In Case You Missed It: Link to Today's Webinar Topic
CARES Act For Small Business
The Apple Valley Chamber of Commerce in partnership with Open to Business and our Chamber partners in Lakeville, Burnsville, Hastings and River Heights is excited to offer you SEVEN complimentary Live 30-minute webinars to help your business navigate the questions, and new normal, related to the COVID-19 epidemic.

Today we kicked off the series covering the topic of what the CARES Act means for small business. Click the button below to listen:
TOPIC: CARES Act for Small Business
Register for each of these LIVE webinars using the registration link below each topic below. All webinars will also be recorded and sent out via email.

Friday, April 3 | 8:00am
Speaker: Bruce Goblirsch, President, Merchants Bank
Learn about the business funding options available and state and federal levels.
Monday, April 6 | 8:00am
Speaker: Matthew Schaap, Attorney, Dougherty, Molenda, Solfest, Hills & Bauer P.A.
Learn how to mitigate your business risk during COVID-19.
Wednesday April 8 | 8:00am
Speaker: Matthew Schaap, Attorney, Dougherty, Molenda, Solfest, Hills & Bauer P.A.
Learn about your legal responsibilities and best approach to managing your cash flow.
Friday, April 10 | 8:00am
Speaker: Kari Switala, Owner, Wild Fig Marketing
Are you an online business now? Learn how to market yourself in this new era.
Monday, April 13 | 8:00am
Speaker: Scott Kadrlik, CPA and Managing Partner, Meuwissen, Flygare, Kadrlik & Associates
How to get your business back up and running after COVID-19.
Wednesday, April 15 | 8:00am
Speaker: Adam Bengston, President & CEO, Endorse Communications LLC
Learn how to conduct your business online in this new state of normal.
Tax Saving Opportunities
From the CARES Act
AV CHAMBER NOTE:  The following is a summary complied by a company which uses very good examples which may bring clarity to some of the confusion out there. We checked with our CPA to be sure this is right for our members and they agreed.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is the largest stimulus package in our nation’s history. Among other things, the CARES Act provides tax relief for businesses and individuals. You may be able to take advantage of a number of tax savings opportunities.

Deferral of Employer Social Security Tax
You can generally defer the employer share of the 6.2% Social Security tax on wages paid from March 27, 2020, through December 31, 2020, with 50% due on December 31, 2021, and 50% due on December 31, 2022. A similar rule applies to 50% of the self-employment tax liability of partners and sole proprietors.

Tdeferral is not available if you take advantage of loan forgiveness under the paycheck protection program provisions of the CARES Act (i.e., certain new Small Business Administration [SBA] loans for payroll and specified other expenses). Take the loss of the deferral into account when considering whether to take advantage of a paycheck protection loan.

Employee Retention Credit
The CARES Act added a refundable payroll tax credit equal to 50% of certain compensation paid from March 13, 2020, to December 31, 2020. To qualify, your business must either have had its:

  • Operations fully or partially suspended due to a COVID-19-related shutdown order, or
  • Gross receipts decline by more than 50% when compared to the same quarter the prior year.

If your business has more than 100 employees, the credit is available only for compensation paid to employees who are not working as a result of one of the two situations listed above.If your business has 100 or fewer employees, any compensation paid during the period when the operations were impacted by one of the two scenarios is eligible for the credit, even if it’s paid to an employee who is still working.

Reinstatement of NOL Carrybacks
Following tax reform, net operating losses (NOLs) generated in tax years beginning in 2018 and later years cannot be carried back and can only offset up to 80% of taxable income in carryover years. The CARES Act permits NOLs from the 2018, 2019, and 2020 tax years to be carried back to the previous five tax years (beginning with the earliest year first) and suspends the 80% of taxable income limitation through the 2020 tax year. The NOL carryback can result in an immediate refund of taxes paid in prior years.

Aside from the cash flow benefits of obtaining an immediate refund, NOL carrybacks present an opportunity to secure permanent tax savings by using losses to offset income generated prior to tax reform when the tax rates were higher.

