With startup businesses running from home, we now are living in an interesting time where you're once successfully run business may need to turn to services, products, and resources available to help during this crisis.
As your small business may continue to take hits from COVID-19 at Alley, we want to help give you the knowledge to fight back. With our virtual event, “Your Guide To Startup Resources”, we’re letting you in on firsthand accounts of small businesses, just like yours, who are looking for resources to help them get up or stay on their feet.
In this event, our panelists, Michael, John, and Noelle, present you with real-business advice from the real-world to help small business owners like you tap into those resources available to you.
Resources at your disposal:
Reaching out for help, especially during times of crisis can be a very important—but hard—step to take. After building out your risk management, the next step is acting on it to help ensure the survival and thriving-capabilities of your company.
In this particular webinar, we take a closer look at:
- The Paycheck Protection Program:Around 370 billion dollars set aside for small businesses under 500 employees, including a forgivable loan
Throughout the session, our expert panelists will go through the various factors that contribute to your likelihood and eligibility for being able to receive payment and the funds of the PPP.
You can also learn from our panelists about other programs that provide service and aid:
- The Small Business Administration (SBA) also has funds relating to economic injury and disaster loans to help provide relief
- The micro grids micro-grant program in D.C. provide grants that are not on loan for small businesses
- So many more!
“Hanging In There”
During this crisis, everyone seems to be going through very similar circumstances—and through this dark time, the notion of being all in this together—is so true.
From companies, small to medium-sized to large, everyone is afraid, everyone is concerned, everyone is unsure of the right answer, and not everyone understands what’s out there for resources. However, doing your research and checking in to see what’s available for you and your business can help you push through and stay afloat.
At Alley, our team is focusing on supporting our community digitally by sharing resources and hosting video events. We hope this event and our entire event series can help keep your business stay connected to the community, move forward in development, and grow with intentionality.
So, welcome everybody. We are here to talk about startup relief and resources that are available to your startup or small business during this crisis. So we've got a really, really amazing panel today. I'm your host moderator, Noelle Tassie, CEO of Alley but we're mostly going to be hearing from our star guests, so I'll let them introduce themselves, Michael.
Hi, everyone. My name is Michael Cohen. I am founder and CEO of Suitless Inc. We are tech enabled consultants that help small businesses become more productive.
Awesome. And, John, over to you.
Good afternoon, everybody. My name is John Olsen. I'm a senior account executive at Founder Shield, a full service retail insurance brokerage, focusing on early stage and venture backed firm. My team specializes in program renewals working with clients to helped build out their risk management processes as they continue to grow and scale operations. I've been with Founder Shield for two years. Prior to founder shield, I was also at Marsh, which is just another brokerage for a couple years there as well.
So really excited for today, there is a Q&A function in this chat for anyone who wants to drop in a question, we'll be answering them throughout the program. But we're actually gonna start off with an overview of some of the resources that are available that have been getting the most press. So we're gonna kick off with a quick kind of explanation of the Cares Act and a little bit of kind of what resources are in there for startups what to expect and some of the PPP. So, Michael, if you want to take it away on that.
Yeah, great. Thank you. So I want to first preface all this with letting everyone know that this isn't legal advice or banking advice or insurance advice or anything of that nature, the the Cares Act, some of you may be familiar with it, It's out in the news right now. It's also phase three of the economic stimulus is it is a legislation that was passed in order to help five different areas of our economy, public health being one of them, individuals, large corps, small businesses and state and local government. And one of the one of the prime features of the Cares Act is this, the Paycheck Protection Program, the PPP that folks have probably been hearing about in the news, it's about 370 some odd billion dollars specifically set aside for small businesses. And that money includes a forgivable loan amount that small businesses under 500 employees can apply for and the idea the basic idea here is that the we don't want the system, especially the unemployment system to become overburdened with companies that can't make payroll. And so what we're doing instead is providing them essentially propping them up for a several months to allow them to maintain their payroll and payroll amounts, so that they don't have to lay off for furlough employees who then have to then take on unemployment. So that's sort of a broad background of Cares [Act].
Awesome, and what are the kind of so in terms of who qualifies for Cares? What are the restrictions on that on receiving funding?
Yeah, so most small businesses actually should qualify. If you're no, I would say the ones that that have to keep an eye on whether they don't qualify or are are businesses that and this is where we would say talk to counsel, but businesses that are new, right, that just started up relatively recently. Businesses that are in the farming sector, businesses with storefronts, religious organizations. There are some restrictions also around it affiliated companies. So if you're if you're a VC backing talk to counsel, other than that most companies are eligible for, for the PPP. And so it's a matter of applying for it and and putting an application in that sort of thing. And then the sort that's the next element of confusion that has been sort of happening over the past week or so that we've been sorting through.
Cool, and I think we actually already have a question which you started to address there about whether private equity or venture capital backed applicants can obtain loans under the PPP. I know that, you know, you can't speak to some of the like legal specifics of this and everyone should absolutely start with counsel, but it'd be held maybe for our audience just hear a little bit more of what the nuance is around that that is creating an obstacle for some companies to receive funding.
