Post on 28-Jun-2020
PPP Flexibility Act and HR Best Practices as Employees
Return to Work
Tom MazurekPartnerTronconi Segarra & Associates
Chuck PezzinoPartnerTronconi Segarra & Associates
Liz WarrenEVP & Chief People OfficerEmployer Services Corporation
June 18, 2020
SBA Loan Approvals
Summary of PPP and EIDL Loan Approvals
Paycheck Protection Program (thru June 16, 2020)
• Over 75,000 new PPP loans for almost $1.7 billion have been approved since the PPP Flexibility Act was signed into law on June 5.
Economic Injury Disaster Loans (thru June 12, 2020)
• SBA has also disbursed 3,245,006 EIDL Advances amounting to over $10.7 billion.
• On June 15, SBA began accepting applications for new EIDL loans and EIDL Advances from qualified small businesses and U.S. agricultural businesses.
Approved Loans Approved Dollars
4,607,098 $513,046,529,867
Approved Loans Approved Dollars
1,332,955 $90,928,747,622
Paycheck Protection Program
Paycheck Protection Program Flexibility Act
• Bipartisan legislation signed into law by the President on June 5, 2020.
• The Flexibility Act makes the following revisions to the PPP:
• The last day on which a PPP loan application can be approved is June 30, 2020.
• For loans made before June 5, 2020, the maturity is two years; however, borrowers and lenders may mutually agree to extend the maturity of such loans to five years. For loans made on or after June 5, the maturity is five years.
• Amends the definition of “covered period” to mean the period beginning on February 15, 2020 and ending on December 31, 2020.
• For loan forgiveness purposes, the covered period now means the period beginning on the date of origination of a covered loan and ending the earlier of 24 weeks after the date of origination or December 31, 2020. An eligible borrower whose loan was made before June 5, 2020 may elect to apply the original 8-week covered period under the CARES Act instead of the 24-week covered period referenced above.
Paycheck Protection Program
Paycheck Protection Program Flexibility Act
• Loan forgiveness shall be determined without regard to a proportional reduction in the number of FTE employees if the borrower, in good faith:
• is able to document (i) an inability to rehire individuals who were employees of the eligible recipient on February 15, 2020; and (ii) an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020; or
• is able to document an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with Federal government safety or health requirements during the period beginning on March 1 to December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.
Paycheck Protection Program
Paycheck Protection Program Flexibility Act
• A borrower needs to use at least 60% of their covered loan amount for payroll costs, and may use up to 40% of such amount for any payment of eligible non-payroll costs. If a borrower uses only 59% of its loan for payroll costs, it will not receive the full amount of loan forgiveness it might otherwise be eligible to receive. Instead, the borrower will receive partial loan forgiveness, based on the requirement that 60% of the forgiveness amount must be attributable to payroll costs.
• A borrower who submits their loan forgiveness application within 10 months after the end of the covered period, will not have to make any payments of principal or interest on their loan before the date on which SBA remits the loan forgiveness amount to their lender. If a borrower does not submit their loan forgiveness application within 10 months after the end of the covered period, the borrower must begin paying principal and interest after that period.
• A borrower can continue to defer the payment of the 6.2% employer portion of the social security tax after their PPP loan is forgiven.
Main Street Lending Program
Main Street Lending Program - Expanded and Ready to Launch
• On June 8, 2020, the Federal Reserve Board expanded the Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support.
• The Federal Reserve Board made the following changes:
• Lowered the minimum loan size for certain loans to $250,000 from $500,000;• Increased the maximum loan size for all facilities;• Increased the term of each loan option to five years, from four years;• Extended the repayment period for all loans by delaying principal payments for two
years, rather than one; and• Raised the Reserve Bank’s participation to 95% for all loans.
• On June 15, 2020, the Federal Reserve Bank of Boston opened the Main Street Lending Program for lender registration. Lenders can find the necessary registration documents on the program site and are encouraged to begin making Main Street program loans immediately.
• The Federal Reserve Board also announced on Monday that it will be seeking public feedback on a proposal to expand its Main Street Lending Program to provide access to credit for small and medium-sized 501(c)(3) and (c)(19) non-profit organizations.
Main Street Lending Program
Visit our Main Street Lending Program webpage for additional information resources.https://www.tsacpa.com/coronavirus-covid-19-resource-center/main-street-lending-program/
Available Relief Options
PPP
EligibilitySmall businesses,
certain nonprofits or tribal business with
less than 500 employees or that
meet SBA size standards, sole
proprietors, independent
contractors, self-employed individuals
TermsLoans are forgivable if used for at least 60% payroll costs and up-to-40% eligible non-payroll costs during
up-to-24 week covered period
Benefit2.5x average monthly
payroll up to $10M
RestrictionsForgiveness subject to FTE employee & salary
reductions
Amounts not forgiven convert to 2 or 5 year
term loans with 1% interest
EIDL
EligibilitySmall businesses & nonprofits that are
suffering “substantial economic injury” as a
result of COVID-19
Terms• Loans capped at
$150K• Up-to-30 year term• Interest of 3.75%
for businesses; 2.75% for NFPs
• First payment deferred one year
BenefitLoans may be used to
pay debts, payroll, accounts payable & other bills that can’t
be paid because of the disaster’s impact, that
are not already covered by a PPP loan
May request an EIDL Advance of up to
$10,000 ($1,000 per employee) that does not have to be repaid
even if loan is not approved
Main Street Lending
EligibilityBusinesses with up to 15,000 employees or
up to $5 billion in 2019 annual revenue and
significant operations or majority of
employees in the U.S.