Temporary Suspension of Excess Business Loss Rules
Tax reform limited individuals from using more than $250,000 ($500,000 married filing joint) of business losses to offset non-business income. The CARES Act repeals the limitation for years beginning before January 1, 2021. If you had a business loss that was limited in 2018 or 2019 under the excess business loss rules, then you may be able to obtain a refund by filing an amended tax return.

Corporate Credit for Prior Year AMT
Tax reform repealed the corporate alternative minimum tax (AMT) and provided an opportunity for corporations to claim a refund of minimum tax credit carryovers during 2018 through 2021. The CARES Act makes any remaining minimum tax credit carryovers fully refundable in 2019. Alternatively, corporations can elect to claim a refund for the unused carryovers in 2018.

Modification of Business Interest Limitation
The business interest limitation was added as part of tax reform and generally limits the deduction for business interest expense to the sum of (i) business interest income, (ii) 30% of adjusted taxable income (ATI), and (iii) floor plan financing interest. Certain small taxpayers are exempt from the limit.
The CARES Act increases the limit to 50% of adjusted taxable income (ATI) for 2019 and 2020, potentially increasing interest expense deductions and reducing taxable income (or creating a net operating loss which can be carried back). You can elect to use your 2019 ATI in computing the 2020 limit, providing relief if your business income declines in 2020. If your business is a partnership, then the relief from the business interest limitation for 2019 takes a modified form.
With this change, you could have an opportunity to amend your return if you already filed your 2019 tax returns and your deduction for business interest was limited.

Bonus Depreciation for Qualified Improvement Property
Under tax reform, qualified improvement property (QIP) was supposed to have a 15-year cost recovery period and be eligible for 100% bonus depreciation. A drafting error, however, caused QIP to have a 39-year cost recovery period, and be ineligible for bonus depreciation. QIP includes most improvements to commercial or industrial buildings after the building was first placed in service, such as most tenant improvements. The CARES Act retroactively corrects the drafting error for QIP acquired and placed in service on or after January 1, 2018.
The retroactive fix may present an opportunity for you to accelerate depreciation, either by filing a Form 3115 or, in some cases, by filing an amended tax return. If you elected out of the business interest limitation for your real property business, then you are not eligible for bonus depreciation on QIP.

So given these options, where should you start?

1. First, we recommend is contacting your insurance company. You may have access to benefits you’ve paid into through your policy that could be helpful during this time.

2. Next, call your bank. Your banker will have advice for you on:
  • Their own resources
  • Any SBA programs they have access to
  • They may refer you to local lending programs such as those available through non-profits (like the Small Business Emergency Loan Program) or loan programs available in certain cities or counties across Minnesota

3. If you’ve been denied credit by a bank or the SBA, you should call any of the  approved lenders for the Small Business Emergency Loan Program  that serve your geography.

4. If you do not use a bank and/or do not have insurance on your business:
  • You can call any of DEED approved lenders for the Small Business Emergency Loan Program for possible access to the program and other resources available through our lending partners.
  • You may also call a lender in the Small Business Loan Guarantee program, when those lenders are identified. Please note that these lenders are likely banks or local development organizations who have underwriting criteria.
DEED Minnesota Call for Businesses (TODAY):
Notes from Conference Call 4/1/2020
APPLE VALLEY CHAMBER NOTE: The following are rough notes of a conference call with the commissioners this morning at 7 a.m. It is intended to give you a heads up early. Always check agency websites for confirmation.

2020 04 01 Call, DEED
Wednesday, April 1, 2020
6:54 AM

  • Daily updates to Critical Sector guidelines. Continue to go back to
  • Still waiting for guidance on CARES Act. Speaking with DOL, UI Depts… all remain to be seen, though actively working to know how quickly we can get programs rolling. They need to iron out a few details yet.
  • Flag for everyone: as of midday yesterday, posted "Guide to Small Businesses" to help them understand the levers from state, fed govt… a lot to digest. This is our first take to help small business make sense of it all. To help you navigate the options in front of you.