Yeah, I'll give it my best shot. So one of the PPP is some of the rules that are around it apply to affiliated companies. So, specifically, if you're a portfolio company of a VC backed firm, you may the employees that are also in other portfolio companies may get lumped in with the calculation of, of how of whether you're considered a small business as part of this loan. Now, I'm not going to say one way or another whether someone is actually a small business or not. But the challenge here is that in the application of the for the PPP itself, you have to attest to, to all of these things, right. So you attest that you are a small business and that you are a, you know that the information that you're providing is legitimate and that you don't have, you know, you're gonna, whether it's by American or there's all these different elements of the application. And so by attesting to that, you're sort of saying that you're subject to things are not subject to things, and that's where companies want to be careful. So, you know, there are also elements of this where, if depending how your your board is structured, you may need to, you may need to talk to your investors are talk to your board or talk to your banker, talk to counsel, you know, I don't want to give too vague of an answer, but that issue has come up over and over again. And so portfolio companies, a lot of them are saying, yeah, maybe we should, you know, look into this a little bit more before sort of attesting personally to the fact that they need this money.
Yep, that makes perfect sense. And we've got we've got some amazing questions about the Care Act from the audience. So few more. If we're a startup with employees on payroll, but not yet in a revenue flow stage, are we qualified for the cares program? And if so, what are the chances of us getting funding which I love this question, because so many companies in our network are, you know, pre-revenue, really dynamic companies building a product, probably haven't brought to market yet. So, yeah.
Well, yeah, so, um, there they are looking at gross payroll as opposed to revenue. So this, this, again, is, you know, you're looking to maintain payroll for two months. So if you if even if you don't have revenue, but you have gross payroll, payroll journals, quarterly, not, you know, quarterly reports and that sort of thing. Our recommendation is to consider applying as long as you can attest to everything again on that application. All of the - everything that we've seen from that's been put out by the SBA and in conjunction with the Treasury has been that they are taking a very liberal stance towards these loans. So I'm not going to say, Hey, you know, just go out and apply for it, right. But there is some language that says, if these loans are of a necessity in order for you to keep your business going, and for you to not lay off employees or furlough employees, then it's a really good idea to put an application in and and depending on who you apply with, whether it's a bank or a community lender, you may get some additional documentation requests, because you have to remember that there's, there's another entity on the other side of this application that's actually going to be processing and paying off these loans. So you know, you're you. It's not just a golden ticket where you send in an app and you get paid an hour later, it is a process. So I encourage everyone to sort of follow the process. Try the process. And, you know, bankers, because they're writing these loans, they're gonna have some really good guidance for you. But yeah, we're saying if you feel as though it is a necessity for you to receive a loan, then you should apply for it. That's kind of the best advice I have.
Definitely. That's, that's, I think that's, that's awesome advice. And hopefully, the process, the process runs pretty smoothly in terms of getting money to where it's needed. So we have three questions that are all around the question of whether essentially in different ways 1099 or non W-2 employees are covered. So one question everyone's put it slightly differently, but yeah, can you include 1099s? I think I know the answer is actually but would love your thoughts Michael. And then with the PPP, so what we were advised and and this isn't like a huge issue for Alley, we almost all of our staff is fully on payroll via W-2. But, um, we're advised the 1099s can actually file themselves.
Yep. So this is one of the points of confusion that sort of existed. Initially, when this rolled out, there was some guidance that said that 1099 if they were ongoing service providers that they could be included as part of a wages. So for example, not if you pay, you know, your, a random designer $1,000 to do something for you. But if you have an ongoing relationship with a, you know, person in 1099, who sort of as a recurring could be construed not as an employee, but as a worker of the company, that they would fall under it and then we recently have been finding that there's two windows for applying for the PPP money. The first is for companies, April 3 was the start of the window, even though some companies didn't actually start, or some banks weren't able to start taking applications until Monday. And then the second is, is the the second window is April 10. Right. And so that is when sole proprietors, 1099 individuals, that's when they're going to be able to apply that the challenge here is making sure that there's enough money available when it when that'd be you know, when that window opens. So this this is a first come first serve program. There's been some talk in the in the in the both the Senate and House recently to expand the program to make sure that there's enough money. There was definitely some concerns last week and early this week that hey, what happens if the this money runs out by no Thursday or Friday. It sounds like it doesn't hasn't happened yet. And also, it sounds like a lot of the actual funding mechanisms have not even been triggered yet. So a lot of companies are still just waiting to get paid. And And interestingly enough, there's the other element of Cares is the individual payment, which some folks will be eligible for. So people are waiting for that as well. So this is a this is an example of the SBA and the treasury and frankly, the government to really try to get money out the door to keep our economy stable. And, you know, it's it's difficult this, this is unprecedented to, you know, fund and back millions of small businesses. So one of the things we're telling everyone is be flexible. Have your documentation in order. Ask these good questions. maybe ask them once or twice to several different people to try and zero in on an answer. And and when in doubt, apply for things apply for grants apply for loans. And the last thing I will say, just regarding this specific element here is, you know, there's all sorts of calculations that are being touted as far as figuring out what your payroll is, whether you're using a trailing 12 months or a calendar year, can use the past three months, whatever it is, we are delicately recommending that folks have a defensible method of calculating what their quote unquote monthly payroll is, and you're seeing all sorts of payroll providers put out very similar methodologies of how they're calculating this. It's some point down the road, whether it's filing tax returns next year, or whether it's filing an additional form that you've collected PPP money, there's going to be some accountability. The real accountability is going to be probably on the backs of small business CPAs and payroll providers. There will be some folks that are, you know, will may go through an audit, if there was some egregious issues, but what I would say is, make sure that whatever amount you're requesting, is defensible. Okay? That you you have a rationale for that. You don't just say, Oh, you know, something, our payroll is $50,000 a month I'm just going to request a million dollars and see what happens. Don't do that. Please, please do not do that.
