to utilize depends on your unique business and personal circumstances. To discuss any of these options, or if you have questions about the big picture, my door is always open.

What Does The CARES Act Mean For You?

With so much focus on the size and scope of the CARES Act (it totals almost $2 Trillion, or 10% of GDP), it’s difficult to tease out the important details. What does this bill do for you, right now? How do you access the opportunities it outlines? Here’s what every American needs to know about the CARES Act.

Show me the money!

Unless you’ve been sheltering in place under a rock, you know the government is sending recovery checks. What people are less certain of is when those checks are coming.

The good news is, if you’ve opted to pay your taxes with direct deposit in the past, the government will use that information to direct deposit your recovery check, speeding the process. Look for that money to appear in the third week of April. If you don’t have direct deposit set up, then you will see a check in your mailbox sometime in May. 

As far as how much you can expect to get: The act provides cash assistance up to $1,200 ($2,400 for those married filing jointly) to many U.S. taxpayers. The amounts increases by $500 for each qualifying child.

That’s the baseline. Payments are reduced for those making more money — these calculations are based on the Adjusted Gross Income you reported to the IRS. Payments begin phasing out for individuals making more than $75,000, for heads of household making more than $112,500, and $150,000 for those married filing jointly. The IRS will base these amounts on the taxpayer’s 2019 tax return, or 2018 tax returns if 2019 has not yet been filed.

If you’ve been laid off, furloughed or fired…

The first thing you need to do is go online and file for unemployment benefits, since this makes your unemployment status “official” with the government. If there are problems with filing in your state, keep trying, and document all of your attempts to file, particularly if they haven’t worked. This is a critical step.

The CARES Act expands unemployment insurance provisions to include an additional $600 per week per recipient for up to four months. It also extends benefits to self-employed workers, independent contractors, and those with limited work history.

The federal government will provide temporary full funding of the first week of regular unemployment for states with no waiting period and extend benefits for an additional 13 weeks through December 31, 2020 after state benefits end.

You may be able to tap your savings…

While it should always be a last resort, Individuals may withdraw up to $100,000 from qualified retirement accounts for coronavirus-related purposes. Essentially, the CARES Act expanded the hardship provision that lets you tap into these accounts without paying the 10 percent early withdrawal penalty.

The money you withdraw will still be subject to income tax, but the tax rate is determined over a three-year period, so if you repay the funds to your accounts within three years, you won’t have to pay the income tax. (Repayment does not count toward that year’s contribution limit.)  Individuals may re-contribute amounts withdrawn to eligible retirement funds within three years.

If you’d prefer to take a loan from your account, instead of a withdrawal, the act provides for that too. It increases retirement plan loans to either $100,000 or the vested account balance. You have a year to start repaying.

Required Minimum Distributions are on hold

 The IRS has also suspended the Required Minimum Distributions for people who are over 72.  This is a big deal for folks that don’t need the money they can allow it to continue to grow.

Charitable giving is encouraged

The CARES Act creates an above the line deduction of up to $300 for charitable contributions. That means you don’t need to itemize too for this deduction to count. If you do plan to itemize, the Act suspended the cap on charitable contributions (previously, it maxed out at 50% of AGI.

While these steps don’t solve all the economic problems that Covid-19 has created it is a good step to help bridge the gaps that have been created. As always, we’re here to help. If we can’t answer your questions, we’ll put you in touch with people who can.

What You Need To Know About CARES Act SBA Loans

What you need to know about small business relief

Help is here. The CARES Act addressing the financial fallout from COVID-19 is now law. This is a massive piece of legislation: It runs 880 pages and accounts for more than $2 trillion dollars. There’s a lot to tackle in it, but the first thing I want to dissect is the loan relief program for nonprofits and small business owners. 

But before I say another thing: Contact your current banker today and ask them if they are participating in the SBA backed CARES loan program. If they aren’t, stop reading and call around to find a lender that is. Then schedule an appointment (virtual or phone) with a loan officer ASAP.

With that taken care of, here’s what you need to know about CARES going into that meeting:

  1. What does it say?

It provides loans to these organizations to help them through the period of time between February 15, 2020 to June 30, 2020. There is approximately $349B set aside for this program. No loan payments under this program are due for one year and no fees are included in the loan.

No collateral or personal guarantees will be required by board members, trustees, or owners. Normally in small business loans, an owner or board member has to sign a personal guarantee, making them personally responsible if the loan isn’t repaid. That isn’t the case here; these loans come with no personal risk for business owners or board members.

2. What businesses does the bill cover?

The bill includes churches, nonprofits, Christian schools that are 501c3s, and small businesses. It covers employers with up to 500 employees (500 people at one location*) are eligible. There are no restrictions on type on industry or location within the US.

3. What can I use the loan for?

Payroll costs

This includes: salary or wages; payments of cash tips to employees; vacation, parental, family, medical and sick leave; health benefits; retirement benefits; state and local taxes.
However, these costs are only covered up to $100K in salary or wages for each employee.

Group health insurance benefits, paid sick leave, medical and insurance premiums

Mortgage or rent payments


Interest on any other debt obligations that were incurred before the loan period**

4. How much can I borrow?

  • Total average monthly payroll costs for the preceding 12 months (March 2019 to February 2020) multiplied by 2.5


  • $10,000,000 if you are a brand new church plant church or organization, use average payroll costs for January and February 2020 multiplied by 2.5.

5. How do I qualify or prepare?

You must certify that you used (will use) the loan to support ongoing operations or use the funds to retain workers, maintain payroll, or make your mortgage, lease and/or utility payments.