  • Congress passed CARES Act last Friday.
  • SBA is working to stand up some of those new programs that were part of legislation.
  • This morning I will update you on 2 of the programs SBA is working on.
  • EIDL Loans.
  • Changed the app process a few days ago, now is more like a Turbo Tax-esque app.
  • Streamlined and added a ton of capacity.
  • Can apply if a small business or nonprofit. AVAILABLE TODAY.
  • As part of that app, can get $10K advance grant as well. All one app through this new enhanced portal. 
  • PPP
  • Details are here, what I have at the moment. SBA is still developing the regulations to govern the program. So this is a preview and how it will "basically work," but isn't live for a few more days.
  • You have our assurance that the PPP is coming very soon, but can't yet apply as of today.
  • This is a loan to help businesses keep workforce employed.
  • Unlike EIDL, NOT a direct loan from SBA. Designed to provide incentives for small business to keep employees on the payroll.
  • SBA will forgive loan if employees are kept on payroll.
  • Eligible expenses: payroll, rent, mortgage interest, utilities.
  • Available thru 6/30/2020. available starting this Friday.
  • Who can apply?
  • Any small business with 500 or fewer employees. This includes sole proprietors, independent contractors, self-employed persons, private nonprofits, 501c19 veteran organizations.
  • Certain industries may have more than 500 employees but meet other "Size Standards" listed on SBA website. 
  • All in hospitality and food, if they have more than 1 location, also eligible at the store location level, if that location employs fewer than 500 locations. So EACH loc can apply.
  • Apply thru any existing SBA 7a lender or FDIC bank, credit union, farm credit institution that is participating. Other regulated lenders will be available once they are approved and enrolled. So talk to your local lender.
  • Earliest lenders can participate is 4/3. so we are working hard with them to get them ready.
  • Fully forgiven if used for payroll, interest on mortgage, rent, utilities. Loan pymts deferred over 6 mths. Noc ollateral or personal guarantees required. No fees.
  • Forgiveness based on employer retaining or quickly rehiring employees. Loan repayment If head count declines or salaries decrease.
  • (B's insert: I looked up the eligibility list and inserted here)
  • Have no more than 500 employees or the applicable industry size standard as provided by the SBA;
  • Are NAICS 72 (lodging and hospitality, food and beverage retailing and catering services) with no more than 500 employees at a location;
  • Are franchisees operating under an SBA assigned franchise identifier code; or
  • Are sole proprietors, self-employed and independent contractors.

  • (B's insert: I looked up maximum loan amount and inserted here) The maximum loan amount is the lesser of:
  • Average pre-loan 12-month gross payroll costs X 2.5) + outstanding amount of certain SBA loans made between January 31, 2020, to date of this new loan to be refinanced; or
  • $10,000,000.

  • (B's insert: clarification of what is "payroll costs")
  • Payroll costs include gross wages, bonuses, commissions, employer group benefits and retirement plan contributions and state payroll taxes.
  • Individual compensation is limited to $100,000 per year.
  • Sick and FMLA paid under FFCRA is excluded.

  • (B's insert: list of allowable uses)
  • Payroll costs, healthcare benefits (including paid sick or medical leave, and insurance premiums)
  • Interest on any mortgage
  • Interest on other debt obligations incurred before February 15, 2020
  • Rent obligations and utility payments

  • (B's insert: clarification on other key terms)
  • Maximum loan rate of 4%; no personal guarantees and non-recourse so long as spent on allowable uses; no collateral required; no “credit elsewhere” test; no SBA guarantee fees, and 100% government guarantee of loan.
  • Borrower to self-certify that uncertain economic times make the loan necessary to support ongoing operations, that funds will be used for allowable purposes, and that there is no other such applications pending.

  • (B's insert: effect on other stimulus and existing SBA debt)
  • PPP borrowers are not eligible for the employee retention tax credit in the CARES Act;
  • There is no “double dipping” of PPP loan allowable uses with any new EIDL loan application;
  • Still eligible for payroll tax credits for sick leave and expanded FMLA under FFCRA;
  • SBA will pay the next six months of scheduled payments for the borrower with existing 7(a) loans in place.