Yeah, all of that. Please do not do that. Because there's only so much so much in the pot as well. Um, so somebody actually asked I don't know if you have the answer to this or have either of you have the answers but about the current volume of applicants for the PPP?
Yeah, I mean, we're hearing anywhere from I mean, there's there's a lot of different Print numbers out there Bank of America was saying one point that they were getting 10,000 applications an hour I think that that's sort of trickled down a little bit. We're hearing community banks are able to get their applications through a little bit quicker if they've already done SBA loans in the past. So some of the Wells Fargo pulled out of of the process of offering these loans. One of the things that we're seeing a lot of with banks is they're only applying for these types of loans for current or existing clients. So if you have a bank account and a lending account, whether that's credit or you know, a line of credit or credit card or whatever, then companies are taking you on, there are small businesses and credit. There's, there's small firms out there and small banks out there that want this business. And so you're starting to see more of those pop up and say, Hey, you know if you're a Wells Fargo customer and you can't get your PPP application in will take you. I know that some of the more common banks like First Republic and SDB have been sort of slower into the into the race here to offer this just because it's not really an SBA loans are not really their game, I won't, I won't sort of knock any bank at all. But when you're a VC backed entity, usually you're not you're not applying for an SBA loan. So just something to be aware of talk to your banker, talk to multiple banks, see if they're accepting, but to go back to your original question. Yeah, there's there's a lot of interest in this program. And, you know, this, that's not even taking into account companies that are just now hearing about it companies on Main Street companies, like, you know, small shops that that are just finding out the PPP that aren't sort of steeped in the, the the information that's coming out of, you know, know well your types of marketing and outreach and that sort of thing. So Yeah, there's a there's a lot. There's a lot out there. And I will say to that, as far as I mentioned that additional money being available, but they're they're looking at potentially making an additional $250 million available as part of the PPP. Billion sorry, with a B. So that hasn't passed yet. I don't think that's even been gone through through the legislative process. But I think that that's probably coming.
Yeah. And I think you have something there, Michael, that you touched on that is so important, right, is just the fact that it's always interesting to me the way that obviously you have if you have a government affairs resource, or you're networked into like VC community or something of that nature, you're going to get clearer information faster. And that that lag and kind of lag and communicating out what's actually in the legislation and what you can do is kind of an unfortunate, unfortunate side effect of how this how this system and how this process works. Yeah, probably the I mean, I would be a lot happier if everyone found out at once, but it is what it is. And that's why we're doing these panels. Um, I think something that you just touched on a few times that we've heard a lot of questions about. And and this is actually something that, you know, as a business, we've looked at our different forms of SBA loans, right. So the the PPP is being administered through existing banks, but the SBA is also providing relief. I think there's like state and federal programs, is my understanding, but it would be really great to hear from you. What you've seen out there.
Yeah. So the SBA also has the economic injury, disaster loans. So these are typical disaster loans that become available to companies. You know, the last time that I think that they were widely available was during Hurricane Katrina. They they're similar To the the process is similar to getting a PPP loan. However, if you're applying for an IVL loan directly through the SBA website, and so the money is a little bit different you can you're eligible for up to $2 million in loans and there's a higher interest rate. You also can get an advance of $10,000. That's potentially forgivable as part of the EIDL. The one thing to be aware of is that you can't have you can't use the EIDL and the PPP for the same purpose, right. So if you have, you know, $50,000 a month payroll and you request whatever it is $125,000 You can't go can't request that on the PPP side and on the EIDL side. So that's something to be aware of. I would say that most folks are starting with the PPP loan because of it has such favorable and generous terms, when it comes to the fact that it's guaranteed by the SBA, it's unsecured. There's not a whole lot of you know, I don't want to say recourse, but it's it's a, it's a much more palatable loan than, than, say the EIDL. On the state side, we're seeing a lot of lot of different loans as well. So we're seeing a lot of business continuity loans and all the different states we're seeing grants and micro grants both at the state level and on the private side. So now I'm in Washington, DC, and they recently put together a micro grant program. So it's, um, you know, we're still waiting again on the system and seeing how it's getting paid out. But these are grants that You can apply for that, that, you know, in general don't need to be paid back unless you know there's something in there. So the way that we're telling folks to look at their options are, first and foremost, the highest level, you want to look at grants that are available. Second, you want to look at forgivable loans. And then third, are loans themselves that have interest, interest rates and terms and so forth. And then in that grant section, you want to start with the state grants because state and local grants because those are the ones that if you're eligible for them, they're going to be the most generous, and then there's a lot of private grants out there as well. There are companies that are doing grants, there are foundations that are doing grants, and that's where you can look more towards the industry that you're in and the you know, the location that you're in, and if you're you know depending on what you're what you do as a company, there may be a charitable foundation out there that's willing to do a grant, you know, for whatever, you know, sort of forward your business in your enterprise, that sort of thing. The problem with those small foundational grants is usually they're relatively small, you know, zero to $25,000. I should also mention that a couple big name companies have grant programs as well. Facebook as an example. They're issuing cash grants and grants around Facebook credits, and then Amazon has a grant program as well for for neighborhood businesses that have storefronts. So those are the two more prominent ones. There are some lists out there that I would recommend folks looking into and maybe we can include that like sort of a follow up for links, but the big links that I like and that I see are ones that have, you know, grants and resources ones that have sort of a breakdown of all the requirements, documentation requirements for PPP. There's another one for, you know, unemployment is kind of a, you know, I don't want to say a four letter word, but no one loves talking about unemployment. But there's some really good resources about how to apply in all 50 states, that sort of thing. So I found that folks have been doing a really good job of compiling all this information, putting it together, it's just a matter of going out there looking for it, finding it, and figuring out what's right for you and your business.
