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On March 27, 2020, the President signed a $2 trillion stimulus package (CARES Act) that included $349 billion for new, partially forgivable small business loans to cover certain payroll costs, mortgage interests, rents and utilities payments. The Paycheck Protection Program (PPP) Loans will charge interest at no more than 4% and will be administered by the Small Business Administration (SBA). As the program’s name implies, PPP Loans are designed to provide cash to small businesses, including sole proprietors and independent contractors. The U.S. Chamber of Commerce has issued the following guide to help small businesses and self-employed individuals prepare to file for a loan.

Small Business Guide to Emergency Loans


We have compiled the highlights of this new program below and recommend consulting with your legal and/or financial advisers regarding this matter.

Paycheck Protection Program (PPP) Loans for Small Businesses

  • This new program provides 8 weeks of cash-flow assistance to small employers, including sole proprietors and independent contractors. Employers who maintain their payroll can get the loan forgiven for the portion of the loan that is used for payroll, rent, and utilities.
  • Businesses can borrow 2.5 times what their average monthly payroll was during the period of 2/15/20 to 12/31/20. While your business can spend your loan on any expenses, it will only be forgiven later if you spend 75% of it on payroll and 25% of it on the other approved items during the 8-weeks after you receive the loan. Any portion of your loan that is not forgiven will be converted to a loan that has a .5% interest rate and must be repaid within 2 years.
  • Small businesses and sole proprietors can begin applying this Friday, April 3rd. Self-employed and independent contractors can begin applying Friday, April 10th.
  • These new Paycheck Protection Program loans will be handled through private banks and lenders. If you are interested in applying for a PPP loan, you should contact your local banker to ask if they are approved to handle PPP loans. If your bank is an authorized 7a lender, you will be able to apply for these loans through them.

Download the PPP Factsheet

Download the PPP Application


Additional Loan Tools

Do you qualify as a small business?

Here is the Small Business Administrations guide to size standards. This is a quick reference for quickly checking eligibility. We recommend also reviewing the SBA guidelines for eligibility.

Small Business Administration Loan Application

For more details, visit the U.S. Treasury Department’s new website at home.treasury.gov/cares.

If you have any questions, please reach out to your Gulfshore Insurance Client Advisor who can direct you to the appropriate resources.

Jobsite Safety and Recordkeeping Guidance During CoronavirusThe Department of Homeland Security considers construction an “essential critical infrastructure workforce.” However, all safety measures that can be taken, should be taken. The National Association of Home Builders (NAHB) has taken the initiative and put together a detailed plan that outlines the steps that every employer and employee can take to reduce the risk of exposure to COVID-19.

The plan describes how to prevent worker exposure to coronavirus, protective measures to be taken on the job site, personal protective equipment and work practice controls to be used, cleaning and disinfecting procedures, and OSHA guidance on what to do if a worker becomes sick, including record-keeping requirements.

National Association of Home Builders COVID-19 Plan:

 

These resources are also available in Spanish, here.

Gulfshore Insurance is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures and resources to help manage ongoing operations.

Department of Labor Issues Additional Guidance Regarding the Families First Coronavirus Response Act (FFCRA)The U.S. Department of Labor (DOL) has now published materials to aid employers in ensuring compliance with this new law, including questions and answers, and the required workplace poster.

Updated DOL FFCRA Notice/Poster
The Department of Labor has issued the Families First Coronavirus Response Act notice/poster. Unfortunately, the first version the DOL issued had a slight error, so the DOL issued a corrected poster to clear up the confusion. You can download the correct version here. The DOL also issued FAQs regarding the notice, which can be found here. Covered employers should post this notice at their workplaces no later than April 1 (the effective date of FFCRA). Additionally, for employers who have employees working remotely, the notice should be sent out by email or regular mail, or by posting it on the company intranet or website.

DOL Issues Additional FAQ on FFCRA
The DOL expanded its existing FAQ on the FFCRA — adding nearly 10 pages of content regarding the new requirements for paid sick leave (E-PSLA) and paid family medical leave (E-FMLA). You can download the Q&A here.

Gulfshore Insurance is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures and resources to help manage ongoing operations.

The Coronavirus (COVID-19) pandemic has put a major strain on every aspect of daily life around the world, including the United States. As spread of the disease shows no sign of slowing down, there is a steadily increasing concern in the United States regarding the health and wellness of not only our citizens, but the economy as well. In response, the United States Congress has been negotiating a historic stimulus package to address the havoc caused by the pandemic.

