COVID 19, The CARE Act, and how we as small business owners find resources

As a business owner, I am looking down the barrel of an unprecedented time in our nation’s history and economy.   I feel fortunate to be considered an essential service, but that does not leave me without the fear of how to do I keep my team employed and our business viable for the upcoming shift in our nation’s economy.

If you are like me you may have a lot of questions on what the CARES Act is and what it can do to help me through this.  Thankfully I have been surrounded by a few people that are much smarter than I am who have tried there very best to keep me informed.

As of today April 2nd this is what I know about how it will affect my business and my clients who are business owners.  I hope that you will use this information as one and pass it on to others that it may benefit from the information.   Keep in mind I am just a business owner so always confirm with the SBA or another qualified professional before taking this information to heart.

Before jumping into the CARES Act just remember it applies to Businesses, Sole Proprietors, Independent Contractors, and non-profits

The best quick reference sheet that I have found to date was given to me by my friend and mentor Kathy Ricci:  You can access it here: Emergency Loan Program Comparison

The first and fastest source to access funds is going to be through the SBA Economic Injury Disaster Program (EIDL).  Here is what it can do:

  • Small businesses applying for an SBA Economic Injury Disaster Loan (EIDL) will be eligible for a $10,000 Emergency Grant to be issued within 3 days of the application being received.
  • Applicants must certify under threat of perjury that they believe they are eligible for the Emergency Grant.
  • The Emergency Grant award of up to $10,000 may be subtracted from the amount forgiven when an EIDL loan is refinanced into a PPP loan.

Access the new EIDL website here: https://covid19relief.sba.gov/#/

The next step is for the Payroll Protection Program: 

Direct link to the program:  www.sba.gov

Instead of typing it all out, You can access the fact sheet Here: Download Fact Sheet    The owner’s guide can be accessed Here: SBA Owners guide

The NFIB has been good enough to create a summary as well that may help. Here is a link to that as well NFIB Summary

The US Chamber of Commerce has created a good information sheet as well:  US Chamber of Commerce Checklist

If you are needing a worksheet to calculate the loan amount that you can access either one that was shared with me here:  Download Loan Amount Calculator Or BBSI Loan Calculator

Last Here is the link to download the Application.  PPP Application

Utah Residents have access to a few other programs as well.

Utah Leads Together Small Business Bridge Loan Program:

If you are a Utah Resident Utah has passed legislation called Utah Leads Together to allow for bridge loans:  The information from the state of Utah can be accessed here: https://business.utah.gov/utah-leads-together-small-business-bridge-loan-program/

Criteria Highlights

  • Businesses must be established and licensed before January 1, 2020, and in good standing with the Utah Division of Corporations and Commercial Code (will be verified here).
  • Applicants must have employees on their payroll for whom they have had payroll taxes withheld (i.e., W-2 employees).
  • Applicants must provide six months proforma of estimated lost revenue or other documented loss evidence.

Eligibility Highlights

  • Businesses that have experienced severe economic impact due to the COVID-19 pandemic.
  • Businesses that can demonstrate a multiplier impact on other industries.
  • Businesses that play a key role within a strategic state supply chain.
  • GOED will determine the eligibility of applicants. Applying is not a guarantee of funding.

Requirement Highlights

  • Financial statements: profit and loss, and balance sheet statements for the previous year, and most recent quarter or month.
  • Last year’s business state of Utah tax returns (2019 or 2018).
  • A copy of the business lease agreement or mortgage statement for the business location.

Salt Lake City Emergency Loan Program

Loan Program Guidelines:

  • Business must be within Salt Lake City Limits (see map)
  • Maximum loan amount: $20,000
  • Interest: 0%
  • Terms: 5 years
  • Loans can be used for ONLY:
  • Working Capital ( i.e. payroll, rent etc.), Marketing, Inventory
  • Applying for this loan will NOT disqualify you for additional funds from the SBA Emergency Loan Program.
  • Repayment will be deferred approximately 90 days following the expiration of the local emergency connected to the COVID-19 outbreak.
  • The funding for the Emergency Loan Program will be disbursed in two separate $500,000 rounds. The first application period deadline was Monday, March 23rd, 2020 at 11:59pm. Completed applications submitted before this deadline will be considered, reviewed and business owners will be notified of their approval status by Thursday, March 26th, 2020. Funds will be disbursed by the end of the week ending on March 27th, 2020.
  • All incomplete applications will be considered and reviewed for the second round of funding. Staff will contact applicants and assist them to complete their applications by the next deadline for consideration.
  • The next application deadline will be on Thursday, April 2nd at 11:59pm

