Auto Glass Safety Council™

Tag: United States

  • Extension to Paycheck Protections Program Enacted

    Federal legislation was enacted earlier this week that extends the Paycheck Protection Program through August 8. The program was originally to expire on June 30.

    AGSC members seeking financial relief from the economic effects of the coronavirus crisis now have additional weeks to apply for aid from the program that provides loans that are potentially forgivable to qualified applicants.

    Approximately $130 billion in unused funds were said to be still available under the program.

    The PPP was enacted as part of the March 27 CARES Act to provide quick relief to small business owners experiencing economic hardship due to the response to the coronavirus. The program promised low interest, possibly forgivable, loans of up to $10 million, for eight weeks of payroll plus 25% more for rent, mortgage, utilities, etc.  The program has since been modified to allow for as little as 60% of the funds to be used for payroll and to allow for forgiveness for expenses beyond the original period through December 31, 2020.

    Exceptions are now also provided for businesses that cannot reopen fully due to restrictions, such as customer capacity with appropriate documentation of the inability to rehire employees or similarly qualified workers or because of compliance with government issued health and safety mandates and guidance.

  • Paycheck Protection Program (PPP) Flexibility Act enacted in Washington

    The Paycheck Protection Program (PPP) Flexibility Act was enacted in Washington last week to address concerns expressed by business owners and give borrowers additional time and flexibility to use the loan proceeds.

    The PPP was enacted as part of the March 27 CARES Act to provide quick relief to small business owners experiencing economic hardship due to the response to the coronavirus.  The program promised low interest, possibly forgivable, loans of up to $10 million, for eight weeks of payroll plus 25% more for rent, mortgage, utilities, etc.  However, struggling businesses quickly experienced real world obstacles in meeting the tight loan forgiveness period and the requirement that 75% of the loan be spent on payroll.  Businesses were given until June 30 to restore full-time employment and salary levels for any changes made between February 15 and April 26 and all loan amounts had to be expended within eight weeks of receiving the loan.

    The new law will provide greater flexibility to small business owners by:

    • Allowing forgiveness for expenses beyond the original 8-week covered period to 24 weeks (through December 31, 2020) and extending the rehiring deadline;
    • Increasing the current limitation on non-payroll expenses (such as rent, utility payments and mortgage interest) for loan forgiveness from 25 to 40 percent, but falling below the 60% threshold for payroll will eliminate, rather than reduce, loan forgiveness;
    • Extending the time to rehire workers from June 30, 2020 to December 31, 2020;
    • Providing an exception for businesses that cannot reopen fully due to restrictions, such as customer capacity, by allowing for documentation of the inability to rehire employees or similarly qualified workers or of compliance with government issued health and safety mandates and guidance;
    • Extending repayment deferment from six months until after a forgiveness decision is made or ten months after the eight or twenty-four week period;
    • Extending terms for loans made after June 5, 2020 from two to five years (terms for loans made prior can be renegotiated with lenders);
    • Ensuring full access to payroll tax deferment for businesses that take PPP loans.

    For a summary and text of the Paycheck Protection Program Flexibility Act of 2020 CLICK HERE.

  • Revised Paycheck Protection Program (PPP) Loan Forgiveness Application Form Released

    On Tuesday, the US Small Business Administration (SBA) and Treasury released the promised revised Form 3508 Paycheck Protection Program (PPP) Loan Forgiveness Application. Form 3508 can be found here, and its instructions here. The new streamlined form incorporates the PPP loan forgiveness changes contained in the recently enacted PPP Flexibility Act, including the expanded 24-week Covered Period for calculating qualified expenses for loan forgiveness and the new exemptions from FTE and salary and wage reductions. In addition, the much-anticipated new Form 3508EZ was also released, providing even greater simplicity for those Borrowers eligible to use it. Form 3508EZ can be found here and its instructions here. Those eligible to use the EZ version include:

    • Those who are self-employed with no employees, or
    • Those who did not reduce salary or wage by 25% or more during the Covered Period for any employee making less than $100,000 and there was no reduction in full-time equivalent (FTE) employees between January 1, 2020, and the end of the Covered Period (taking into account certain reduction safe harbors and exemptions), or
    • Those who did not reduce salary or wage by 25% or more during the Covered Period for any employee making less than $100,000 and the Borrower can certify that it was unable to operate during the Covered Period at the same levels as before February 15, 2020, due to compliance with government health directives related to COVID-19.