Definitely. And yeah, I think, sort of to that, and I want to make sure we get to business interruption insurance, but somebody asked, and you're talking about how the PPP is, by far kind of the more popular of the two programs between PPP and EIDL. So you know, one of the reasons right is the the option of potentially have the loan forgiven, which somebody asked about, they said, you know, is it eligible to be forgiven? And if not one, two applicants have to start repaying and is there a payment deferral period. And I think that another question to throw in there that we've heard and we've received, we received conflicting counsel on this, I think based on, you know, essentially additional federal guidance that got issued, but it's around the payroll tax relief feature and like weather taking advantage of that means your PPP loan can be forgiven.
So it's a good question. So to start with the last question, I think what you're talking about is that you cannot use the employer. There's two parts of the cares act, it says there's an employer credit portion that is much less popular that will probably not get used. That's part of the Cares Act, as well as the PPP so you can't use the PPP and the employer tax credit. What you can do is on the FCRA, there there are tax credits through the three year quarterly payroll, and they do that and so that that actually covers That covers the, for employees who need emergency pay leave. So if someone was quarantined or deemed to be isolated, or if they're sorry, not isolated, if they're deemed to be, you know, necessitated that they stay at home, there's like six different categories, if you have to care for a family member, if you're symptomatic, if you are caring for a child whose school is closed, those sorts of things. So that can be used. You know, we've actually put together a, like a actual form document that we're using with our clients, where employees can go in and say, like, Hey, you know, I'm off because of this reason, and we sort of made a conditional to say like, oh, if you chose option number one, then you know, you need to add this information or if you chose the child, the childcare element, then you know, you need to add in what what location your child is at. So we've gotten a little bit creative in terms of how to administer the EPL portion the Emergency Pay Leave of the family's first act, but yeah, you can use that with a PPP. You can't use the PPP with the employer credits. From my understanding.
Yeah, we, we've been hearing a lot of different things about this. So it's really helpful to get that kind of clarity.
And I will, I will be the first to say again, like, I don't work for the government that, like things are changing, you know, we're getting future guidance every day. So I would say try to stay on top of things, if you if something may or may not apply to you keep an eye on it, just, you know, things, things could change.
Yeah. And for those of our Alley members who are on the call, we're gonna, you know, try to collect as many of these resources and if we have your email, be pushing it out to you, for sure. So, you know, the EIDL obviously, it's the kind of program that previously has been used around, you know, disaster relief, and I think that that brings up the related point that I'd love John to speak to which is business interruption insurance, which has been a pretty hot topic. So if you want to give some background because I don't know, some people might even have it and not know. And then what it is?
Yeah, absolutely. And before I dive into that quickly, just one important concept to note is that insurance industry, it is entirely regulated from a state level. So conversely, from what Michael was speaking about, you know, everything is coming from mostly for a federal level, everything is going to pretty much be on a state by state basis. The National Association of insurance commissioners hasn't unilaterally released anything yet. But you know, each state's and it's important to know, you know, what's going on and you know, the state that you're domiciled in, just to understand, you know, what type of things are being passed from the regulatory agencies and things like that. And as you mentioned, Noelle, you know, obviously, business interruption has been one of the primary points of contention for this during the crisis that we're experiencing right now, a lot of states and traditionally, business interruption insurance is included in your property coverage, which is traditionally covered through your general liability and packaged together there. But it's sort of a sublimate included in the property. But traditionally the the standard wording for that basically excludes and typically has wording such as an exclusion for viruses, or communicable diseases. But a lot of states have, you know, recently posed in, you know, introducing legislation requiring insurance to pay those losses, retroactively removing that exclusion. Some of those states have included, you know, New Jersey, Massachusetts, Ohio and New York. So, you know, obviously, a lot of the Alley network would be impacted there. And what that essentially would do is, you know, again, retro actively remove that exclusion and, you know, potentially, you know, force insurance companies to pay for those types of losses. What we've been been recommending to doing for our clients and you know, really anybody who has that business interruption insurance is to put carriers on notice, obviously, a lot of these, you know, things are still gonna go in through the State Department's, but just putting the carriers on notice and you know, once and if these are past, you know, just staying ahead of the curve in terms of, you know, potential payouts and things like that.