  • (B's insert: Terms of Loan Forgiveness) PPP loan forgiveness is the amount expected to be expended over an eight-week period following the loan origination (the “covered period”) for the following:
  • Payroll costs
  • Iterest (not principal) on a covered mortgage or other loan secured by real or personal property incurred before February 15, 2020
  • Payments on a covered rent obligation (lease agreement in place before February 15, 2020)
  • Utility costs

  • (B's insert: clarification on Loan Forgiveness Reduction) Loan amount forgiven is limited to the eligible amount times the percentage obtained by dividing: the average number of FTEs per month employed during the covered period; by at the borrower’s option,
  • The average number of FTEs per month employed during the period February 15, 2019, through June 30, 2019; or
  • The average FTEs during the period January 1, 2020, through February 29, 2020.
Reduction in rate of compensation: For any employee who earned less than $100,000 in 2019 on an annualized basis, the loan forgiveness amount is reduced dollar for dollar for any reduction in wages paid during the covered period that is more than 25% of the wages paid to that employee in the most recent full quarter before the covered period.
A special provision allows, in general, for employees rehired by June 30th to be excluded from the above loan forgiveness reduction calculation.

  • Continue to work on flexibility for licensees. 
  • One challenge: we have testing facilities for new licensees… looking at potential for providing temporary licenses for individuals who want to enter one of our licensed professions but have not yet completed testing due to shut-downs. 
  • Also continuing to respond to administration questions received re status as essential/critical businesses (thru DEED Critical Industries website).
DLI, Nicole Blissenbach
  • One small update: just this week we started receiving more calls from individual workers who are not critical sector employees being told by employers they must come to work. Remember: if they are not critical sector employees, they are not to come to work, would be violation of EO. If necessary, we will engage with local law enforcement to help educate the employers.
Revenue, Robert Dody
  • We are clearly receiving a number of questions and concerns about extending filing payments and due dates for all various tax types.
  • We are taking a hard look across our 30+ tax types to determine our statutory authority, and trying to better understand how we can provide more relief to taxpayers.
  • We do understand there is a reat need, doing our best to meet that need.
  • Planning to publish information to provide help to taxpayers re what we can/can't do.
  • We hear you, working hard on how we can assist and provide guidance
Governor's Office, John Kelly
  • There are a lot of different programs, a lot to navigate. Keep checking in, going back to the DEED website daily because it's being updated…
  • If you feel you've tried one avenue, keep exploring. Programs are continuing to develop.
  • These calls and your questions are very helpful to us.

