Our thoughts are with all who have been impacted by the recent outbreak of COVID-19. As business owners and leaders, it is important to remain informed and prepared as this outbreak continues to impact our local and global communities.
Recommended Strategies for the Workplace:
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Create plans to communicate with your staff, and volunteers
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Learn about plans in place in each community where you have a business
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Be prepared to modify, postpone, or cancel large conferences or events
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Allow staff to stay home if someone in their house is sick or school closures have occurred
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Consider accommodations such as telecommuting and staggered shifts to protect employees who are at higher risk for adverse health complications
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Provide tissues, no-touch disposal receptacles, soap and water, alcohol-based hand rubs, and/or disposable disinfecting wipes for employee use
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Cross-train personnel to perform essential business functions in the event of increased numbers of employee absences
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Do not require a healthcare provider’s note for employees or volunteers who are sick with acute respiratory illness to validate their illness or to return to work, as healthcare providers may be extremely busy and not able to provide such documentation in a timely way
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Plan to minimize exposure between employees and also between employees and the public, if public health officials call for social distancing
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Review human resources policies to make sure that policies and practices are consistent with public health recommendations and are consistent with existing state and federal workplace laws
COVID-19 LOAN RESOURCES
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The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (PPP), the initiative provides 100% federally guaranteed loans to small businesses. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
The administration has released initial guidelines; they are available at www.treasury.gov. The U.S. Chamber of Commerce has issued this guide to help small businesses and self-employed individuals check eligibility and prepare to file for a loan.
Small businesses and sole proprietors can begin applying on April 3. Independent contractors and self-employed individuals can apply beginning on April 10.
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You are eligible if you are:
• A small business with fewer than 500 employees
• A small business that otherwise meets the SBA’s size standard
• A 501(c)(3) with fewer than 500 employees
• An individual who operates as a sole proprietor
• An individual who operates as an independent contractor
• An individual who is self-employed who regularly carries on any trade or business
• A Tribal business concern that meets the SBA size standard
• A 501(c)(19) Veterans Organization that meets the SBA size standard
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Lenders will be looking for:
Borrowers will need to complete the Paycheck Protection Loan Application (which is available HERE) and payroll documentation
Lenders will also ask you for a good faith certification that:
1. The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations
2. The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments
3. Borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for here
4. From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here (Note: There is an opportunity to fold emergency loans made between Jan. 31, 2020 and the date this loan program becomes available into a new loan)
If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents
(final requirements will be announced by the government) such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.
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Calculation Payroll Costs:
INCLUDED Payroll Cost:
1. For Employers: The sum of payments of any compensation with
respect to employees that is a:
• salary, wage, commission, or similar compensation;
• payment of cash tip or equivalent;
• payment for vacation, parental, family, medical, or sick leave
• allowance for dismissal or separation
• payment required for the provisions of group health care benefits,
including insurance premiums
• payment of any retirement benefit
• payment of state or local tax assessed on the compensation
of the employee
2. For Sole Proprietors, Independent Contractors, and Self-Employed Individuals: The sum of payments of any compensation of income of a sole proprietor or independent contractor that is wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than$100,000 in one year, as pro-rated for the covered period.
EXCLUDED Payroll Cost:
1. Compensation of an individual employee in excess of an annual salary
of $100,000, as prorated for the period February 15, to June 30, 2020
2. Payroll taxes, railroad retirement taxes, and income taxes
3. Any compensation of an employee whose principal place of residence is outside of the United States
4. Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act
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Will Loans Be Forgiven?
How Much?
A borrower is eligible for loan forgiveness equal to the amount the borrower spent on the following items during the 8-week period beginning on the date of the origination of the loan:
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Payroll costs (using the same definition of payroll costs used to determine loan eligibility)
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Interest on the mortgage obligation incurred in the ordinary course of business
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Rent on a leasing agreement
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Payments on utilities (electricity, gas, water, transportation, telephone, or internet)
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For borrowers with tipped employees, additional wages paid to those employees
NOTE: The government is now advising that because of high participation, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. The loan forgiveness cannot exceed the principal.
How could the forgiveness be reduced?