You can get more information and apply Here: https://www.slc.gov/ed/elploan/

KIVA Loan Program

Up to $15,000 loan

o% Interest

Payback over 3 years

Note: this is a peer-to-peer lending method (a form of crowdfunding)

https://www.kiva.org/borrow

Facebook Small Business Grants Program

Facebook is offering $100M in cash grants and ad credits for up to 30,000 eligible small businesses in over 30 countries where we operate. We’ll share more details as they become available   https://www.facebook.com/business/boost/grants?ref=eml

If you have other resources or know of other information please email [email protected]  We are all working together in this!

Short Term Rentals- How do I get started?!

Purchasing your short-term rental can be exciting and a bit overwhelming if you are not prepared.  A checklist will help you to prepare your investment to maximize the return. 

 

Before you list the home anywhere, buy the correct insurance for the property use! Many insurance carriers will exclude claims on homes if you do not have short-term rental coverage. The coverage is a specific endorsement on some policies. If you are planning on holding the property in an LLC or other commercial entity, purchase business insurance. Often it is not that much different in cost and will save you a lot of headaches in the long run.

Make a plan of how you are going to list the property. Are you going to list it yourself or hire a professional property manager?

 

 If you are going to hire a property manager, you need to be prepared to ask them a few questions:

  • What is the marketing strategy?
    • Will you be listing on sights like Homeaway.com, AirBnb ect?
  • How do they handle damages?
    • Will they put systems in to monitor water damage, control the mechanical systems, and prevent break-ins?
  • What is the cost of their services?
  • Will they coordinate with a cleaning service?
  • Can they provide you with a revenue projection for their efforts?
  • How often will they update the listing?  

If you are going to manage the property yourself, you will need to take on a few things to ensure you have success.

  • Make sure it’s clean. Replace all light bulbs and make sure they are working. Remove everything but the minimums. People do not care about your nick-knacks.
  • Hire a professional real estate photographer and PAY THEM to take listing photos of your home. They will pay dividends for years to come.   
  • Invest in automation: Water detection, Remote water shut off, Digital key locks that can be programmed remotely, Cameras facing the exterior of the property, and a Decibel meter installed inside the home.
  • Build a house manual. The more quality information you can provide your guests, the better time they will have.
    • Your manual should include House Rules. (the ones that will get them kicked out)
    • Parking (if you can, provide a diagram)
    • Activities close by: restaurants, gas stations, grocery stores, trail maps etc
    • If you are close to a place that rents items your clients would use set up a referral relationship
  • Hire professionals to help you maintain the property.
    • A home cleaner is going to be your best asset to having quick turns and positive reviews. Find out what their procedure is for turning a rental. Do they have a checklist? Will they take photos each time to document damage?
    • Build a list of professionals that can make repairs when needed. (plumber, electrician, HVAC, roofing, snow removal etc)
    • Once you have this in place, you are ready to list the property. Use the pictures you paid for. Spend time describing the property. Describe the sleeping accommodations, with photos. Sleeps 10 can be pretty awkward if they have to all sleep in the same room. Build your case about why they should rent from you. 

 

You can list locally in classifieds, but you will need a system to handle the reservations. 

  • Wix.com has a hotel plugin that you can use to do this. It is a bit more work, but the potential is there.
  • You can list on home-sharing sites.
  • Then you will need to sync the calendars of each sight so that you do not encounter double bookings. Most of the sites above have “how-to’s” to get it done.
  • Last I would encourage you to find management software that can help keep track of everything from income, expenses, sales tax, use tax, deductions, etc. There are a lot of tax advantages of owning a rental investment. Spend a little to save a lot!

We hope that this helps you with choosing how to manage your new investment and create memories for families and generate that return you were hoping for.

Changing My Home Insurance: How does it affect my Escrow Account?

Home owners is not required by law. However, If you have a mortgage on your home the lender that holds your mortgage will require you to carry homeowners insurance.  Or they will place coverage for you (forced placed insurance)

When you have selected your insurance carrier the mortgage company will save a portion of your monthly mortgage payment into you escrow account to pay the taxes & insurance once per year. This is known as PITI (Principle, Interest, Taxes & Insurance)   In this way you are not having to save separately in order to pay your taxes and insurance.

