Reply to CARES Act and Childcare Facilities

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]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. [/quote]

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.[/quote]

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.[/quote]

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.[/quote]

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