|Our nation and world are experiencing 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. On January 19, 2021, the Paycheck Protection Program reopened for all lenders to originate PPP loans for First Draw borrowers and Second Draw borrowers. Schedule C filers are encouraged to use a separate First Draw and Second Draw application form.
Upon relaunching the PPP, improvements to the program were made to expand eligibility to 501(c)(6)s, 501(c )(5) labor organizations, 501(c ) (7) social and recreation clubs, 501(c )(8) fraternal benefit societies, destination marketing organizations, housing cooperatives, newspapers, broadcasters, and radio stations and expand the list of eligible PPP expenses to include PPE, supplier costs, property damage, and operation expenditures.
Smaller and harder-hit businesses with less than 300 employees and a revenue reduction of twenty-five percent may be eligible to apply for a PPP second draw loan for a maximum amount of $2 million. Businesses with NAICS code 72, such as restaurants and hotels, will be eligible for an increased loan amount of 3.5x payroll.
Another PPP provision in which I advocated for includes a simplified one-page PPP loan forgiveness application for loans under $150,000. The SBA must produce this new form within 24 days from the fourth coronavirus relief bill's enactment. Currently, if an employer maintains payroll continuity they are eligible to request loan forgiveness on a Paycheck Protection Loan used to cover payroll costs, including COBRA premiums, interest on mortgage obligations, rent, and utilities by using one of three forms. Borrowers with PPP loans of $50,000 or less may use a simpler loan forgiveness form, for borrowers who are self-employed or did not reduce the number of employees, employee hours, or pay by more than 25 percent, may use the shorter SBA form 3508EZ, otherwise, borrowers may use this form.
As required by SBA, lenders will be providing for-profit and non-profit borrowers with PPP loans of $2 million or greater a Loan Necessity Questionnaire form to complete within ten days upon receipt. This questionnaire will be used to evaluate the good-faith certification borrowers made on their PPP application form.
After hearing many concerns about the PPP, I cosponsored H.R. 6821, the Small Business Expense Protection Act of 2020, which would allow small businesses to deduct eligible expenses paid from PPP funds from their taxes. To further expediate the passage of H.R. 6821, I recently joined with my colleagues in sending two letters to House Leadership urging them to restore PPP deductibility before the end of the year. Due to these proactive efforts, I am happy to report end of the year legislation included a provision to allow small businesses to deduct PPP expenses from their taxes.
Shuttered Venue Operators Grants (SVOG)
Economic Injury Disaster Loan Program
Eligible live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives who demonstrate a 25 percent reduction in revenues now have the opportunity to apply for a new $16 billion grant program. Grants will first be rewarded to entities who have faced a ninety percent or greater revenue loss. After fourteen days, the grants will open to entities with seventy percent or greater revenue loss. Following the two fourteen day periods, grants will be rewarded to all eligible entities. The grants must be used on specified expenses such as payroll costs, rent, utilities and personal protective equipment. Any amount of the SVOOG will be reduced by any PPP amount received after December 27, 2020. The Shuttered Venue Operators Grant program program is now accepting applications. Additional information on the program can be found here.
Restaurant Revitalization Fund
The American Relief Plan provides for a $28 billion grant program for restaurants, bars, caterers, and food trucks. The SBA will first prioritize grants to businesses who made $500,000 or less in gross revenue in 2019 as well as small businesses owned by women, veterans, and those socially or economically disadvantaged. Grants may be for up to $10 million and grant allocations will be determined by the difference between 2020 gross revenue compared to 2019. While grants amounts will not be treated as taxable income, grants will be reduced by amount received through the Paycheck Protection Program. Eligible expenses will include payroll costs, mortgage and rent payments, supplies, food and beverage costs, and paid sick leave. SBA will begin accepting applications on May 3, 2021. More guidance on the program and application process can be found here.
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 to aid in the temporary loss of revenue they are experiencing. Beginning April 6, 2021, businesses may be approved for 24-months of economic injury with a maximum loan amount of $500,000. For businesses with approved loans prior to April 6th, the SBA will reach out to provide details on how businesses can request an increase in their EIDL.
