CARES Act and Childcare Facilities

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have cash reserves, but we will need those for our own income loss. Sorry we didn’t foresee the future to save enough to support ourselves and others during a pandemic. Should I also burn through my savings to support my hair stylist who owns her own business? What about the restaurants we used to go to?

Don’t get me wrong, we want to help to the extent we can. I plan to buy some gift cards to local places and could afford some sort of partial tuition payment. But that I’m now supposed to burn through my family’s cash savings when we have no idea how long this will last and whether one of us will get permanently laid off is insane to me.

Look, if you can afford it, then you are blessed. Go for it. But childcare is the bill that often breaks our budget every month in good times. Also, with expanded unemployment insurance, the teachers can collect an extra $600/week from the federal government in addition to state unemployment. Why can’t they collect that and then parents donate to a go fund me to help if there is a shortage?

You need to talk to the school and tell them that.

I did like a week ago and have gotten no response. I have to give one month’s notice so tomorrow is our deadline to withdraw for May, which I’m going to have to do if they hold the line on paying full price. I’ve already prepaid for April (not to mention days I paid for in March they were closed) and we won’t be eligible for our deposit back due to some technicalities if we withdraw now, so I’m already out nearly 8k at this point, which isn’t a small amount for us. With my new reduced pay I will be making less than $1000/week so I’m honestly turned off that they seem to think $1k/week in unemployment isn’t good enough for them and they’d rather come after parents for payments.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The reason the forgivable loan is not an option for daycares and preschools is because in order for the loan to be forgiven, you have to maintain payroll at the same level that it was this time last year. Since you have some families who have stopped tuition and terminated care (or will terminate), you need to cut staff to make up for revenue losses but you can't cut staff because then you won't qualify for forgiveness.

The loan forgiveness only looks at FULL TIME head count, not part time. Centers can cut their floaters if necessary, who usually only work on a part time basis. This will not jeopardize forgiveness.

The loans do not require any collateral or a person guarantee. This is literally free money, if you're not dumb enough to screw it up. The families will come back.

Families are not coming back NOW - they're coming later. If you layoff staff for April / May to give families a break in tuition, you would not qualify for the free money because you have not maintained payroll during those months to my understanding.

Don’t lay them off. Take out the loan. Pay your employees. Then apply for forgiveness. Or lay them off and they can collect $1,000/week in unemployment then you just charge a reduced rate to cover rent and utilities. Or continue to come after parents for full tuition payments when they’re dealing with their own financial stress and see if they even want to return to your daycare after being treated like free money to keep your business running.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The reason the forgivable loan is not an option for daycares and preschools is because in order for the loan to be forgiven, you have to maintain payroll at the same level that it was this time last year. Since you have some families who have stopped tuition and terminated care (or will terminate), you need to cut staff to make up for revenue losses but you can't cut staff because then you won't qualify for forgiveness.

The loan forgiveness only looks at FULL TIME head count, not part time. Centers can cut their floaters if necessary, who usually only work on a part time basis. This will not jeopardize forgiveness.

The loans do not require any collateral or a person guarantee. This is literally free money, if you're not dumb enough to screw it up. The families will come back.

Families are not coming back NOW - they're coming later. If you layoff staff for April / May to give families a break in tuition, you would not qualify for the free money because you have not maintained payroll during those months to my understanding.

Your understanding is wrong. Please read the links above.

You do not need to maintain payroll now. You need to maintain payroll in the immediate 8 weeks after the loan is originated. That likely will not be for some time (perhaps months), given that it’s a brand new program, the SBA is a small agency, and they need to work with banks to build out the systems to manage the program. If you’re a daycare, you need to be actively talking to your local banker.

You get full forgiveness if your average full time # of workers in the 8 weeks after the loan is originated is greater than or equal to (1.) the average # of full time workers from Jan 1 to Feb 29, 2020 or (2) Feb 15 to June 30, 2019. You get to choose between (1.) or (2.) for purposes of calculating forgiveness - clearly the best choice is to pick the smaller number so have to hire less people in the 8 week period after the loan originomatiom.

Even if you don’t have the same numbers, you still can get partial forgiveness. This is literally free money. Here’s a simple example:
-Borrow $100K
-After the loan is originated, you only have 5 FT workers
-Before the crisis, you had 7 FT employees

Your forgivable amount is $100K * (5/7) = $71,400. You would need to pay back $28,500 at 4% interest over 10 years. That’s a fantastic deal for a small business. You will not get lending terms that cheap anywhere else. You save your business. Don’t factor it into the tuition hike until next year. Theparents will be back.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The reason the forgivable loan is not an option for daycares and preschools is because in order for the loan to be forgiven, you have to maintain payroll at the same level that it was this time last year. Since you have some families who have stopped tuition and terminated care (or will terminate), you need to cut staff to make up for revenue losses but you can't cut staff because then you won't qualify for forgiveness.