Yep, that makes perfect sense. And is there any insight into whether any business interruption insurance claims would interact with the PPF, PPP or other federal relief programs? In terms of eligibility or if you are audited?
Yeah, this is going to be independent. Again, it's entirely state driven. You know, so those types of requirements are in there. Again, it's it's going to be you know, very independent of you know, what's happening on a federal level.
And you guys have you know, I think, Michael, you brought up the the audit issue earlier. You know, some some companies that take PPP money, even if you're not asking for you know $10 million for 50k of monthly payroll, you know, some companies are going to get audited. Do you have any recommendations for companies now to both protect against that happening? We know how hard that can be for small businesses and also to make sure that, you know, frankly, you come out the other side and make a decision.
Yes, good question. So, I mean, some of this stuff is simple, but we're telling folks to document everything, document your methodology, show your work, even if even if your application for the PPP seems simple. document how you got to that amount of X dollars that you're requesting, right. And, you know, if that means drafting up a narrative for your company, that's a paragraph that says, We pulled 940 ones for every quarter, we took the totals, we divided that by number of whatever it is, you know, draft that up and have that prepared. And what I imagine is going to happen, we're not entirely sure there's probably going to be in order to receive that forgivable component, it's probably going to be a, you know, some sort of IRS Form would be my guess, it's going to say, How much did you receive? How much did you spend on payroll? Does it tie with your, your payroll registers and your 941s, and you know, how much was above and beyond the forgivable amount. And then these are the terms for your loan, it's gonna look something like that. So yeah, document everything, have a narrative for everything, have a rationale and a methodology for everything, and sort of pull that all together and put it somewhere where like, the, you know, if, if down the road, you get an email from, you know, the IRS or the SBA or whoever, whatever agency is going to be sort of digging through this stuff down the road, that you're able to just shoot this often and say, like, here's what we did. Here's how we did it. Here's the money we took. Here's what we pay back. Here's what we didn't, you know, here's where all the money went. I think having a good accounting of of that too, you know, if you, if you don't already have an accountant, make sure your account if you do have an account, make sure they know what they're doing that you're taking the money. If you don't have an account, make sure you're keeping really detailed records. Even if you're on spreadsheets, you know, separate spreadsheet just for where PPP money's going. Yep.
Perfect. Sound advice in general, I think. And, John, we have a question for you from the audience regarding insurance. So this is from Jonathan Selby, do you think putting carriers on notice will impact renewal pricing the next year? It's a very interesting question.
Yeah, absolutely. It's definitely something we get asked a lot. And the answer would be straight and have no, you know, it's not going to impact pricing, looking at the renewal. You know, simply putting them on notice isn't going to, you know, be any detriment to you at all. It's just basically putting it out there that in the event that any of these state legislators pass in Anything related to business interruption insurance and that virus exclusion? Again, it's just putting you ahead of the curve. And you know, because this is such a force majeure event, it really shouldn't impact renewal pricing at all.
Awesome. Great. So we've got a lot of questions about the SBA and the PPP. Another question, what is the best way to get answers from the SBA once you've submitted an application and if they say your application is in review.
So you're going to want to try to work with your bankers specifically on that. getting in contact with the SBA right now is, I would say next to impossible. They have two email addresses that they use they they're supposedly man, a support desk that you can reach out to and I can find those emails addresses. One is specifically dedicated to disaster loans. The other one is a general SBA support desk. We've sent emails in, we've asked people who've sent emails in good luck with getting anything back from the SBA. Bankers have a more direct line. So there they are tied into the the systems that the SBA uses, they use a specific e- Tran system, I believe, to sort of manage all these transactions. I don't know enough about how banks are tied into those systems. I think it's my understanding that some banks have their own internal cues for applications whereas some are just processing them as they receive them and can give update based on when they think the money will become available or if there's additional question. There's I don't have a whole lot of insight into this area. Unfortunately, I think a bank who's familiar with SBA loans can give a much better and more sort of thorough answer. But again, your your banker is the conduit to the SBA loan, I would, I would try to avoid interacting with the SBA as much as possible and limit that as much as you can just because they're they're inundated right now with just about every question you could imagine and every scenario and everything like that.
Yeah. And frankly, getting your banker on the phone as a isn't isn't a super easy feat right now, either, which we've experienced on our side. And then somebody I actually submitted a question, James Wang submitted a question that's kind of in that vein, which is, what should we do as we're Wells Fargo customers, and they stopped. I guess they stopped doing the PPP and SBA programs. And I'm also curious if you have insight into why that happens and why they dropped.
