|Our nation and world have experienced an unprecedented threat in the form of coronavirus (COVID-19), and I know this has had devastating consequences for many businesses throughout Collin County. While the situation is continuing to evolve, I want to make sure my constituents have current information on the resources available to you and your business.
Since COVID-19 started spreading throughout the United States, I have been in communication with many local small businesses, discussing their ability to operate amidst the devastating effects coronavirus has taken on every facet of commerce. Please know, I remain engaged on this rapidly evolving issue and am working to provide needed resources to our local businesses during this critical time. Congress, as well as different federal agencies, have worked to enact policies to help employers and businesses impacted by coronavirus. Below, you will find information to assist you at this time.
If you have any questions about the materials below, please do not hesitate to contact my office by calling (202) 225-4201 or sending me a message online. My staff and I are here to assist you in any way possible during these uncertain times.
Financial Assistance for Businesses
Paycheck Protection Program
To help workers provide for their families and assist businesses struggling to keep their doors open, Congress passed H.R. 748, the CARES Act which created the Paycheck Protection Program (PPP), a Small Business Administration (SBA) 7(a) loan program. This program provides for 100% federally-guaranteed loans for cash-flow assistance to encourage small businesses to retain their employees and help recover from the economic crisis quickly. PPP also provides assistance for 501(c)(3) nonprofits, sole-proprietors, independent contractors, and other self-employed individuals. Businesses may apply through August 8, 2020 for relief assistance.
If an employer maintains payroll continuity they are eligible to request loan forgiveness on a Paycheck Protection Loan used to cover payroll costs, interest on mortgage obligations, rent, and utilities. For borrowers who are self-employed or did not reduce the number of employees, employee hours, or pay by more than 25 percent, may be eligible to apply for forgiveness using the shorter SBA form 3508EZ. Otherwise, borrowers may use this form.
On April 23, 2020, I supported the passage of H.R. 266, the Paycheck Protection Program and Health Care Enhancement Act. This bill provides an additional $310 billion to the Paycheck Protection Program, of which $60 billion is set aside for smaller banking institutions to administer PPP loans. I also sent a letter addressed to Congressional Leadership requesting the Paycheck Protection Program to be fully funded to ensure every small business who is experiencing hardship due to the pandemic receives the critical funding they need to survive.
After listening to stories and concerns about the Paycheck Protection Program from Collin County small businesses, on May 20, 2020, I cosponsored the Paycheck Protection Flexibility Act which was signed into law by President Trump on June 5, 2020. This bipartisan bill provides more flexibility for businesses to use their PPP loans, while still qualifying for loan forgiveness. It extends the forgiveness covered period from eight-weeks to twenty-four weeks to help accommodate the various stages of reopening. Small businesses that prefer to stay within the original eight-week period can opt-out of this extension.
Additionally, the Paycheck Protection Flexibility Act replaces the 75/25 rule with a 60/40 rule, allowing businesses to use forty percent of their PPP loan on mortgage interest, rent, and utilities. Other provisions of the legislation include extending the required rehire date from June 30, 2020 to December 31, 2020, allowing small businesses with PPP loans to also benefit from employer payroll tax deferment, and altering loan forgiveness parameters to account for a lack of ability to rehire or return to normal business activity levels. Further, all new PPP loans will receive a 5-yr maturity, while existing loans will remain at a 2-year maturity.
Economic Injury Disaster Loan Program
The Small Business Administration is working to provide targeted, low-interest loans to small businesses and most private non-profits that have been severely impacted by the coronavirus. The program provides small businesses with working capital loans of up to $2 million to aid in the temporary loss of revenue they are experiencing.
EIDL interest rates are determined by formulas established in law and are fixed for the life of the loan. EIDL loans can have maturities up to thirty years and interest rates cannot be more than four percent.
The CARES Act made a number of changes to the SBA’s EIDL program to help small businesses further. Eligibility for an EIDL loan was expanded under the bill to include cooperatives, ESOPs with fewer than 500 employees, sole proprietors, and independent contractors.
Small businesses in Texas can apply for relief here.
Due to the processing time of EIDL applications, Congress created a provision to expedite capital access for distressed businesses. This emergency grant allows small businesses that have applied for an EIDL loan due to the pandemic, to request an advance on the loan, of not more than $10,000, which the SBA will provide shortly after an applicant has submitted their application. The amount of the advance will be determined by the number of pre-disaster employees as of January 31, 2020. Applicants will receive $1,000 per employee up to a maximum of $10,000. The advance payment may be used for providing paid sick leave to employees, maintain payroll, making rent or mortgage payments, and repaying obligations that cannot be met due to revenue loss. Applicants will not be required to repay advance payments, even if subsequently denied for an EIDL loan.