It appears Congress’ hard work has paid off, as they just passed a $2 trillion package to provide a jolt to the economy reeling from the deadly virus. All Americans would do well to understand the package’s provisions, as it will offer direct relief to businesses and individuals alike.

WHAT IS IN THE STIMULUS PACKAGE?
The $2 trillion stimulus package, negotiated by Republican and Democratic leaders, is the largest economic stimulus measure in modern history. The bill is a $2 trillion combination of tax provisions and other stimulus measures, including emergency business lending. The measure promises to provide help for struggling American families and businesses, as well as health care workers on the front lines of the coronavirus outbreak.
Significant Provisions Affecting Businesses

The tax package itself is broad, with tax payment relief and significant business tax incentives. Here is a list of the most significant provisions affecting businesses:

  • $367 billion will be made available in loans for small businesses and $150 billion for state and local governments. The loans will be forgiven so long as businesses pledge not to lay off their workers.
  • Small businesses forced to suspend operations or that have seen gross receipts fall by 50% from the previous year will be eligible for a tax credit worth up to 50% of wages paid during the crisis, so long as they keep their workers employed throughout.
  • The Treasury Department will distribute $500 billion in loans to struggling industries (e.g., passenger airlines and businesses critical to maintaining national security). Additionally, an oversight board and inspector general will be created to oversee loans to large companies.
  • Health care providers will receive $100 billion in grants to help fight the coronavirus and make up for revenue lost by delaying elective surgeries and other procedures.
  • $200 million will be carved out for the Federal Communications Commission to provide health care providers with connected devices to facilitate telemedicine services, with the goal of freeing up hospital beds. Another $25 million will go to a grant program that helps rural communities purchase broadband equipment for telemedicine.
  • The Commodity Credit Corporation, an institution that USDA uses to stabilize the farm economy, would see its spending authority increased to $14 billion. The package also sets up a $9.5 billion emergency fund for producers, including fresh fruit and vegetable growers, dairy farmers and cattle ranchers, along with local food systems like farmers markets.
  • Colleges and universities, as well as school districts, will receive more than $30 billion.
  • State and local governments will receive $150 billion, with $8 billion set aside for local governments.
  • The package will provide the U.S. Postal Service with a $10 billion Treasury loan to stave off insolvency. Retailers, restaurateurs and hotels will be able to immediately deduct from their taxes what they spend on property improvements.
  • Employers can defer the 6.2% tax they pay on wages used to fund Social Security.

 

Significant Provisions Affecting Individuals

The major piece of the individual tax changes will offer rebate checks based on a new tax credit of $1,200 per filing adult and $500 for each qualifying child. Additionally, unemployed individuals will receive an unprecedented expansion of benefits and payments.

Here is a list of the most significant provisions affecting individuals, many of which will be discussed in detail later in this piece:

  • Single Americans will receive $1,200, married couples will get $2,400 and parents will receive $500 for each child.
  • Unemployed individuals, including freelancers and furloughed employees, will get an extra $600 per week for up to four months, on top of state unemployment benefits.
  • The package also calls for a new pandemic unemployment assistance program, which will provide jobless benefits to those who are unemployed, partially unemployed or unable to work because of COVID-19 and don’t qualify for traditional benefits.
  • The Department of Education will suspend payments for student loan borrowers without penalty through September 30.
  • There will be housing protections against foreclosures on mortgages and evictions for renters. Anyone facing a financial hardship from the coronavirus will receive a forbearance on federally backed mortgage loans of up to 60 days. Those with federally backed mortgage loans who have tenants are not allowed to evict tenants solely for failure to pay rent for a 120-day period.

As you can see, the package will have a far-reaching impact as it drives money toward workers, small businesses and industries that have been impacted by the economic downturn due to the pandemic.

OVERVIEW OF MAJOR BILL PROVISIONS

Now that you’re aware of the major implications for both businesses and individuals, let’s take a more in-depth look at the most important provisions.

Loans and Tax Credit Available to Small Businesses

Keeping businesses afloat and workers under the wing of their employers is critical for ensuring the economy can quickly restart after the pandemic subsides. To this end, the stimulus package creates a $367 billion federally guaranteed loan program for small businesses that employ 500 or fewer people who must pledge not to lay off their workers. The loans will be available during an emergency period ending June 30, and would be forgiven if the business uses the loan funds for approved purposes and maintains the average size of its full-time workforce, based on when it received the loan.