  1. Question for McDonald at SBA: is DEED or certified lenders licensed by the SBA? If so, do DEED loans disqualify owners from new Payroll Protection Plan? McDonald: we have list of all SBA-approved lenders on our website. Will be sure to get DEED that link as part of follow up. About 400 SBA lenders in MN. My understanding that many can do MN emergency loan programs as well. My understanding is they are not mutually exclusive. If you get assistance from the state, won't preclude you from SBA assistance. Grove: that's right, you can get assistance from both. We have some provisions in SBEL that, once you get fed $ you pay DEED back, but you can and should apply to both.
  2. Can employer bring back employees they've laid off and access PPP? McDonald: waiting on the final guidance for that.
  3. Can agricultural coops access PPP? McDonald: are eligible. Some ag enterprises, a limited few, who would qualify. Generally, that would be more under any program at USDA. I would recommend once we have the guidance and the program up and running, we'll have greater clarity. But I do know some qualify for EIDL. Still looking for eligibility specifics.
  4. Why did the DEED programs for emergency funding requre borrower be denied funding from private lender? McKinnon: primary lender in this case may be one of our lenders as well. If one of our lenders makes the determination that, for some reason, you cannot access private or other financing, that's the determination that's needed. We are trying to make the state resources last and go a little further. If other financing is available, we encourage all businesses to work with banks, look at SBA, to allow MN funds to go a little further.
  5. How quickly are DEED loans being processed? McKinnon: our lenders have been working hard on this. they are inundated with applications. Working as quickly as they can. Once they receive an app, it also comes to DEED. As of yesterday, several organizations are ready to make loans. And more should come on very soon.
  6. SBEL in EO 20-15 states "if additional financing is received…. SBEL will be repaid…" would DEED consider modifying this? (further clarification….this question came from a lender… this is a dis-incentive. They WANT to provide other sources. Can they be allowed to get financing from more than 1 place without having to repay DEED?) McKinnon: if additional financing is received, we require repayment of our SBEL loan… so no forgiveness but could extend the term. If covenants of that other $ do not allow for repayment of existing debt - like SBEL -will work within those parameters (B: but it doesn't sound like the repayment requirement is being considered for change).
  7. Shared work: we are getting auto-reply emails. Will DEED be going thru them and what is estimated response time? Grove: hadn't heard that yet. Yes, we are going thru every one . We received 30 applications the first week, 60 the next week, 120/week now. I was unaware there was a backlog, will check in about that. We highly encourage businesses to apply for Shared Work. Dannon: there is an auto-reply, but that is the correct way to contact the team. They ARE processing the requests and responding to those emails. That is the right first step. Blissenbach: I can confirm… I get the auto reply but I've also gotten answers.
  8. For those who apply for UI and don't qualify, can we use the same credentials for new Pandemic Disaster UI? Do we have to contest the original non-qualification ruling? Grove: whole thrust behind Pandemic UI is that it helps those who aren't covered by UI to get paid with these additional benefits. Program is passed but not stood up yet, still waiting on guidance. If you are applied/denied, you are in the system. It is complex because UI team calculates benefits as an individual; look at your paycheck over past weeks/months to determine average payout. If you've been denied, and you are an indep contractor, we don't know your pay history so we need to understand how much people are eligible for.
  9. For PPP, can I increase pay for critical sector employees? McDonald: again, more will be known in the next couple of days when the regulations come out. Hang tight as we get this up and running.
  10. Can owner use disaster loan for business AND Qualify for UI benefits for themselves? Grove: yes. Please apply for both.
Paycheck Protection Program (PPP) Information
For Borrowers
This information was provided to us by the Saint Paul Chamber of Commerce.

The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.

The loan amounts will be forgiven as long as:
  • The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
  • Employee and compensation levels are maintained.

Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
Loan payments will be deferred for 6 months.

When can I apply?
  • Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
  • Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

Where can I apply?
You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit for a list of SBA lenders.

Who can apply?
All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries (click HERE for additional detail).

For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the SBA’s Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.

What do I need to apply?
You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. Click HERE for the application.

What other documents will I need to include in my application?
You will need to provide your lender with payroll documentation.

Do I need to first look for other funds before applying to this program?
No. We are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources (i.e., we are waiving the Credit Elsewhere requirement).

How long will this program last?
Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.

How many loans can I take out under this program?
Only one.

What can I use these loans for?
You should use the proceeds from these loans on your:
  • Payroll costs, including benefits;
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.

What counts as payroll costs?
Payroll costs include:
  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State and local taxes assessed on compensation; and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

How large can my loan be?
Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.

How much of my loan will be forgiven?
You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

How can I request loan forgiveness?
You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

What is my interest rate?
0.50% fixed rate.

When do I need to start paying interest on my loan?
All payments are deferred for 6 months;
however, interest will continue to accrue over this period.

When is my loan due?
In 2 years.

Can I pay my loan earlier than 2 years?
Yes. There are no prepayment penalties or fees.

Do I need to pledge any collateral for these loans?
No. No collateral is required.

Do I need to personally guarantee this loan?
No. There is no personal guarantee requirement. ***However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.***

What do I need to certify?
As part of your application, you need to certify in good faith that:
  • Current economic uncertainty makes the loan necessary to support your ongoing operations.
  • The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
  • You have not and will not receive another loan under this program.
  • You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
  • Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
  • All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
  • You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.
City of Apple Valley COVID-19 Resources for Businesses
The City of Apple Valley has compiled information and resources for businesses and created a COVID-19 Information Page. They are making updates as they arise.

Apple Valley Chamber of Commerce |