More funding to come for struggling businesses, musicians: here’s what you need to know
Here’s what you need to know:
Prepare now: “The best advice I can give you is that you can’t procrastinate on this,” says Bart Herbison, executive director of the Nashville Songwriters Association International. Banks will have used the first funding to resolve issues in their application processes, but businesses will no doubt seek guidance in providing the Small Business Administration with accurate information. “You must expect frustration. “
You must reapply, even if you have already applied for the first round of funding: Applicants have multiple resources, but they have to navigate a difficult application process; the Small Business Administration needs specific information for payroll protection, loan advances, bridging loans, and debt relief. And because there is no queue, applicants whose first application was late must reapply, but banks will only accept applications after the PPP fund is replenished.
Is it difficult to be approved? To disburse the CARES Act funds quickly and as widely as possible, Congress has relaxed loan requirements beyond what is typically required of businesses and individuals. The Small Business Administration does not require any personal collateral, collateral, or credit history to receive the loan. More importantly, up to 75% of the loan does not need to be repaid, if it is spent on salary costs.
How much can you get? Congress created the PPP to provide companies with a financial lifeline to stay in business and keep their employees. Businesses can borrow 2.5 times their monthly wage costs for an eight-week period, up to $ 10 million. The PPP caps compensation at $ 100,000 per year, but covers pension contributions, health care benefits, vacation pay, and some taxes paid by employers.
It’s not just for full-time employees or on staff: People who would not normally get unemployment benefits can also get funding from the CARES Act. The PPP covers independent entrepreneurs, sole proprietorships and some self-employed workers. The law also funds generous pandemic insurance through individual states. Requirements and application processes vary, but in general, people who have lost income due to the coronavirus may be eligible for financial assistance for 39 weeks in 2020.
Other resources are available: Musicians have other ways, beyond the CARES Act, to help make ends meet. Artists were able to call on their record companies and publishers for breakthroughs without having to give up additional rights, lawyer Dina LaPolt said, calling it a “refreshing” change from the years when the houses of discs awaited additional rights in return. Artists can also obtain royalty advances from distributors or auction rights on future royalties through companies such as Royalty Exchange.
Lanie Allbee of Martin, Allbee, Miller, Bryan & Associates in Nashville advises homeowner clients to take advantage of federal and state assistance. The CARES Act allows homeowners on federally guaranteed loans to request a break or reduction in their mortgage payments; the law also prevents lenders from starting foreclosure on federally guaranteed loans for at least 60 days. Homeowners with private mortgages are not included, although some states – namely California and New Jersey – have agreements with banks to allow a 90-day grace period for mortgage payments.
There is also over four dozen relief funds that professionals and creators can approach from organizations such as the Recording Academy’s MusiCares, which hold parts of the music industry together during this crisis.
Where to apply: Business owners are likely to apply through their commercial banks. The 2,500 banks participating in the PPP were a common obstacle in the first round application process. (City National and Chase received high marks from people Billboard spoke to.) Anyone seeking PPP help should apply through a participating bank, not the Small Business Administration. Each bank has its own application process with different language that may require analysis. During the first funding round, some applications were not suitable for individual businesses that do not have a payroll. Applications are supposed to be more understandable in the second round.
Small businesses only get a fraction of the money: The Small Business Administration has been widely criticized for the size of some businesses that have received funding, but it depends on your definition of small. While the Small Business Administration limits PPP loans to small businesses with up to 500 employees, restaurants can have up to 500 employees at each location, which means Shake Shack, a publicly traded company with nearly 8,000 employees. people at 189 sites in the United States, received $ 10 million. – he announced Monday that he would repay the loan following public outcry – and the Ruth’s Christ Steak House chain received $ 20 million.
Of the 1.035 million loans that the Small Business Administration approved through April 13, 0.32 percent of recipients received loans over $ 5 million which accounted for 9.2 percent of the funding. Only 15% of the dollars went to 725,058 loans of $ 150,000 or less.
Who will need the help of CARES Act? Many artists are actually small businesses that put bands and other employees on the payroll for year-round access. An artist who generates $ 25 to $ 30 million in annual touring revenue could have a payroll of around $ 1.9 to $ 2.1 million, said business manager Lou Taylor. “If you don’t have any income, you have to make the decision to spend your own money to keep your staff. Most businesses won’t.”
Albee agrees. The best country artists and the “greatest Christian artists” who “pay their employees $ 20,000 to $ 50,000 a month cannot make payroll,” she says. Some smaller artists got creative online and broadcast live performances, “but that’s nothing compared to what they normally have,” Allbee adds. “It might have grossed a few thousand dollars, but they used to make $ 5,000 per show.”
Mid-level and developing artists are also less likely to have savings and need consistent touring income. This is also bad news for their band members, who usually don’t get paid and are instead hired by tour. Individuals are not necessarily left out since the PPP covers independent contractors and sole proprietors. Herbison says he spoke with Rep. Ted deutch, chairman of the House of Representatives Songwriters Caucus, to ensure the law contained language that would apply to songwriters who work for themselves, not for corporations.
Songwriters are also affected by store closures, Herbison says, noting that many still work part-time in restaurants and bars and may need PPP loans because songwriting is not their primary focus. source of income.