So I don't have a ton of insight, like I, it was my understanding that Wells Fargo did not want to be responsible for the volume. Again, and I'm sort of speaking a little bit about turn here. Like I'm not 100% clear. I think the volume that they were getting after they turned it because they turned it on and they started accepting applications. And then they turned it off a day later. And I think Wells Fargo customers, rightfully so were extremely upset. It's my understanding it was a volume issue that they didn't think that they could keep up with it. Someone from wells would probably have a much better and more PR spun answer. I can tell you that there's plenty of small biz SBA lenders, independent small banks that are accepting applications from companies that have never banked with them before, which is which is good news. I think we have a list somewhere that I can I can find. There's also a good list on the SBA website of like 100 SBA lenders that do the most work now that has probably been picked through on a pretty note at this point, I think what you're trying to do is find kind of the you know, I don't want to say undercover but less utilized SBA lenders who are not getting 10,000 applications an hour right now, who can work with you to secure a loan even if you haven't banked with them in the past. You know, I think it's also a good opportunity to to look at other banks, in addition to Wells Fargo, nothing against Wells Fargo, but but it might be a good opportunity to see hey, like I worked with this this lender and he was really easy to work with and he took me on and helped me get my money and you know, like if I have to go through another round of this, who knows maybe there's a phase five or phase six where you know, there's another PPP program or something similar might be a good idea to start thinking about that now.
Yeah. Hopefully, of course, we all hope we won't be in phase six the PPP. But uh, yeah, fingers crossed. But who knows? I think the only thing we know is we have no idea. So somebody asked him, this is sort of FCRA adjacent. Right. So family leave. If my employee is contracted COVID-19, will my workers comp policy provide coverage? And I know that there's also the again, the FCRA. Yeah.
I'm sorry. I thought you were talking about the FCRA with Michael, could you repeat that question?
Yes, sir. That's the question was about workers comp. And if somebody on your team has contracted COVID, whether you can file a worker's comp claim and then I also know again, there's FCRA provisions, but
Yeah, absolutely. I mean, for workers compensation, you know, obviously, that is protection for your employees through the course of the, you know, their employment, their their normal course of business. The issue we've sort of been seeing with this type of claims for, you know, workers compensation they haven't really played out yet, is primarily, you know, where do you find the burden of proof of where was contracted? You know, was it on your way to work, you know, with someone else in your office sick, is there a way to prove that that was a course of action. So we're sort of right now to wait and see if there was a way to prove that it was, you know, through the normal course of work, things like that, obviously, I know, sort of health care workers and things like that, it's a little easier to sort of point to that. But as of now for standard office employees and things like that, we're sort of at a wait and see and, you know, seeing what, how, you know, the evidence can be pushed one way or another whether or not it happened in the course of business.
That that makes perfect sense. And then somebody asked, and I think, John, this is also on for you. Are there other provisions, my insurance policies that I should should be focused on right now.
Yeah, so for you know, insurance in general, from an overarching standpoint, from an enterprise level, another two, you know, policies that we should be looking at is employment practices coverage. That is going to be obviously anything related to mass layoffs, furloughs, things like that, protection for any suits that are related through the you know, the course of employment, things like that. In California, they waive the WARN Act, which you know, makes it easier for California based companies to you know, go through those layoffs and things like that without having to provide as long as have a forewarning. So look at those types of coverages, obviously, consult with your broker to see what types of provisions are in there for types of, you know, layoffs, furloughs, things like that. Another coverage that we have been seeing claims pop up is directors and officers coverage. One claim came from I think it was Norwegian Cruise. Cruise Lines, they were being sued for a class action suit because a lot of their salesman's were still sort of downplaying the COVID, exposure, things like that, obviously, we saw a bunch of cruise lines, where people were getting affected, and obviously, the close quarters caused the spread pretty quickly. So they were being sued for misrepresentation for venture back in earlier stage companies, you know, these types of claims can include just how reporting is going about, you know, the management type of decisions, responses and things like that to the virus to help keep the company alive. So those are just a couple of other other, you know, policies that we've seen clients sort of be concerned with it and tons of coverage for.
Awesome. Thank you, John. We have another question, which I love because it's on the accounting side, is PPP considered a grant and that doesn't need to be recognized as income on the income statement?
So, again, not speaking from an accounting background here, but it is it is a loan, I would imagine that it is added to your balance sheet and then it comes off at some point. I so do the last question there. There was a question about whether contractors were eligible for FCRA. I think that was there was a second part of that. And the answer is it's for W-2 employees only. So someone had asked if your contractors can are eligible for that EPL, that emergency pay leave, or the extended expanded family medical leave, that's just for W two employees.
Now, we have a lot of questions about qualifying under the PPP actually, that we might as well I think address explicitly just because I think people like to, to hear every edge case ruled out right. So one is if you're an independent contractor under W-4 do you count in PPP? Do you count those people?
So this is where we're advising folks that they that the independent contractor should be applying using the second window as opposed to the first.
Perfect. And then we have somebody asking if they qualify for a loan for hiring new workers, and I think we've also we've received advice on this, which was, and I'm curious, Michael, as to your thoughts, and neither of us are lawyers. But we were basically told no way unless they started before February 15.