Additionally, small businesses forced to suspend operations or that have seen gross receipts fall by 50% from the previous year, will be eligible for a tax credit worth up to 50% of wages paid during the crisis, so long as they keep their workers employed through the crisis. Wages remain eligible until business is no longer suspended or gross receipts for a quarter reach 80% of the prior year. The credit could be applied to all wages for employers with fewer than 100 employees, while the benefit is capped at $10,000 in wages per employee for larger employers.

Expansion of Unemployment Benefits

The stimulus package includes a significant expansion of unemployment benefits that will extend unemployment insurance by 13 weeks and include a four-month enhancement of benefits (for reference, many states already provide 26 weeks of unemployment benefits, and thus participants in such states would be eligible for a total of 39 weeks when adding the 13 weeks of federal relief). The enhanced benefits will provide an additional $600 per week on top of what state unemployment programs pay.

Note that many individuals who typically do not qualify for unemployment insurance will qualify under the package, including independent contractors and self-employed individuals. In sum, those who are unemployed, partially unemployed or who cannot work for a wide variety of coronavirus-related reasons will be more likely to receive benefits.

Individual Checks to Taxpayers

As noted earlier, the package will provide direct payments to taxpayers based on the adjusted gross income found on their 2019 federal tax return. All U.S. residents with adjusted gross incomes up to $75,000 ($150,000 for married couples) will get a $1,200 ($2,400 for couples) payment. Families will receive an additional $500 per child, as a way to create a safety net for those whose jobs and businesses are affected by the pandemic. However, the payments will start to phase out for individuals with adjusted gross incomes greater than $75,000. Those with incomes higher than $99,000 will not qualify for payments under the stimulus package.

It is unclear how long it will take the IRS to process every payment. The Trump administration has indicated that Americans could be seeing direct payments as soon as April 6.

HOW CAN I TAKE ADVANTAGE OF THE STIMULUS?

Now that you’re acquainted with the impact of the stimulus package, let’s discuss how you might take advantage of these benefits:

How can I obtain a small business loan from the government?

The U.S. Small Business Administration (SBA) is offering loans for qualifying small businesses. These are low-interest (3.75% for small businesses and 2.75% for nonprofits) loans with terms potentially as long as 30 years. You can apply for an SBA loan through its website. Be prepared to provide the following information:

  • Tax Information Authorization (IRS Form 4506T), completed and signed by each principal or owner
  • Recent federal income tax returns
  • Personal Financial Statement (SBA Form 413)
  • Schedule of Liabilities listing all fixed debts (SBA Form 2202)

You may also need to provide profit and loss statements, recent tax returns and balance sheets.

After you apply, the SBA will review your credit before conducting its own inspection to verify your losses. The SBA says its goal is to arrive at a decision on any disaster loans within two to three weeks. If it determines you are eligible, it will send you a loan closing document for your signature.

How can employees collect unemployment assistance?

If your business is closed because of COVID-19 and your employees cannot work from home, or your employees are unable to work due to the disease or need to take care of someone who has it, they can likely collect unemployment. As each state administers a separate unemployment insurance program, employees should be told to visit their state’s unemployment insurance website, which will provide the relevant details regarding their individual programs. The information employees will need includes their Social Security number and driver’s license or state ID.

CONCLUSION

If there’s anything that is certain, it is that the full economic impact of this unprecedented pandemic is yet to be understood. Despite the unpredictability, Congress’ historic economic stimulus package is a sight for sore eyes for struggling businesses and individuals alike.

As the pandemic develops and the stimulus package is rolled out, look for more relevant guidance from Gulfshore Insurance in the near future, and continue to stay abreast of the latest state and federal developments.

DOL Outlines Coronavirus Relief Law's Paid Leave RequirementsOn March 24, 2020, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) issued guidance explaining the paid leave requirements under the federal Families First Coronavirus Response Act (FFCRA).

The FFCRA expanded the federal Family and Medical Leave Act (FMLA) to allow partially compensated employee leave for child care purposes related to COVID-19. The FFCRA also provided for employee paid sick leave for specific COVID-19-related reasons, including an employee’s own illness or quarantine. The Act included other measures to address the effect of the coronavirus pandemic on workers.

The DOL’s guidance explains the two paid leave provisions in the FFCRA. The guidance addresses issues such as:

  • Which employers and employees are covered under the FFCRA;
  • How much leave employers are required to grant employees and for what pay;
  • Exemptions from the law;
  • What tax credits are available to employers to pay for the leave; and
  • Enforcement and penalties under the law.

The language of the FFCRA said it would take effect no later than April 2, 2020; however, the DOL guidance gives an effective date of April 1, 2020. This Compliance Bulletin contains the DOL’s guidance document.

Download the Compliance Bulletin