    The new PPP loan Forgiveness forms also take into account guidance contained in an Interim Final Rule (IFR) issued yesterday. The IFR can be found here. The IFR makes revisions to previously issued IFRs to bring them into compliance with the PPP Flexibility Act provisions. Of note, the IFR makes clear that when Borrowers use the 24-week Covered Period, the cap on compensation for non-owner employees is $46,154 – tripling the prior $15,385 cap based on the 8 week Covered Period. However, employee-owners are capped at $20,833 when the 24 week Covered Period is used. While these latest publications provide some answers to ongoing questions, more guidance is expected as has been the case throughout the PPP loan process.

  • U.S. House Approves Third Coronavirus Relief Package

    On Thursday, the U.S. House approved a third Coronavirus relief package to further address the economic dislocation caused by the global pandemic. The Senate had passed the legislation on Tuesday and it is expected to be quickly signed by President Trump.

    The $484 billion piece of legislation includes:

    • $322 billion for the Paycheck Protection Program – Including $60 billion for a small lender set-aside
    • $60 billion for the Emergency Industry Loan Program
    • $75 billion for hospitals
    • $25 billion for virus testing

    The additional $322 billion for the Paycheck Protection Program (PPP) adds to the $349 billion previously allocated in the CARES Act. The new money seeks to address the funding shortfall that left the PPP coffers empty last week before a large number of small businesses received loans. Large companies, that had pre-existing relationships with banks and teams of lawyers and accountants at the ready, were quickly able to access the limited PPP funding, at the expense of “mom and pop” small businesses. The situation has caused continued economic distress and a political uproar, as those smaller businesses, considered by many to be the backbone of our nation, were unable to secure the desperately needed financial lifeline.

    The PPP will work the same as previously, providing loans that are potentially 100% forgivable if used for payment and other basic expenses such as rent, mortgage or utilities, in the 8-week period following loan funding. It is worth noting that while these loans have been highly attractive because they could be completely forgiven, some financial advisors are urging care spending down all of the funding in that it is possible that the lender could later decide that not all of the spending complied with the forgiveness requirements and that it may be important for some small businesses to maintain cash on hand to meet future needs. The PPP loans carry only 1% interest and repayment is deferred for six months. Companies are advised to confer with their accountants and financial planners regarding cash flow and financial needs.

    The new legislation set aside $60 billion for community-based lenders, small banks and credit unions. The intent is to assist businesses, shut out of the first round of funding, that do not have relationships with big banks.

    It is anticipated that due to the enormous number of businesses that are still in need of assistance, this new round of funding will quickly be disbursed, perhaps in as little as 24 hours.

    The bill also contains an additional $60 million for the Economic Industry Disaster Loan (EIDL) program. The EIDL is a U.S. Small Business Administration disaster loan program that is available in states that are declared disaster areas, usually as a result of natural disasters such as hurricanes and earthquakes. In response the global pandemic, for the first time in history, all 50 states have been declared disaster areas at the same time. These loans are available for up to $2 million at a 3.75% interest rate. EIDL applicants who have less than 500 employees are eligible for a one-time $10,000 federal grant for immediate relief for payroll, rent and mortgage. Grant recipients can also receive PPP loans but up to $10,000 will be deducted from the forgivable portion of the PPP loan.

    Congress is already in negotiations on a fourth coronavirus relief bill as the legislation passed on Thursday did not address shortfalls being faced by state and local governments. Also, as businesses in some of the harder hit areas may remain shuttered for longer than the eight-week time frame anticipated by the PPP, further assistance may need to be contemplated.