CARES Act, PPP and EIDL updates – 12 May 2020
With unemployment at 14.7%, the April jobs report is literally off the charts, as an article in the New York Times shows. Unfortunately, the COVID-19 pandemic has not yet vanished as quickly as everyone hoped. According to this brief history of other plagues, pandemics tend to end either when the spread of the disease has waned or when society adapts to the continued risk and returns to something like normal. The pressure to reopen businesses seems to indicate we may be heading into the latter kind of ending, especially with no vaccine or fast-acting medical remedy in sight. Let us hope that you and your loved ones remain healthy and safe!
CARES ACT UPDATES
Economic Impact Payments (aka Stimulus Checks)
According to the IRS timetable, paper checks will go out this week to people with income between $20,001 and $30,000. The IRS is mailing out paper checks based on income, with $10,000 increments each week. If you want your payment sooner, you have until noon on May 13 to access Get My Payment and update your banking information with the IRS.
The IRS keeps adding more answers to FAQs for Economic Impact Payments. According to the latest updates, deceased and incarcerated individuals are not eligible for payments. Any payments received on behalf of such individuals should be returned to the IRS, following the instructions provided in another FAQ. If the payment was made to joint filers and only one spouse was deceased or incarcerated, only the portion of the payment for the deceased or incarcerated individual needs to be returned.
Paycheck Protection Program (PPP)
The second round of loans under the PPP is proceeding slower than the first, partly due to smaller loan sizes and the elimination of robotic applications. As of May 7, there was still $100 billion in funds available, but that funding may already be exhausted. Some applicants were delaying submission in the hopes of receiving clarification about how the forgiveness provisions will work. That clarification has still not been provided.
In response to the guidance from the Treasury Department that expenses related to forgiven loan amounts will not be forgiven, several Senators have introduced a bill that would allow those expenses to be deducted. This is just one area where the intent of Congress is not being followed.
A recent report from the SBA’s inspector general points out several areas where the agency’s execution of the PPP did not follow the intent of Congress. According to this report, lawmakers wanted the program to prioritize businesses in rural areas, new businesses, and businesses owned by women, veterans and other disadvantaged groups. However, the SBA’s guidance to banks did not reflect that priority. The application forms did not include a field to collect that kind of demographic information, so it’s unlikely that the effectiveness of the program in fulfilling that intent will ever be determined.
The report also notes that the statute did not define the exact percentage of loan proceeds to be used for payroll as a condition of loan forgiveness. But according to the SBA’s rules, 75% of loan proceeds must be used for payroll to qualify for forgiveness. The report recommends that that the SBA re-evaluate its processes and rules to more closely adhere to the intent of Congress. Stay tuned!
The Justice Department announced last week that two men in Rhode Island had been charged in the first case of fraud involving the PPP. The two men received loans totaling more than half a million dollars claiming payroll expenses for companies that had no employees.
Economic Injury Disaster Loans (EIDL)
Under the CARES Act, a fund of $50 billion was set aside for emergency loans of up to $2 million and advances of up to $10,000. However, due to overwhelming demand, the SBA has cut off access to most applicants while it sorts through the backlog of applications. According to the SBA’s EIDL website, “only agricultural business applications will be accepted due to limitations in funding availability and the unprecedented submission of applications already received.” Other sources state that loans will now be capped at $150,000, down from the previous maximum of $2 million.
HELP FOR SMALL BUSINESS
In addition to the PPP and EIDL, the Federal Reserve will be expanding eligibility for its Main Street Lending Program. However, no launch date has been announced, so keep an eye on the Federal Reserve’s Main Street Lending Program website for details.
Google has compiled a listing of companies that are offering discounted or free resources for small businesses. The offers include three months of free payroll and state unemployment insurance from Paychex and a free three-month subscription from Bill.com to run payables and receivables remotely.
Cybercrooks have taken advantage of the uncertainty and sudden changes in work habits to launch a series of attacks, as this report from McAfee details. Many attacks were in the form of phishing emails with COVID-19 themes designed to lull people into clicking on links to trigger malware. Several ransomware attacks also hid under COVID-19 disguises.
To stay safe online, you’ll want to review the information in the National Cyber Security Alliance Resource Library. This resource library includes links to articles on how to keep a remote workforce safe and how to protect against coronavirus-themed attacks.
CASH FLOW TIPS
Keeping the lights on requires creativity these days. Aprio has an on-demand webinar full of new ideas, such as leveraging R&D tax credits as a way to bring in much-needed cash and how to take advantage of the Employee Retention Credit. On May 14, Entrepreneur is sponsoring an interactive webinar on managing cash flow in uncertain times. Eisner Amper suggests some outside-the-box options, such as leasing equipment to another company that needs it and forming a buyers cooperative to take advantage of volume discounts.
WORKING FROM HOME
Working effectively from home requires functional technology, but without an IT department, it’s up to you to fix it. Here are some simple fixes for tech problems, from poor wifi to noisy surroundings.
Working from home means the barrier between home and work is gone. Some people work too much, while others have a tough time getting the most important work completed. Here are tips from 100% remote company Zapier to help remote teams stay on task and stay connected.
That barrier between home and work is distorted even more if you’ve got small children. But, as this article in Harvard Business Review points out, “the key is to invent new ways to preserve old routines.” This includes adapting pre-COVID-19 schedules to fit the new reality of everyone at home all the time. Working parents may need to swap out periods of work and periods with their children.
WORK AFTER COVID-19
Guidance to help small businesses is beginning to pivot from how to survive during lockdown to how to reopen safely, including guidelines from the White House for a three-phase reopening plan, which state governors are free to adopt or not, as they feel appropriate. Under the White House plan, all individuals are encouraged to continue practicing good hygiene and to stay home if they feel ill for all three phases. Employers are encouraged to continue with social distancing and protective equipment.
The U.S. Chamber of Commerce also has a playbook to help small businesses reopen, which includes state-by-state updates on lockdown status.
Returning to work may mean an end to the open office, according to the New York Times. Offices may need to add partitions between desks, outdoor work areas for collaboration, and desks with built-in hand sanitizer dispensers. However, according to epidemiologists, there is no configuration that will result in zero risk: “Other research shows that one of the best ways to reduce transmission in the workplace is to provide paid sick leave that encourages ill employees to stay home.”
We hope you and your family are well and remain well. If you have any questions, please don’t hesitate to reach out to us.
12 May 2020