CARES Act

The Small Business Association (SBA) has provided loan guarantees making it possible for banks to provide small business loans at reasonable interest rates. Other provisions in the act will also allow for certain deductions/credits to your debt, further reducing the economic impact on your business.

Small businesses fewer than 500 employees are generally eligible, so most body shops should qualify. Shops need to have been in business as of Feb. 15, 2020, and paid employee salaries and payroll taxes.

It is thought that credit requirements will be significantly relaxed, historically speaking. Body shops will need to provide proof of payroll costs. The SBA is expected to release detailed guidelines soon on credit requirements and application criteria.

The Small Business Association’s 7(a) program makes $350 Billion available for businesses to take advantage of. In addition to these funds, there are also various expenses that will be forgiven, as well as tax credits. Payroll tax deferments are also made available when businesses do not take advantage of the loan forgiveness provisions. All provisions are intended to help reduce the financial burden of maintaining business continuity during the COVID crisis.

Loans will be made immediately available through more than 800 existing SBA-certified lenders, including banks and credit unions. Additional lenders will be brought into the program.

The loans will cover the following businesses and related expenses:

• For business under 500 employees (Certain businesses above 500 employees may still qualify based on NAICS code).
• Allowable uses of the loan include the following expenses incurred between February 15, 2020 – June 30, 2020.

Qualified Expenses include:

• Salary and wages up to an annual rate of $100,000; health care benefits, commissions, or similar compensation.
• Mortgage interest payments
• Rents
• Utilities
• Interest on other debt obligations incurred prior to February 15, 2020

Loan forgiveness is available for costs incurred during the eight-weeks following your loan origination date. Qualifying loan forgiveness costs (when payroll costs are maintained):

• Payroll cost (Forgiveness subject to possible reduction when an employee’s compensation reduces by 25%, or if there is a reduction in employee headcount made during the eight-week period)
• Mortgage or debt interest
• Rents
• Utilities

Note: Loans are to be set with an interest rate not to exceed 4%.

Qualifying shops qualify for loan amounts based on a formula based on a shop’s past payroll expenses. Payments may be deferred for six months to a year. The government is implementing expanded payment systems and more information on fund dispersal is expected soon.

Body shops provide a quality livelihood for many of our family, friends and neighbors. Fortunately, the bill creates a “paycheck protection program” for small businesses. The “Paycheck Protection Program” would provide 8 weeks of cash-flow assistance through guaranteed loans to small businesses who maintain their payroll during the crisis.

If payroll is maintained, the portion of the loans used for covering payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven.

The Guidance clarifies that for loan forgiveness, it is anticipated that not more than 25 percent of the forgiven amount may be for non-payroll costs. Additionally, the CARES Act was originally unclear on how to treat employees making over $100,000. The new guidance makes it clear that you can include employees making over $100,000 but they will be capped at $100,000. To obtain a loan, a qualifying small business should submit an application through an SBA and Treasury approved bank, credit union, or nonbank lender.

Contact your bank or lender directly to apply for the small business loans available through the Small Business Association (SBA). The government is expanding the rules surrounding FDIC-insured banks and SBA loans. Your bank funds the loan; the SBA guarantees the loan. Start with your local lending institution or by clicking the image below.

https://covid19relief.sba.gov

The material in this communication is for information purposes only.  See your tax advisor or legal counsel for specific advice.

Click on links below for more information

• Workplace, School, and Home Guidance
• People at Risk for Serious Illness from COVID-19
• How COVID-19 Spreads
• Symptoms
• Steps to Prevent Illness
• Frequently Asked Questions
• What to Do If You Are Sick with COVID-19
• Stigma Related to COVID-19
• Facts about COVID-19
• Information for People at Higher Risk and Special Populations
• Communication Resources

Click on links below for more information

• Situation Summary
• Cases in the U.S.
• Global Locations with COVID-19
• Risk Assessment
• CDC in Action: Preparing Communities

 

Click on links below for more information

• Interim Guidance for Businesses and Employers
• Information for Communities, Schools, and Businesses
• Environmental Cleaning and Disinfection Recommendations – Community Facilities
• U.S. Small Business Administration: COVID-19 Resources
• U.S. Department of Labor:
  • Guidance for Preparing Workplaces for Coronavirus
  • OHSA Resources for Workers and Employers on COVID-19
• World Health Organization: Get Your Workplace Ready for COVID-19
• Cybersecurity and Infrastructure Security Agency: Risk Management for COVID-19
• U.S. Environmental Protection Agency: Disinfectants for Use Against COVID-19
• If you have medical supplies or equipment to donate, please provide FEMA details on what you are offering.
• If you are a private company that wants to produce a product relatedto the COVID response – email nbeoc@max.gov.