RECAP of the April 1, 2020 IECRM Member Forum: COVID Impacts – Resources for the SBA Economic Injury Program, the CARES Act, and Labor & Employment Issues
On Wednesday, April 1, 2020 from 7:30-8:30am via Zoom, IECRM held its inaugural Membership Forum to more than 90 contractors, IECRM industry partners, and subject matter experts. The Forum Series will be held every Wednesday morning at the same time through the end of April.
Subject matter experts included:
Ruben Estrada, Lead Consultant, North Metro Small Business Development Center
Kristin White, Attorney at Law, Fisher & Phillips
Amanda Peterson, Head of Compliance and Regulatory Affairs, Colorado Lending Source
Tom Thompson, Procurement Counselor, Colorado Procurement Technical Assistance Program (PTAC)
Among those tuning in were several IECRM industry partners representing banks, financial institutions, accounting and tax specialists, and insurance agencies. We will hear from them in the forums to come.
With the CARES Act now signed into law, the Forum discussion focused on the U.S. Small Business Administration’s (SBA) steps to offer designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19.
These loans may be used to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.
The SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay. These Economic Injury Disaster Loans (EIDL) are just one piece of the expanded focus of the federal government’s coordinated response. The SBA is strongly committed to providing the most effective and customer-focused response possible.
To begin the vastly streamlined process, visit https://covid19relief.sba.gov/#/ It also was pointed out that if you applied for an EIDL before last Friday (3/28), you will need to reapply using the new, streamlined application.
“This new application is very streamlined. From a credit perspective, many banks across the nation are ready to deploy the $10,000 loan amount,” said Amanda Peterson, Colorado Lending Source. “Banks are authorized to issue the loans and anyone that is already authorized to administer SBA loans can loan.”
Beginning Friday, April 3 through June 30, the Paycheck Protection Program (PPP) will be taking applications. It is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll during the COVID-19 crisis. The SBA will forgive PPP loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. This includes salaries up to $100,000 annually.
“One of the reasons that the government chose the SBA to oversee the funding is because they are experienced at calculating these types of loans,” said Amanda. “The SBA lender you work with is required to help with these calculations.”
She continued, “There are legal considerations for these loans. The most important two are calculating how much to apply for and keeping rigorous documentation in order to prove that you are using the funds exactly as they are defined in order to receive the loan forgiveness that is part of the PPP.”
Ruben Estrada, North Metro Small Business Development Center, cautioned that it’s important to be clear about what each of the SBA instruments is designed to do. EIDL is for economic disaster grants starting at $10,000. PPP is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll during the COVID-19 crisis. “SBA’s Debt Relief is for established loans. The government will make up to six months of loan payments on a small business’ loan payments,” he said. “It’s also possible to stack loans that might grant extra debt forgiveness. This might allow a business to consolidate loans.”
Tom Thompson, Colorado Procurement Technical Assistance Program (PTAC), emphasized that the survival of small business in this country is essential to our local, state and national economy. “If you have government contractors or need procurement technical assistance to help you in the selling of your products or services to the appropriate government agency,” he noted, “all you all you have to do is register hereto take advantage of PTAC’s no-cost services.”
The signing of the CARES Act into law and its many provisions which apply to employers, such as paid sick leave for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19.
“There are two provisions providing paid leave to employees forced to miss work because of the COVID-19 outbreak,” explained Kristin White, Fisher & Phillips. “They are an emergency expansion of the Family Medical Leave Act (FMLA) and a new federal paid sick leave law.”
The Emergency Family and Medical Leave Expansion Act
Expands Coverage and Eligibility – The Act significantly amends and expands FMLA on a temporary basis. The current employee threshold for FMLA coverage would change from only covering employers with 50 or more employees to instead covering those employers with fewer than 500 employees.
Provides Job-Protected Emergency Leave – Any individual employed by the employer for at least 30 days (before the first day of leave) may take up to 12 weeks of job-protected leave to allow an employee, who is unable to work or telework, to care for the employee’s child (under 18 years of age) if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency. This is now the only qualifying need for Emergency FMLA and a significant change from the prior version of the bill passed by the House over the weekend, which contained several other COVID-19-related reasons to provide Emergency FMLA.
Paid Leave – Another big change from the prior version passed from the House is the reduction of the unpaid period of Emergency FMLA. Now, the first 10 days (rather than 14 days) of Emergency FMLA may be unpaid. During this 10-day period, an employee may elect to substitute any accrued paid leave (like vacation or sick leave) to cover some or all of the 10-day unpaid period. After the 10-day period, the employer generally must pay full-time employees at two-thirds the employee’s regular rate.
Calculates Pay for Non-Full Time Employees – Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking Emergency FMLA. Employees who have worked for less than six months prior to leave are entitled to the employee’s reasonable expectation at hiring of the average number of hours the employee would normally be scheduled to work.
Job Restoration – Employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the Emergency FMLA leave due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA.
The next IECRM Member Forum: COVID Impacts will be held on Wednesday, April 8 from 7:30-8:30am. To register click here. We will continue to explore the CARES Act, SBA Express Bridge Loans, and we will cover tax implications involved when applying for and receiving funding or loans from these programs.
IECRM is honored to help you navigate through these unprecedented times during the Covid-19 crisis. Below you will find the helpful links and resources mentioned during this live forum discussion.