Terms• 5-year loan term• Interest of LIBOR +
300 basis points• Principal payments
deferred for 2 years & interest payments deferred for 1 year
Loan AmountMSNLF min. $250K MSPLF min. $250KMSELF min. $10M
RestrictionsLoans are not
forgivable
Make commercially reasonable effort to maintain payroll &
employees
Other covenants & restrictions apply
Payroll Tax Deferral
EligibilityAll businesses
regardless of their size (Incl. self-employed
individuals)
BenefitDefer payment of the employer share (6.2%) of Social Security tax from 3/27/20 thru
12/31/20
Repayment Deferred amount paid
in two equal installments:
50% by 12/31/2150% by 12/31/22
RestrictionsPPP Flexibility Act now
allows borrowers to continue deferring Social Security tax after PPP loan is
forgiven
Employee Retention Credit
EligibilityEligible businesses
that fully or partially suspended operations due to gov’t COVID-19 order or experienced significant decline (at
least 50%) in gross receipts compared to same quarter in 2019
BenefitFully refundable tax
credit equal to 50% of qualified wages (up- to
$10,000 per employee)
RestrictionsUnder 100 employees:
Wages paid to any employee
Over 100 employees:Only wages paid to
employees not providing services
A business cannot receive a PPP loan &
use Employee Retention Credit
SBA Loan Programs
ProgramsSBA loan programs
include:Basic 7(a) loans
(standard, small loans, SBA Express, SBA
Express Bridge Loan, SBA Veteran’s
Advantage), 504 loans, Microloans
TermsLoan amounts &
repayment terms vary depending on loan
type (see SBA website or eligible lender for
more info.)
BenefitSBA will pay 6 months of principal, interest &
any associated fees related to new 7(a), 504, and Microloans
disbursed prior to 9/27/20
SAFETY PLAN NARRATIVE
HEALTH AND SAFETY POLICY
RISK MANAGEMENT ASSESSMENT
SAFETY DATA SHEETS
EMPLOYEE RETURN PLAN
COMMUNICATION PLAN
SCREENING FORMS OTHER FORMS
Safety Plan
Handling Illness
Screening (Employees and Visitors)
General Hygiene
Avoiding Exposures at
WorkAbsenteeism
Social Distancing
Additional Resources
TravelWho to contact
Safety Policy
Screening
Handling a Positive COVID-19 Result
Employees Who Refuse to Return
Policies to Consider
Navigating the “New Normal”
Culture Implications: Conflict
• Passed by House, expected to be reviewed by the Senate this summer• The bill passed the House by only 9 votes• Highly unlikely to be passed as is by the Senate, negotiation is expected • The President has said he won’t sign it. Some of the difference in philosophy
between the parties are based on the Republican belief that this bill as the Democrats passed it focuses too much on assistance to states and localities
• Republicans want business liability relief included in any bill they pass
• The Bill includes:• HAZARD pay
• Given to a wide variety of “essential” workers, including doctors, nurses and other frontline medical personnel, police officers, firefighters, social workers, grocery clerks, postal workers, and childcare and cafeteria workers.
• A $13-an-hour raise paid until workers receive a total of $10,000 if their regular pay is less than $200,000 per year. Or up to $5,000 total if they make more than $200,000 a year.
• Paid for 60 days after the pandemic ends if the $10,000 or $5,000 totals aren’t reached first.
• Distributed by employers, who will apply to the government for hazard pay, add it to their workers’ paychecks, deduct payroll taxes from all hazard payments.
• Expansion of the unemployment from the CARES Act, including the extra $600 weekly federal unemployment benefit, through January 31, 2021 For those already receiving federal pandemic unemployment compensation, payments could be extended into March 2021 (minus the $600)
HEROES Act: Update
• Other things in the bill that will most likely be negotiated:• Student loan debt collections stopped for an additional year• Mortgage relief• Rental Assistance• 2nd stimulus check to individuals up to $6,000 for a family
• Additional enrollment period for health insurance under the ACA exchanges for uninsured
• Expands the CARES Act’s employee retention tax credit, increasing the credit from 50% to 80% of qualified wages and increasing the employee wage limit from $10,000 per year to $15,000 per quarter
• Requires the Occupational Safety and Health Administration to require all workplaces to implement infection control plans
• $3.1 billion for workforce training at the Department of Labor
HEROES Act: Update
For additional questions and information:
Tronconi Segarra & Associates716.633.1373www.tsacpa.com
Visit our COVID-19 Resource Center:https://www.tsacpa.com/coronavirus-covid-19-resource-center/
Email our Response Team: covid19team@tsacpa.com
For additional questions and information:
Employer Services Corporation716.691.4455https://myesc.com/
Coronavirus Resources:https://myesc.com/category/news-events/coronavirus-update/
Contact: Rachael Brownrbrown@myesc.com
Contact Tronconi Segarra Contact ESC
Thank You