CARES Act-Forgivable Loan for Small Business Owners

BY: Tifanie Jodeh, Esq.
Kelmer Messina

The results of the COVID-19 virus has riddled our economy, most notably the entertainment business. It is a challenging time to be a business owner, we here at Entertainment Law Partners are determined to assist in solutions to help you make the best out of this difficult time. In particular, information on the application and general process for the CARES Act’s Paycheck Protection Program.
The Federal Government is in the process of implementing the Paycheck Protection Program, which will dispense nearly $350 billion dollars in forgivable loans through many  lenders and financial institutions, assisting small businesses’ capability to pay their employees while simultaneously guaranteeing the job security of all their employees for an 8 week period.
As early as Friday, April 3 (this date is fluctuating at the time of this writing), you can apply via your financial institution. Each financial institution will have their own documentation and application requirements. We have been in touch with several banks regarding their filing requirements. These loans will generally be dispensed on a first-come, first-serve basis, therefore, it is to your benefit to apply as soon as possible.
To apply for this loan, your lender or financial institution will require you to prove (among other items) the following:

• Your small business has less than 500 employees. 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 will need to provide to the lender documentation that verifies these costs. 75% of the loan must be used for payroll costs (Not complying with this requirement could affect the loan’s forgiveness).
• You have not and will not receive another loan under this program.
• You will also need to provide your lender with any additional documentation they request (such as tax and payroll documents), which they will use to calculate an eligible loan amount, which could be the lesser of (i) 2.5 times  the business’s average total monthly payroll costs during the prior on-year period prior to the loan being made multiplied by 2.5, plus the outstanding amount of an SBA disaster loan that was made between January 31, 2020, and the date that such loan is financed with a loan under the Act; or (ii) $10 million.

Because this program makes no distinction between corporate entities like sole proprietorship, partnerships or LLCs, nearly any company can apply as long as they fulfill the conditions, even if they are independent contractors or seasonal workers. This makes it so that if you are an actor, writer, director, producer or any other kind of Entertainment Industry professional, with a company and payroll eligible to apply for the loan.
As previously mentioned, financial institutions are likely to require a vast amount of necessary documents to determine both your applicability and the size of the loan. Assembling the documentation required by this program will be time-consuming and in some cases difficult to put together. While you may be eligible, a faulty application could be catastrophic for your company if your loan gets delayed or denied because of documentation issues. We are currently in a time full of uncertainties, yet you do not have to allow your business’s future to be uncertain.
Instead of allowing any minor mistakes to come in the way of your finances, we at Entertainment Law Partners are able to use our expertise to assist with your application ensuring the best possible presentation for consideration.

Have questions? Contact to discuss this loan as well as other state and local programs.  

Email us at Asst@entlawpartners.com or call 310-684-3666 to schedule a free initial consultation.