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. While SBA is still accepting applications for emergency disaster loans, EIDL advances are now only available for small businesses in low-income communities.
Advances of up to $10,000 are available for small businesses in low-income communities who previously received an EIDL advance of less than $10,000 or who applied but received no funds due to lack of program funding. Applicants do not have to take any action as the SBA will be reaching out to those small businesses who qualify.
In addition, PPP borrowers no do not have to deduct the amount of their EIDL advance from their PPP forgiveness amount.
Transportation Service Providers
Transportation services providers, including the motorcoach, over-the-road bus industry, and private school bus operators with 500 employees or less that have experienced a revenue drop of 25% or more on an annual basis as a result of COVID-19 will be eligible for grants, loans, and loan guarantee. Recipients of funds must prioritize payroll costs for employees however, funds may also be used for continued operations and maintenance, rent, leases, PPE, and insurance.
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, including 7(a) loans, 504 loans, and microloans. To enhance these existing SBA loan guarantee programs, the 7(a) loan guarantee will be increased to 90 percent through October 1, 2021 and borrower and lender fees for 7(a) and 504 loan programs will be waived through September 30, 2021. Additionally, the one million dollar loan limit for SBA Express loans is extended. To help expedite 504 loans of less than $500,000, a 504 Express Loan Program will be established. For more information on loans or how to connect with a lender, visit the SBA website.
SBA Digital Learning Platform
The SBA has launched Ascent, a free digital e-learning platform designed to help women entrepreneurs grow and remain resilient in their business operations. The program offers tips on preparing and recovering from disasters, strategic marketing, business financial strategy development, and access to capital.
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. Borrowers with qualifying loans approved by the SBA prior to the CARES Act will be provided with an additional three months of principal and interest payments beginning February 2021. These payments will be capped at $9,000 per borrower per month. Following the three months, borrowers considered to be the smallest or hardest hit by the pandemic may be eligible to receive an additional five months of payments.
The SBA will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.
SBA payments of principal and interest on the first six months of newly approved loans will resume for all loans approved between February 1, 2021 and September 30, 2021.
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 through the beginning of the first quarter of 2021. More information on the new rates can be found here.
Employee Retention Tax 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. The tax credit for 2020 was modified by allowing businesses with PPP loans to qualify. Furthermore, the credit is extended through December 31, 2021. More guidance can be found here.
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 9% to 8.5 % for 2021.
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. Legislation passed by Congress extends the termination of this provision to the earlier of 60 days after the national emergency termination date or January 1, 2022 and clarifies that insurance companies are covered by the provision.
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 the first day of the fiscal year of the institution that begins after the national emergency termination date or January 1, 2022.
Reforms to Employee Benefits
Guidance from the IRS
The Families First Coronavirus Response Act provided a refundable payroll tax credit for the mandated paid sick and family leave which were mandated through December 31, 2020. The tax credit was extended through March 2021 for employers that continue to voluntarily offer paid sick and family leave to their employees. The American Rescue Plan Act is extending this tax credit through September 30, 2021 and is increasing the amount for the credit from $10,000 to $12,000 per employee as well as the number of days for which self-employed individuals can claim the credit from 50 to 60. The IRS published information on the refundable tax credits businesses will receive for providing paid leave.
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 To Do If You Are Sick Document [DOWNLOAD]
- Stop the Spread of Germs Poster [DOWNLOAD]
As part of the NIH RADx testing initiative, NIH introduced the COVID-19 Testing Impact Calculator, a tool designed to help small businesses visualize how different approaches to testing and other COVID-19 mitigation measures, like mask use, can curb the spread of coronavirus within organizations. This tool was funded by the National Institute of Biomedical Imaging and Bioengineering, and is available to businesses for free.
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.
In January 2021, President Biden released his approach to reopening our nation’s economy. A detailed explanation of the President’s “National Strategy for the COVID-19 Repsonse and Pandemic Preparedness" 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.