6. What’s the catch? How do I pay this back?
You may not have to pay the loan back: The full amount can be forgiven if you meet a few parameters. The primary qualifier is employment; the loan is forgivable if you employed the same number of people during the loan period as you did last year. If you have fewer employees, you may have to repay part of the loan. If you’ve cut employee salaries by more than 25%, you must repay the loan.

Here’s how that all breaks down:

  • Full-Time Equivalent Employee (FTE) (as defined in section 45R(d)(2) of 11 the Internal Revenue Code of 1986)
  • The goal of this loan is for your 2020 FTEs to be equal to or greater than your 2019 FTEs. Essentially, they want you to have equal to or more employees from February. 15, 2020, to June 30, 2020, as you did last year from February 15, 2019, to June 30, 2019.

If you have (or will have) fewer employees in 2020 than in 2019, then you need to complete a calculation. Divide your average number of full-time employees (FTEs) during the COVID-19 window (February 15 – June 30) in 2020 by the average number of full-time employees you had during that same window in 2019.

Turn that number into a percentage, and the difference between that number and 100% is the amount of your loan you must pay back.

So, for example, if you have 18 full-time employees now but had 19 last year:


If you’re required to pay back all or part of your loan, the maturity period is 10 years. We currently do not know the interest rate of this loan but given that the repayment will be spread over 10 years, the church or nonprofit’s monthly payment to repay this loan will be very low.

As I mentioned earlier when I told you to call your banker, this program is backed by SBA, or the Small Business Administration. It’s important to ask right away whether your lender is participating, and if not, to find one that is.

I’ll be in touch with more details about how CARES may be able to help your business during this unprecedented period. As always, we’re here to help. Please contact our office (336) 310-4233 or with any questions.

Running Your Business During COVID-19: A Step by Step Guide

In the age of a pandemic, when we are cooped up in our homes feeling powerless, challenges can take on epic proportions. It feels like we’re locked in a fight for our survival, partly as humans but also as business owners in a world economy. The decisions we make as leaders right now are truly a matter of life or death.

More →

Faith over Fear

Over the past week, I’ve had conversations with many of you about the “new normal” we find ourselves in.  This past week was weird for us all: It felt shapeless. Without the routine of going to work or dropping the kids at school, I felt unmoored. What day is it? How am I supposed to feel? Do I freak out? Go about as if this is business as usual? Is it somewhere in the middle? 

To answer those questions, I started by summarizing the problem. We are waiting on the news to turn and the virus to reach its peak.  

COVID-19  is like a video that goes viral on Facebook. One person sees it and shares it with their network, who then shares it with their network, and the next thing you know 5 million people have seen a cat video. Only this time, it’s a virus. It is frightening to think about what this virus has done to the global economy.  We don’t know what the final tally will be, but we know it is going to be big.  Big from the perspective of the impact on unemployment, corporate revenues, GDP, and stock prices.  

As we begin to digest what life will look like after this virus passes, I am certain of two things: 1) The virus will pass, and we will develop a vaccine and treatment to deal with future outbreaks of COVID-19.  2) Our economy will come back, the question is when.  We are a resilient nation.  We have come back from two world wars, a Depression, dozens of recessions, terrorist attacks, and even global pandemics.  

Knowing these two things, I realized there is a choice we must make today. When things are out of control, people tend to forget they still have choices.  Even with working at home, distance learning, and job loss: We still have a choice. That choice is between faith and fear.  

Today is the day to choose Faith!

So how do you choose faith? You can start by not listening to the negative news programs or watching the rolling death tolls. Instead, look for the positive. I’m not saying to ignore the risk associated with Covid-19.  Quite the opposite. 

As weird as it may sound, I find the atomic bomb to be a useful analogy to our current state. 

When the world was worried about the next bomb being dropped, they didn’t cower in fear.  If we were going to be destroyed by a nuclear weapon, we would be destroyed doing sensible human things: reading, writing, working, praying.  It would not find us huddled together like frightened sheep.

So it goes with this virus. If contracted, the virus may destroy our bodies. But for those at risk, and for the rest of us in isolation,  it does not have to dominate our hearts and minds. COVID-19 test results are only one part of our health and well-being.  

Ask yourself if what you are watching and reading. Is it feeding your fear or your faith? To get you started with positivity, here is the great C.S. Lewis discussing how he transitioned to life in the nuclear age:

In one way, we think a great deal too much of the atomic bomb. “How are we to live in an atomic age?” I am tempted to reply: “Why, as you would have lived in the 16th century when the plague visited London almost every year, or as you would have lived in a Viking age when raiders from Scandinavia might land and cut your throat any night; or indeed, as you are already living in an age of cancer, an age of syphilis, an age of paralysis, an age of air raids, an age of railway accidents, an age of motor accidents.

No one could have predicted this virus or its impact on the global economy.  And there are still many unanswered questions. But this is a moment that humanity has faced many times before, and every time we have come through them stronger because we choose Faith and not Fear! 

If you need anything we are here to help. 

Dream Big and Learn Fast!

In the latest episode of the Business Owners Blueprint Podcast I talk with Billy Prim, Chairman of Primo Water. Billy Prim is a very rare breed. He is from a rural tobacco farming town but his entrepreneurial spirit runs deep.

He founded two companies that he took public, Blue Rhino and Primo Water. Listen as you learn some of his lessons on business, leadership, success, and overcoming difficulties. We also talk a little baseball.