SBA Express Bridge Loans
The Express Bridge Pilot Program provides access to up to $25,000 for small businesses that need cash fast. These loans are intended to provide quick relief for small businesses who are experiencing a temporary loss of revenue and can be term loans or used to bridge the gap while applying for a SBA EIDL. The loan must be repaid in full or in part by proceeds from the EIDL loan. Small businesses who currently have a business relationship with an SBA Express Lender may qualify. For more information on the loan guidelines click here.
Other SBA Loans
SBA provides a number of loan resources for small businesses to utilize when operating their business. For more information on loans or how to connect with a lender, visit the SBA website.
For small businesses with existing SBA loans, SBA is required to pay all principal, interest and fees for six months. This includes SBA’s 7(a), 504, and Microloan programs.
The SBA will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.
Other Financial Assistance
The Federal Reserve established the Main Street Lending Program to assist small and mid-sized businesses impacted by the pandemic. This $75 million dollar lending program will operate through three lending facilities: the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF). Business may be eligible for the program if the business has 15,000 employees or fewer, or the business had 2019 revenues of $5 billion or less. The program offers loans from $250,000 to $300 million with a 5 year maturity. Small and medium sized businesses interested in participating in the loan program can find additional information on how to apply and which forms are needed here.
As a result of legislation passed by Congress, various Collin County cities have established grant programs to help stabilize small local businesses during the pandemic.
- The City of McKinney's Small Business Grant Program grants up to $25,000 to small businesses with less than 100 employees and less than $15 million in annual revenue. Applications will be open from Wednesday, June 24, 2020 at 12:00 PM through Wednesday, July 8, 2020 at 12 PM.
Tax Relief for Businesses
Congress has passed a number of tax provisions to help keep businesses open, including assistance with cashflow and providing tax credits for employers to keep employees on payroll.
To further help small businesses, the IRS has decreased interest rates for underpayments and overpayments beginning July 1, 2020. More information on the new rates can be found here.
Tax Deadline Extension
The Department of Treasury and IRS have moved Tax Day from April 15, 2020 to July 15, 2020 for small and medium size businesses and individuals who need it. While businesses have an additional 90 days to file and make payments without interest or penalties, those who may receive tax refunds should file now to get money. Details can be found on the IRS website.
Employee Retention Credit
Employers that face full or partial closure orders or suffer economic hardship due to COVID-19 may be eligible for a refundable payroll tax credit. Employers that continue to pay employees that are furloughed may qualify for a fifty percent credit on up to $10,000 of wages paid to those employees. This is not only to help businesses stay afloat but also to help workers keep their jobs, stay connected with their employer and ensure that furloughed workers have jobs to return to. Small Businesses receiving a Paycheck Protection loan are not eligible for this credit. More guidance can be found here.
Delay of Payment of Employer Payroll Taxes
To help cash strapped businesses, employers and self-employed individuals will be able to delay the payment of their 2020 payroll taxes over two years, with half of the amount required to be paid in 2021 and the remaining half in 2022. Employers are generally required to pay a 6.2% Social Security tax on employee wages, which is matched by employees. This provision will allow for an additional $300 billion of cash flow for businesses.
Delay of Payment of Employer Unemployment Taxes
The deadline for employers who are required to cover a share of unemployment benefits to submit payment to the Texas Workforce Commission has been moved from June 1, 2020 to December 31, 2020. Employers impacted by this change include qualifying employers who reimburse TWC for the full amount of unemployment benefits to be paid to eligible former employees. During this time, interest and penalty charges will also be waived.
Support for Businesses Suffering Losses
As part of the CARES Act, limitations on a company’s use of net operating losses is relaxed. Under this bill, a net operating loss arising in a tax year beginning in 2018, 2019, or 2020 will be permitted to be carried back five years - ostensibly to a prior year in which that company had been profitable. This provides distressed businesses access to immediate tax refunds. Additionally, this provision temporarily removes the taxable income limitation to allow a net operating loss to fully offset income.
Modification on Business Interest
Another provision to help employers maintain operations and payroll is a temporary increase in the amount of interest expense businesses are allowed to deduct on their tax returns. The CARES Act will increase this limitation from thirty percent to fifty percent of taxable income for 2019 and 2020.