When you decide to switch insurance to another carrier.  The mortgage company has to be notified of this change and they will send a 2nd payment to the new insurance carrier on your behalf to ensure the home insurance is current.  This will cause a shortage in your escrow account similar to a negative balance in your checking account.

When you cancel the previous home insurance carrier, they will send you a pro-rated refund of the unused premium directly to you.   The previous insurance carrier can not send this money back to your mortgage company to replenish your escrow.

What should you do with the refund check?

  1. Cash it & keep the funds? This is not what we recommend from a budgeting standpoint.  When the escrow account is analyzed at the end of the year.  They will realize there is a shortage and increase your monthly deposits into the escrow account to make up the difference.   This will increase your mortgage payment.
  2. Cash it and send it back to my mortgage as an escrow deposit?   We highly recommend doing this.  When you receive the refund.   Set the money aside and send it back to the mortgage as a separate payment to replenish your escrow balance.   Be sure to notify the mortgage company what the payment is for.  They could see it as a principle payment and reduce your loan balance, but it will still cause your mortgage rates to increase on the annual review of your loan.

Know THIS before you drive for Uber!

What you should know about your Auto Insurance before you drive for Uber or Lyft!

In the past few years, companies like UBER and LYFT (aka rideshare) have changed the way we travel and what food we have delivered. With just a few clicks, we can arrange a ride and leave the hassles of driving behind us. We no longer need to worry about finding and paying for parking.  We don’t need to find a designated driver or navigate unfamiliar streets when traveling in a new city. We don’t even have to venture out to get food anymore.

On the flip side of this, rideshare companies rely on everyday drivers and their vehicles to be the fleet.  This provides drivers with income and keeps the cost down for the rideshare. But it brings up the question, AM I INSURED while I’m driving?  The answer to this is YES and NO. Of course, it isn’t a simple answer, and here are a few things you need to know before you sign-up to drive.

  1. While you have a paying customer in your vehicle, you are insured by the rideshare company.  Most companies are providing $1,000,000 of liability and your Comprehensive & Collision deductible is $1000.
  2. Your insurance provides coverage for your vehicle while the app is turned off. This means if you are not looking for riders and the app isn’t open.
  3. Unless you have added coverage for Ridesharing to your policy, you DO NOT have coverage from when you turn the app on to pick-up a ride until you have the customer in the vehicle. If you are in an accident after you have accepted a ride and before you pick the rider up you could have NO COVERAGE.  This is often called a “GAP” in coverage and needs to be covered.
  4. Just because you are covered for providing rideshare does not mean you have coverage for delivering food (Uber Eats, Door Dash, Grubhub, etc…) Several carriers are more than happy to cover you for transporting people but they are not okay if you are delivering food.
So what should you do?
  1. Call your current insurance agent/carrier and make sure you have coverage for Ridesharing. If they tell you do, ask them to show you where it is shown on your policy. If you don’t, ask them to add it.
  2. If you are driving for Uber Eats and such, ask them if you are covered for this risk as well.
  3. Go out and meet new people and have fun making a little extra money.

If you have any questions, please give us a call, and we’d love to answer your questions for you.

5 Rules Every Landlord Should Live By

I’m pretty confident that if you asked anyone who has ever owned a rental property you would get an overwhelming response that it’s not as lucrative or easy as they thought it would be. In fact, owning a rental property can be a major pain, and end up costing you a ton of money!

I certainly don’t mean to be a “Debbie Downer”, and I know that if it’s done right it can be lucrative, but from an insurance agent’s perspective, I don’t see a lot of people doing it right.

So you’re probably thinking, “Well Chris, you are an insurance agent. What do you know about real estate or rental properties? Why should I take advice from you?”

I’m not a real estate agent, and I don’t own a rental property. However, several of my friends/family/clients/co-workers own rentals, and because I insure a bunch of their properties, I’ve had a first hand account of the process, and I’ve learned what to do, and what not to do.

 

1.) Do your due diligence on the rental property

This is undoubtedly the biggest mistake I see landlords make. They are in such a rush to make money, they don’t pay enough attention to the property. I get it–you want to buy the cheapest property possible so you can turn the biggest profit. The problem with that is, the property is cheap for a reason. It has problems–lots of problems.

Many people buy properties in low income areas, with hopes of re-painting the walls every 5 years and making some rent money. The problem is, that’s the exact type of property that insurance companies don’t want to take a risk on.

Be very careful with the “as-is” property too. Unless you have money to burn, stay away. You are almost always going to spend more money than you think. Most “as-is” properties are either forecloser’s or properties that have been vacant/abandoned.