Yeah, February 15. Is the is kind of like the the drop dead date. There, there may be some other I believe there's like a program in Virginia that that provides some sort of new higher benefits like various states have different types of benefits that are already in place or have been expanded for new hires, but yeah, it's, it's, that's that's really a tough one. Again, you can try, you know, I don't want to tell I want to give anyone bad advice here. But yeah, it's really we're looking at sort of the historical.
Yeah. So John and Michael yeah, because we've got about 15 minutes left, something I'd love to talk about sort of shifting away from more of the technical questions is just overall like looking at the government response to this crisis and what it does for small business and then some of the things that we can already see coming down the line, you know, what are what are some learnings from this first round of relief? And what you know, what could we be at what could the federal government and state governments be doing better? You know, as somebody running a startup and small business I've got some pretty strong opinions on this, but I'd love to hear from both of you.
I'm happy to go first. Yeah. You know, one thing that we've we've sort of been speaking about internally is the insurance industry tends to, you know, try to fix things after the fact. You know, one thing I can sort of equate this to is sort of when 9/11 happened, insurance for terrorist acts wasn't really contemplated. It wasn't till afterwards that they set up TRIA, which was the, you know, the Terrorism Act that they passed, which would help insurance companies in the event that they were to go insolvent, or things like that, my guess and hope is that, you know, after you know, this settles, or hopefully maybe during the, the process and you know, as everything's still developing is that they put something similar, you know, to in the event because, you know, obviously we can see something to this scale from a communicable disease or pandemic, is put together some type of fun that would help businesses and you know, coverages, right business interruption and things like that, and help carriers facilitate those types of responses and aid and things. Care like that to their insurance.
And that would help your industry move faster in cases like this?
Absolutely just help facilitate it, um, you know, again, similar to the, you know, terrorists act 9/11, they, you know, put something in place that, you know, hopefully that never happens again, but you know, it would help facilitate in the event of something happening and through another pandemic, where to start back up, just sort of have an agency and have the ability to act quicker and have a better understanding of how businesses will respond.
Yeah, definitely. I mean, it It feels like from from our perspective and so many other small businesses we've talked to you right? If you your point about insurance, sort of fixing things after the fact and this is one of those cases where if you really want to sort of front run the economic impact, getting like decisive action and cash into the hands of small business owners now is really what's what's going to help like it's, you know, nobody's gonna it's not gonna solve a lot of problems if you get that payroll reimbursement in like four months after your company has already hit a major cashflow crisis and you've gone under you know, and that's that is the problem with government in general is it's not necessarily designed for decisive and quick actions. So I think that that makes sense. It would have been nice to have. Michael?
Yeah. I, I, I empathize with the, you know, the feeling that these things need to happen fast, right, like the speed at which companies can get money and people can get money. And I mean, that that's critical for infrastructure for our economy. You know, I would like to see the Department of Labor playing a stronger role here. We're clearly experiencing a transition to, you know, remote workforce being more critical than ever. It'd be just totally critical right now. And when we come out the other side I'd quote unquote, I think a lots gonna change in terms of remote work remote life, you know how people are telecommuting when and it's going to become much more acceptable. And really, the Department of Labor, he should be on the forefront, they should be the tip of the spear making sure that people are getting retrained, getting, you know, education. You know, I'm not gonna advocate free education or free college or whatever. But I think there's a lot of change that's going to be had, and labor is going to become a really important agency in the future. I know they've had some some, some departments in Department of Labor that's focused on you know, adult training and, and things like that. And so, yeah, I think that education is going to be one thing that we're going to see just totally transform. Regardless of when this the pandemic ends or regardless of what happens with the economy, we're just I think we're all realizing that we put all our eggs in this basket of work has to be done in person. And we've seen the the sort of challenge that's created when we all live by that. And so things are just gonna change or they're gonna be, there's gonna be a force to be changed. And I think that that's coming and figuring that out is going to be a no small feat.
Awesome. Um, is there anything that you know, when you look at the cares act that you feel is is missing from that or that should have been could have been done better or differently? Because this is something that I think that comes up a lot. There's a lot of I mean, everyone has their wish list, but I'm just curious if there's anything in there where you you feel it could have been done more effectively.
I'd have to, I'd have to think about that one. I think that the the individual payments could have probably been... I just don't know. I mean, I would have, I would love to see folks getting those payments quicker I would love to be to see the business. I mean, I think that's kind of the, what everyone's thinking, right? It's like, how can we do this stuff quicker? A lot of the stuff is like, you know, you know, I will say this, I will say that. I think that there, in terms of the PPP, I would have liked to have seen a little bit more like, means testing, you know, a little bit more, maybe, like some tears in there. Because, you know, everyone's getting lumped together. This is kind of like a first come first serve whoever can get through the door first. And I think we may look back on that down the road and say like, yeah, you know, like, there were some companies that probably should have gotten their PPP loan like, like way before this other company that had $10 million in reserves in the bank. I think we may look back and say, you know, a lot of companies, we go prevented them from going under, if we sort of triage who got what and when. But again, it's we're in like, unprecedented time. You know, it's, we've never been in a situation before we're kind of doing the best we can. So yeah, I'd have to think, though, if there are other things that are sort of missing from the cares act itself, and maybe it gets put into it sounds like there, there may be, you know, phase four on the horizon. So hopefully they're able to get it right that time. Yeah.