Qualified Improvement Property
Congress fixed an error in the tax code related to the depreciation schedule for improvements to business properties. Businesses can now immediately write off costs associated with improving facilities instead of having to depreciate those improvements over a 39-year life of the building. This will encourage businesses to continue to invest in property improvements as America recovers from COVID-19, and increase businesses’ access to cash flow.
Relief for Businesses
The CARES Act includes measures to temporarily delay or modify regulations that normally tie up capital. The following provisions are in place to encourage banks and credit unions to work with those businesses and individuals struggling to survive.
Capital Relief for Community Banks
Community banks looking to deploy additional, needed capital to consumers and businesses will be able to take advantage of the temporary reduction in the Community Bank Leverage Ratio (CBLR) from nine percent to eight percent. Federal banking regulators will also be allowed to grant a reasonable grace period if any community bank falls below the eight percent threshold.
Relief from Troubled Debt Restructuring (TDR) Disclosures
Banks and credit unions trying to help mitigate the stress and impact of COVID-19 on borrowers by providing loan modifications, will no longer have to worry about triggering a Troubled Debt Restructuring (TDR) classification or disclosure. Congress temporarily suspended “generally accepted accounting principles” (GAAP) requirements for TDR classifications on loans. This provision further incentivizes and encourages banks and credit unions to exhaust all options to support consumers and businesses during this time.
Relief from Current Expected Credit Losses (CECL) Standard
In 2016, the Financial Accounting Standards Board (FASB) finalized a new accounting standard called the Current Expected Credit Losses (CECL). This new standard forces banks to recognize expected future losses immediately, requiring banks to hold more capital reserves, which therefore ties up capital and reduces the supply of available credit. The CARES Act, now provides banks and credit unions with the option to decide to comply with the new accounting standard. Currently, smaller banks and credit unions are not required to comply with the new standard until 2023. This provision gives larger banks the option to free up trapped capital and will allow banks and credit unions to extend additional loans to consumers and businesses. This temporary waiver from CECL will expire when the pandemic ends, or by December 31, 2020, whichever comes first.
Debt Guarantee Authority
Due to the pandemic, many are worried about their financial security, including their deposits being held by financial institutions. The Federal Deposit Insurance Corporation (FDIC) is authorized to temporarily guarantee noninterest bearing accounts of banks and credit unions without a maximum guarantee limit. Depositors will be reassured that their deposits are safe at any amount.
Temporary Tariff Relief
On April 18, 2020, President Trump signed an order for the deferment of duties, and fees for certain imports for 90 days in response to the Coronavirus outbreak.
Reforms to Employee Benefits
Paid Sick Leave Program Reforms
If an employee's ability to work has been impacted by COVID-19, the employer may be required to temporarily provide for fully paid sick leave, beginning April 1, 2020. Public and private employers with less than 500 employees will now be required to provide full-time employees with two weeks (80 hours) paid sick leave as well as part-time employees on a pro-rated basis.
This leave would apply to full-time employees who are home sick from coronavirus, complying with a quarantine, or taking care of an individual who has been infected. This leave also applies to working families who may be forced home due to school closures. The Department of Labor provided general guidance here as well as a common questions and answers page.
However, as a result of Congressional action, the federal government will provide employers with a refundable payroll tax credit of 100% of the required wages. The IRS has posted initial general guidance on how to receive your refundable payroll tax credit here.
Employers are required to cover employees not working for the following reasons:
- the employee is subject to a Federal, State, or local quarantine or isolation order related to coronavirus;
- the employee has been advised by health care provider to self-quarantine due to coronavirus;
- the employee is experiencing symptoms of coronavirus;
- the employee is caring for an individual who is subject to an order described in (1) or has been advised as described in (2);
- the employee is caring for their child because the school is closed or childcare provider is unavailable due to coronavirus; or
- the employee is experiencing a similar condition specified by the Secretary of Health and Human Services
Initially, the Department of Labor observed a temporary period of non-enforcement of paid leave protections under the Families First Coronavirus Response Act in order to enable employers to come into compliance, but as of April 20, 2020, the Department is fully enforcing these protections. According to the Department of Labor, enforcement of these provisions will focus on maximizing benefits for workers and employers alike. It's important to note, the Secretary of Labor has authority to issue regulations to exempt small businesses with fewer than 50 employees if the above requirements would jeopardize the going concern of the business.