The loan forgiveness only looks at FULL TIME head count, not part time. Centers can cut their floaters if necessary, who usually only work on a part time basis. This will not jeopardize forgiveness.

The loans do not require any collateral or a person guarantee. This is literally free money, if you're not dumb enough to screw it up. The families will come back.

Families are not coming back NOW - they're coming later. If you layoff staff for April / May to give families a break in tuition, you would not qualify for the free money because you have not maintained payroll during those months to my understanding.

Your understanding is wrong. Please read the links above.

You do not need to maintain payroll now. You need to maintain payroll in the immediate 8 weeks after the loan is originated. That likely will not be for some time (perhaps months), given that it’s a brand new program, the SBA is a small agency, and they need to work with banks to build out the systems to manage the program. If you’re a daycare, you need to be actively talking to your local banker.

You get full forgiveness if your average full time # of workers in the 8 weeks after the loan is originated is greater than or equal to (1.) the average # of full time workers from Jan 1 to Feb 29, 2020 or (2) Feb 15 to June 30, 2019. You get to choose between (1.) or (2.) for purposes of calculating forgiveness - clearly the best choice is to pick the smaller number so have to hire less people in the 8 week period after the loan originomatiom.

Even if you don’t have the same numbers, you still can get partial forgiveness. This is literally free money. Here’s a simple example:
-Borrow $100K
-After the loan is originated, you only have 5 FT workers
-Before the crisis, you had 7 FT employees

Your forgivable amount is $100K * (5/7) = $71,400. You would need to pay back $28,500 at 4% interest over 10 years. That’s a fantastic deal for a small business. You will not get lending terms that cheap anywhere else. You save your business. Don’t factor it into the tuition hike until next year. Theparents will be back.

I hope you're right. Thanks for breaking this down. You were actually more helpful than my CPA!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The reason the forgivable loan is not an option for daycares and preschools is because in order for the loan to be forgiven, you have to maintain payroll at the same level that it was this time last year. Since you have some families who have stopped tuition and terminated care (or will terminate), you need to cut staff to make up for revenue losses but you can't cut staff because then you won't qualify for forgiveness.

The loan forgiveness only looks at FULL TIME head count, not part time. Centers can cut their floaters if necessary, who usually only work on a part time basis. This will not jeopardize forgiveness.

The loans do not require any collateral or a person guarantee. This is literally free money, if you're not dumb enough to screw it up. The families will come back.

Families are not coming back NOW - they're coming later. If you layoff staff for April / May to give families a break in tuition, you would not qualify for the free money because you have not maintained payroll during those months to my understanding.

Your understanding is wrong. Please read the links above.

You do not need to maintain payroll now. You need to maintain payroll in the immediate 8 weeks after the loan is originated. That likely will not be for some time (perhaps months), given that it’s a brand new program, the SBA is a small agency, and they need to work with banks to build out the systems to manage the program. If you’re a daycare, you need to be actively talking to your local banker.

You get full forgiveness if your average full time # of workers in the 8 weeks after the loan is originated is greater than or equal to (1.) the average # of full time workers from Jan 1 to Feb 29, 2020 or (2) Feb 15 to June 30, 2019. You get to choose between (1.) or (2.) for purposes of calculating forgiveness - clearly the best choice is to pick the smaller number so have to hire less people in the 8 week period after the loan originomatiom.

Even if you don’t have the same numbers, you still can get partial forgiveness. This is literally free money. Here’s a simple example:
-Borrow $100K
-After the loan is originated, you only have 5 FT workers
-Before the crisis, you had 7 FT employees

Your forgivable amount is $100K * (5/7) = $71,400. You would need to pay back $28,500 at 4% interest over 10 years. That’s a fantastic deal for a small business. You will not get lending terms that cheap anywhere else. You save your business. Don’t factor it into the tuition hike until next year. Theparents will be back.

I hope you're right. Thanks for breaking this down. You were actually more helpful than my CPA!

You need to talk to your local SBA banker who is authorized to issue SBA-backed loans. Your CPA will be maintaining the necessary paperwork, but the banker will understand the loan program and it’s requirements.

[Anonymous]

Why are families expected to pay to keep our centers in business when they can take out a forgivable loan that will cover rent, payroll, utilities, etc.? Am I missing something here? It just seems like it’s not feasible what we are being asked to continue to pay in light of long term closures.


In many cases, it's going to take months for the schools to get the loans.

[Anonymous]

Anonymous wrote:Why are families expected to pay to keep our centers in business when they can take out a forgivable loan that will cover rent, payroll, utilities, etc.? Am I missing something here? It just seems like it’s not feasible what we are being asked to continue to pay in light of long term closures.


In many cases, it's going to take months for the schools to get the loans.

Okay, so charged a reduced payment to pay rent, utilities, and cover some payroll. Dip into savings a bit to cover some payroll too (I mean there HAS to be at least some savings even if they didn’t plan). Take out a regular business loan as a stop gap. I dunno. But parents are not just free money to bailout the childcare industry.