If you don’t know what to look for in a rental, hire a trusted 3rd party home inspector and make sure everything, and I mean everything checks out. Don’t leave any stone unturned.

Everything must be up to code before you have a tenant in the house. Period. If it’s not, make it up to code.

In particular, you need to make sure the wiring, plumbing, heating, and roof are all “problem-free”, and that they’ve been upgraded or updated within the past 10 years. I’ve seen more problems with those three things than anything else, and you are putting yourself (lawsuit), and your tenant at risk if they aren’t in good working condition.

And whatever you do, make sure there are no mold problems. Don’t just assume there isn’t. You need to test the house, and document it. Mold can kill–literally.

Of course, you may want to walk away from a property because it might be cost-prohibitive to bring everything up to code, and that’s something that only you can decide, but before you buy a rental property and put get a tenant, do your due diligence on the home.

It’s worth the time and effort.

2.) Have written contracts in place

Find a lawyer and pay his/her fee. Trust me it’s worth it. You can’t just tell your tentant, “You break it, you buy it”. You need to have a written rental contract and lease in place.

If at all possible, don’t sign less than a 12 month lease, and make sure your tenant thoroughly understands the terms of the contract. Don’t be lazy and just have them sign it without explaining everything first.

You can save yourself a lot of time, money, and hassle if you do this, and it will show the tenant that you are serious, and that they will be held accountable for the property.

3.) Thoroughly screen your tenants

Rarely have I seen someone screen their tenant(s). Most landlords are so worried about getting someone in the property to pay rent, that they fail to check the people/person out.

At the very least, you need to make sure your tenant is carrying their own renters insurance (HO4 policy). Let the tenant know that your insurance doesn’t cover them whatsoever.

Really what you should be doing is checking their credit and also checking for any criminal activity. These are reports that cost very little up front, and will give you great piece of mind knowing that you have a trustworthy, reliable tenant.

Whether you allow pets and/or smoking is up to you, but I’d be careful with both, because in the end, they could cost you money if you have to repaint, replace carpeting, etc. They could also potentially result in liability exposure with dog bites, and house fires.

4.) Make sure you have rental property insurance

Having the correct type of insurance for your rental property is paramount. The problem is, most people don’t know that they need a certain type of policy.

You can not buy traditional homeowners insurance for a rental property. What you need is called a “Dwelling Fire” policy, or sometimes it’s referred to is a “Landlord” policy.

Keep in mind that the underwriting for rental properties is generally a little tighter, and the coverage isn’t as broad as what you would find in a traditional homeowners policy. As I mentioned before, many people buy properties in low income areas, with hopes of re-painting the walls every 5 years and making some rent money.

The problem is, that’s the exact type of property that insurance companies don’t want to take a risk on.

Still you must buy this type of policy for a rental. Do not buy regular homeowners insurance because it is not designed to insure a non-owner-occupied home, and your claim would almost certainly be denied if you had the wrong policy.

Another thing you need to be aware of, is that most Dwelling Fire/Landlord policies state that if a property is vacant/un-rented for more than 30 consecutive days (with some companies it’s 60 days), coverage can be severely reduced and even eliminated, so make sure if it’s a rental property, don’t let it sit vacant too long.

If you think it will be vacant for more than 30-60 days, you need to let your insurance carrier know that, because that situation would most likely call for a different type of Dwelling Fire policy.

5.) Keep tabs on your rental property

I’ve had people call me for quotes for their rental properties, and when I begin to probe them on the construction information, they know absolutely nothing about the house.

Some people don’t know whether the house is brick, siding, or what it’s made of. They don’t know how old the roof is, or the last time the heating was updated.

Folks, if you own a rental property, you need to know all of these things.

I had someone one time who had purchased a home from a contractor who had flipped it, and hadn’t even seen the house once. He bought it on the word of the contractor, and knew nothing about it except that he wanted to rent it out as soon as possible. That is well, not very smart. You shouldn’t be trying to get insurance on a house you haven’t seen yet.

You need to keep tabs on your property.

Keep records of all repairs, and make sure you physically visit or at least drive by the property every 3-6 months or so to make sure everything is in good working order. Remember, this is an investment. You need to maintain and take care of the property just as if it was your primary residence.

Owning a rental properties can be a lucrative business that can generate a lot of passive income, however, if you don’t abide by these 5 rules, it could end up being a royal pain, and cost you a lot of money in the process.