The amount of loan forgiveness calculated above is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Specifically, reduction based on reduction of number of employees
SBA - Small Business Administration Expert Bookkeeper
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In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.
The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. This loan advance will not have to be repaid.
Up to 30 years loan with fixed interest rate: 3.75% for business, and 2.75% for nonprofits
To apply for a COVID-19 Economic Injury Disaster Loan
To apply for a disaster loan unrelated to COVID-19
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What qualifies a small business loan?
Your business size is determined by the SBA by NAICS code
Refer to the Electronic Code of Federal Regulations
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Will personal guarantees be required?
Personal guarantees are required if requesting $25,000 of financing or more (as of 3/22/2020)
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What can these loans be used for?
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These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact
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The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere may not be eligible for these or may obtain these loans a higher interest rate. The interest rate for non-profits is 2.75%
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PPP (Paycheck Protection Program)
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Lesser of $10,000,000 or
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Average total payments of applicant for "payroll costs" incurred during one-year period before the date on which the loan is made* multiplied by 2.5
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If not in business during February 15, 2019 - June 30, 2019, then use average total monthly payments of applicant for "payroll costs" incurred during January 1, 2020 - February 20, 2020 multiplied by 2.5
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Maximum Loan Amount
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How to Use It?
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Payroll costs
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Continuation of group health benefits during periods of sick, medical, or family leave & insurance premiums
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Employee salaries, commissions, or similar compensations
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Payments of interest on any mortgage debts (excludes prepayment of principal)
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Rent
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Utilities
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Interest on other debt obligations that were ordered before the covered period
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Allowable Use of PPP Loan
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Applicants are required to make good faith certifications to SBA lender
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Uncertainty of current economic conditions makes necessary loan the loan request to support operations
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Does not have another application pending for PPP loan or previously received a PPP loan
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Acknowledging that funds will be used to retain workers/maintain payroll or make mortgage payments, lease payments, and utility payments
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If funds are used for unauthorized purposes, the federal government may pursue criminal fraud charges
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Paycheck Protection Loan Forgiveness
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For PPP's covered costs incurred & payments made during eight-week period starting on day of loan origination to only include
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Payroll costs
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Interest on covered mortgage obligations
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Payments of covered rent obligation
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Payment of covered utility payment
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Forgiveness shall not exceed principal
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Amounts shall be considered canceled indebtedness buy not taxable
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Requires submission of appropriate documentation to lenders
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PPP Loan Overview
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Temporary expansion of existing program sunder section 7(b) of Small Business Act
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Forgiveness eligibility
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Definitions are critically important
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Covered period for loan: February 15, 2020 - June 30, 2020
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Covered period for potential debt forgiveness: eight-week period from the loan origination
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Covered loan: PPP loan made during the covered period
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Employee definition: full-time, part-time or other basis
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Payroll Costs defined - includes:
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Employers
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Salary, wage, commission, or similar compensation
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Payment of cash tips or equivalent
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Payment of vacation, parental, family, medical, or sick-leave
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Allowance for dismissal or separation
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Payment required for the provision of group health care benefits including insurance premiums
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Payment of any retirement benefit
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Payment of state or local tax assessed on the compensation of employees
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Sole proprietor, independent contractor
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Sum of payments of any compensation to (or income of) a sole proprietor or independent contractor that is a wage, income, net earnings from self-employment or similar compensation not more than $100,000/annually (as prorated for the covered period)
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Payroll Costs defined - excludes:
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Annual compensation of individual employee exceeds $100,000 (prorated for covered period)
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Payroll taxes, railroad retirement tax, federal tax withholding
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Compensation of an employee with principal place of residence outside of U.S.