- Employers would be required to pay employees their full wages, not to exceed $511 per day and $5,110 in the aggregate, for a use described in (1), (2), or (3) above
- Employers would be required to pay employees two-thirds of their wages, not to exceed $200 per day and $2,000 in the aggregate, for a use described in (4), (5), or (6) above
- Employers would receive a 100% refundable payroll tax credit on the wages required to be paid
- The requirement to provide the paid leave would apply to all public sector employers and those private sector employers with less than 500 employees
- Tax credit eligibility only applies to those private sector employers with less than 500 employees
To that end, according to the Department of Labor, an employer, including a religious or nonprofit organization, with fewer than 50 employees is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. A small business may claim this exemption if an authorized officer of the business has determined that:
Paid Family and Medical Leave Program Changes
- The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
- There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
Due to COVID-19, some employers may be required to temporarily extend Family and Medical Leave Act (FMLA) benefits to employees who must stay home to care for a minor child whose school or care provider is unavailable due to COVID-19, beginning April 1, 2020. If this situation applies to an employee, employers are required to provide said employee with ten weeks paid leave at two-thirds of their wages. However, payments are not to exceed $200 per day and $10,000 total for the 10 weeks.
Again, the federal government will provide employers with a refundable payroll tax credit of 100% of the required wages. More details can be found here.
- This leave would cover employees who are not working because the employee is caring for their child because the school is closed or childcare provider is unavailable due to a public health emergency
- The requirement to provide the paid leave applies to all employers with less than 500 employees
- Federal, state, and local governments are not eligible for the Credit
Guidance from Department of Labor
The Department of Labor issued their temporary rule for paid leave under the Families First Coronavirus Response Act.
Additionally, employers can find general guidance here as well as fact sheets, frequently asked questions, and the required posters employers must display or share with employees regarding their rights under the Families First Coronavirus Response Act.
Guidance from the IRS
- Non-Federal Employee Rights Poster
- Federal Employee Rights Poster
The IRS published information on the refundable tax credits businesses will receive for providing paid leave.
Advance Funds from Treasury Department
The United States Department of Treasury will provide advance funds to businesses so they can meet paid sick-leave requirements. Employers will be able to use cash deposited with the Internal Revenue Service to pay sick-leave wages. Learn more here.
Complying with Federal Regulations
The Occupational Safety and Health Administration (OSHA) launched a General COVID-19 Information webpage that provides infection prevention information specifically for workers and employers, and is actively reviewing and responding to any complaints regarding workplace protection from novel coronavirus, as well as conducting outreach activities. OSHA has also issued a list of steps employers can follow to ensure safe social distancing in workplaces to protect employees from the coronavirus. Below are a list of seven steps that OSHA recommends:
For more information, you can visit OSHA's website or call 1-800-321-OSHA (6742).
- Encourage workers to stay home if they are sick.
- Isolate any worker who begins to exhibit symptoms until they can either go home or leave to seek medical care;
- Establish flexible worksites (e.g., telecommuting) and flexible work hours (e.g., staggered shifts), if feasible;
- Stagger breaks and re-arrange seating in common break areas to maintain physical distance between workers;
- In workplaces where customers are present, mark six-foot distances with floor tape in areas where lines form, use drive-through windows or curbside pickup, and limit the number of customers allowed at one time;
- Move or reposition workstations to create more distance, and install plexiglass partitions; and
- Encourage workers to bring any safety and health concerns to the employer’s attention.
OSHA has also released a series of Frequently Asked Questions for employers and employees regarding the use of masks and face coverings in the workplace. This information can be found on OSHA’s website here.
Keeping Your Workplace and Employees Healthy
Below are helpful documents from the Centers for Disease Control and Prevention (CDC) you can distribute to your employees to help provide them accurate information. I have included links to these resources below:
Additionally, recommended strategies for employers from the CDC can found at this link.
- What You Need to Know Document [DOWNLOAD]
- What To Do If You Are Sick Document [DOWNLOAD]
- Stop the Spread of Germs Poster [DOWNLOAD]
Reopening the Economy
While this pandemic is far from over, government executives have laid out the framework to reopen our economy and it's important we all work together to do so as safely as possible.
On April 16, 2020, President Trump released his approach to reopening our nation’s economy, a plan focused on empowering governors to tailor a phased reopening based on the health situation of individual states. A detailed explanation of the President’s “Opening Up America Again” plan can be found on the White House's website.
As we work to slow the spread and adjust our coronavirus response to rapidly changing conditions on the ground, please visit the Open Texas Homepage for the most up-to-date information regarding dates and restrictions for families, individuals, and businesses.
In an effort to help connect job seekers find available positions as we begin to open the economy, Texas Workforce Commission encourages those looking for employment opportunities to visit their website which currently has nearly 3 million resumes from Texas job seekers. On this system, employers can post job openings, find candidates, and review labor market information.