COVID-19 Weekly Digest - May 20, 2020
The COVID-19 pandemic has impacted nearly every part of the economy. According to a survey by the Census Bureau, 75% of all small businesses in the U.S. have applied for a loan through the Paycheck Protection Program, but as of May 2, only 38% had received funding. For unknown reasons, businesses in some parts of the country reported higher rates of success. Only about one in five businesses in California have received funding. Hopefully, your business has been one of the lucky ones!
CARES ACT UPDATES
Economic Impact Payments (aka Stimulus Checks)
The IRS just announced that it is adding 3,500 phone representatives to answer questions about economic impact payments. Phone support will still be limited, and most queries can be answered on the IRS website or via the Get My Payment app.
According to the IRS timetable, paper checks will go out this week to people with income between $30,001 and $40,000. The IRS is mailing out paper checks based on income, with $10,000 increments each week.
In response to queries from taxpayers, the IRS continues to add to its FAQs for Economic Impact Payments. If you did not update your bank account information before May 13, you would receive your payment by check. If the bank account you used for direct deposit of your most recent refund has been closed, the bank will reject the deposit, and you will automatically receive a check by mail. If your most recent tax return had a balance due, and you paid directly from your bank account using Direct Pay or EFTPS, unfortunately, the IRS cannot use that information for direct deposit of your economic impact payment. You will receive a check in the mail.
You should receive a notice in the mail regarding your economic impact payment. Keep this with your 2020 tax information because you will need it for your 2020 tax return.
Employee Retention Credit
The IRS continues to add to its FAQs for the Employee Retention Credit. Employers can now find answers regarding qualified health plan expenses and the interaction with the Paycheck Protection Program. Another set of FAQs clarifies that employers who use a third-party to pay and report payroll expenses are eligible for this credit, and outlines the procedures these businesses should use.
Paycheck Protection Program (PPP)
If you are baffled by the rapid-fire changes to the PPP, you are not alone. More than a few small business owners applied with multiple lenders to increase their chances of being approved, assuming that the SBA would only approve them once. However, that has not been the case, and a few have reported being approved multiple times and receiving funds more than once.
Late on Friday, May 15, the SBA released an application for loan forgiveness, which you can access here. In record speed, on May 16, CPA Tony Nitti posted an excellent guide that walks through the application. As Nitti observes, there are still lots of unanswered questions, so stay tuned for updates.
Restaurants, barbers and hair salons, in particular, have been voicing complaints that they have not been able to bring back employees while under local lockdown requirements, and some in Congress have been listening. Substantial revisions to the program may be in the works, including liberalizing the dates for qualified expenses and allowing more overhead costs to be eligible as forgivable expenses. Other ideas under consideration include using payroll processers instead of banks to get the funds out quickly.
Another Stimulus Program Coming Soon?
On Friday, May 15, the House passed the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act). This $3 trillion bill includes additional stimulus payments of $1,200 per person (including dependents), the extension of unemployment benefits to the end of 2020, and changes to the PPP. Kelly Phillips Erb has an excellent summary of Forbes. Keep in mind that this bill still needs Senate approval to move forward.
Help with Student Loans
Under the CARES Act, payments on individual student loans are suspended through September 30, as this article in the Journal of Accountancy explains. This applies to Direct Loans or Federal Family Education Loans (FFEL) held by the Education Department. Interest will not accrue during this time. For borrowers working toward public service loan forgiveness, this period of suspended payments will count as long as they are still employed full-time by an eligible employer. Borrowers are encouraged to verify this with their lender.
National emergencies, such as the COVID-19 pandemic, make forbearance available for all student loans. However, this is not automatic, so borrowers will have to request this. A six-month deferment is also possible to those on unemployment.
HELP FOR SMALL BUSINESS
Main Street Lending Program
The Federal Reserve still has not announced a start date for its Main Street Lending Program, which is intended to fill in the gap between the programs for small businesses – the EIDL and the PPP – and programs for larger businesses. The U.S. Chamber of Commerce put together a guide and answers to FAQs about this program. Some warn that the complexity, slow launch, and lack of measures to protect workers may not help as many people as was hoped.
Forbes continues to update its list of financial resources for small businesses. Gusto has a listing of state-by-state information of relief options.
To survive during the lockdown, some small businesses are being creative by offering a concierge shopping service, curbside pickup, and personal delivery, as described over on the Zapier blog. An article in Fast Company provides examples of partnering with other businesses, changing product lines, and switching to online delivery methods.
REOPENING AFTER LOCKDOWN
The CDC released its guidance for reopening key segments of our communities including childcare programs, mass transit, restaurants and bars, schools, and workplaces. Workplaces are urged to remain shut down unless they are ready to protect workers with a higher risk of severe complications from COVID-19.
The Washington Post asked three public health experts for advice on keeping safe when venturing out. All three agreed that being outdoors is more reliable, and less time spent around people is better.