How about you, John?
Yeah, I mean, going piggybacking off that I think it's just all about the facilitation similar to you know, business personal property. We'll just see how that develops over the next few weeks. But you know, currently we're we're to wait and see type of situation sure inside.
Yeah, I think I mean, I guess another kind of follow on question to that in terms of things that can be done better something really unique about this situation. is you know, frequently when you have a huge or in certainly in like, last one Yours when you have a huge piece of federal relief legislation targeted at businesses, you know, with page after page of like up to sleeve bullies, typically, it's being targeted at large institutions that have in house Government Relations teams that have read every version of the bill, you've got like five lawyers issuing guidance on it in house. Now, when you sort of flip that on its head, and all of a sudden, you've created this incredibly dense sort of regulatory program to give money to small businesses who don't have that, you know, it's a very different scenario. And I think sort of Michael to the point about, like, triage and figuring out who gets the money and even just the questions that we've been seeing today, right? No, no small business that's qualified for the PPP, has the legal team on staff that can really like address these questions. So you know, is there anything that you guys think could be done better there to make Sure that small businesses are actually empowered to take advantage of the legislation because it feels like it's almost there's a, the people who needed the most are, I guess, the least, prepared to understand how to take advantage of it.
I mean, my recommendation would be to use the resources at the community level, so not even state and local resources, but like, for example, co working spaces or portfolio companies or members of peer advisory groups, using that using your network to try to zero in on some of these questions. And, you know, I would love to see the federal government put some money into, you know, virtual live chat, right, like, How great would that be, if you could go to the SBA website and chat with an SBA advisor or score advisor or a lender, whatever it is, and just getting get some information at your fingertips? I mean, I think that I know the IRS has something similar and they get very busy around tax time and that sort of thing. But why can't the like in every agency have some sort of, you know, queueing and bots and, you know, responsive chat box available that people can use. I mean, to me, it's like, that's what a government in 2020 should, should have. You shouldn't be having to rely on, you know, your community, your neighbor, the guy in the cubicle across the way to explain to you how PPP works. And so, for now, that's kind of what we get, and we have to be a community and stand strong and help each other out. But I think it's a good lesson for us from a perspective of what we want for government to say like, like, no, you need to get with the times.
Yeah, I mean, I think Michael hit, you know, square in the bag is, you know, just relying on you know, your vendors and things like that, you know, we've been trying, you know, obviously a lot of the companies we work with don't have their own risk management type of you know, departments or you know, lawyers, things like that, that they can rely on, you know, to cover these types of things. So, you know, really what, you know, sort of our value add is really just to, you know, send out this publications, you know, make ourselves available as sort of that outsourced vendor, you know, obviously, so let's do something similar, but just relying on others, but you know, exactly what Michael said, there's really not much government involvement with smaller, you know, businesses, mainstream type of companies that don't really have access to that or, you know, don't understand where to find that type of information.
Yeah, for sure. I don't think a lot of small business owners right now have time to read all whatever hundred pages or what have you of the Cares Act. So and, of course here, we love the theme of community and sort of leveraging your community. So to Michael's you know, to Michael's point earlier, I think, at the very least, we can get resources out that way. But yeah, I think we need to ask more for the government from the government to support small business. Cool. So we have two minutes left. So you know, Michael and John, if you both have any closing thoughts that you want to share with our audience, we've still got a lot of people on just around this entire process. And, you know, there's one, I guess if there's one thing that they take away from today, what would you want it to be?
Yeah, I mean, I, I don't know if it's trite to say, like, hang in there. Um, everyone's going through very similar circumstances. So when I say hang in there, it's not like a, like a, you know, punching on the arm and saying everything's gonna be okay. But this notion of we're all in this together, is it's so true. We, we've talked to a ton of companies, small and large, medium size there. There's Everyone is afraid. Everyone is concerned. Everyone doesn't know the answer to Cares. Everyone doesn't understand PPP. Everyone doesn't understand what's out there. And so just sort of accept the fact you know, the fact that, accept the uncertainty, and hang in there. And I say that with like a very, you know, I know it's easy to roll eyes at that, but we're gonna get through this.
Yeah, I assume somewhere I mean, from an insurance standpoint, definitely reach out to you know, whoever your broker is just to, you know, get a better understanding of what, you know, types of coverages that, you know, you have currently, I mean, a lot of people didn't really anticipate getting coverage for a pandemic or, you know, types of things that would cover those. So, you know, just reach out to whoever's in your network, see what type of coverage you have, you know, and what types of things you can sort of leverage to try to, you know, get some type of reimbursement from an insurance standpoint.
Awesome. Great advice, Michael and, John, thank you both so much for joining us today and giving us an hour of your day to keep everyone informed. And to our attendees. Again, they're from Suitless and Founder Shield, two amazing companies in our network. So thank you to our attendees also for sharing an hour of your afternoon with us and we'll be following up after this panel. We also have somebody from the SBA joining us, hopefully next week for a Lunch and Learn. So definitely make sure you're on our email lists. And that one was hard to schedule. Let me tell you. Thank you all so much. Take care.