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Qualified sick-leave under Families First Act
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Qualified family-leave under Families First Act
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Eligibility:
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In addition to any small business concern, any business, nonprofit organization, veterans organization or tribal business concern if they employ not more than the greater 500 employees or the SBA size standard by industry (loans start April 3, 2020)
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Sole proprietors, 1099 contractors & eligible self-employed (starts April 10, 2020)
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SBA - Approved lending institution will require to confirm if
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In business on February 15, 2020
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Business had employees with whom applicant paid salaries & payroll taxes or
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Paid independent contractors as reported on 1099-Misc
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Less than 501 employees per location for
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NAICS starting with "72" e.g. hospitality, restaurants, other
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Waiver of affiliation rules (Section 121.103 of Title 13) will only apply to:
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Business concerns starting with NAICS of "72" of not more than 500 employees
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Business concerns operation as a franchise assigned a franchise ID code by SBA
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Business concerns that received financial assistance from a company licensed by under Section 301 of Small Business Investment Act
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Affiliation rules (Section 121.103 of Title 13) do not apply to:
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Nonprofit organizations & veterans organizations, these apply in the same manner as Small Business concerns
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Payroll Tax Credits
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Families First Coronavirus Response Act
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CARES Act
COVID-19 BUSINESS STRATEGIES
EXpert Bookkeeper
WHAT TO DO ASAP?
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Stay informed to protect your health and the health of your community
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Trusted resources
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County of Santa Barbara
https://publichealthsbc.org -
County of Ventura
https://www.ventura.org/covid19/ -
California Governor’s Office of Business and Economic Development
https://business.ca.gov/coronavirus-2019/ -
California Department of Public Health
https://www.cdph.ca.gov/ -
Centers for Disease Control and Prevention
https://www.cdc.gov/coronavirus/2019-ncov/index.html
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Protect your business
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Contact your insurance provider
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Supplemental coverage for any loss income or sales
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Track Losses
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Review any performance-based contracts with Suppliers or Customers
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Experiencing any disruption or concern in the following areas
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Supply chain disruption and liability
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Questions or concerns about implications of tariffs
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Technology plans for setting up remote work stations for employees
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Concerns about cash flow during disruption
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Concerns about credit and finance issues
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Concerns about force majeure
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Recommendations for employers to take now
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Visit the CDC website for further information
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CASH FLOW PLANNING
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Construct a 13-week cash flow projection to identify critical liquidity gaps
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Develop a customer plan to protect & serve customers to reduce collection risks
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Formulate a vendor payment plan to protect the supply chain & minimize cash flows
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Create an employee plan to protect critical employee resources
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Manage inventory to identify potential opportunities in every dollar of your balance sheet
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Contact your Bank for SBA loans!
ASSUMPTIONS TO CONSIDER
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Customer payment plans, reassessing credit limits & collection sensitivity
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Vendor payment plan - critical and noncritical vendors for transparency
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Employee model, measure costs per FTE, including sensitivity to changes in headcount
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Manage inventory to identify potential opportunities in every dollar of your balance sheet
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Forecast income statement, monthly balance sheet & net working capital requirements
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Talk to your lender
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Consider applying for an Economic Injury Disaster Loan Program (IDLE) directly from SBA
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Analyze & consider applying for Paycheck Protection Program Loans through an SBA-approved lender versus employee retention credit
Your efforts should be concentrated around controlling the cash burn rate to bridge the short-term storm (<3 months) to the long-term future steady state!
Santa Barbara County Public Health Department
STAY AT HOME EXECUTIVE ORDER
On Thursday, March 19, 2020, California Governor Gavin Newsom ordered all individuals living in the State of California to stay home or at their place of residence, except as needed to maintain operations of the 16 federal critical infrastructure sectors. The Stay at Home Executive Order is an effort to preserve the public health and safety and to ensure the healthcare delivery system is capable of serving all while prioritizing those at the highest risk and vulnerability.
Californians working in these critical sectors may continue their work due to the importance of these sectors to California’s health and well-being while those who work in “non-essential” sectors should stay home.
Essential services to remain open include:
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Gas stations
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Pharmacies
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Grocery stores
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Farmers markets
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Food banks
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Convenience stores
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Takeout and delivery at food serving facilities, such as restaurants
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Banks
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Laundromats/laundry facilities
WORKPLACE HEALTH HYGIENE
Employers: Actively encourage sick employees to stay home:
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Employees who have symptoms of acute respiratory illness are recommended to stay home and not come to work until they are free of fever (100.4° F [37.8° C] or greater using an oral thermometer), signs of a fever, and any other symptoms for at least 24 hours, without the use of fever-reducing or other symptom-altering medicines (e.g. cough suppressants). Employees should notify their supervisor and stay home if they are sick.
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Ensure that your sick leave policies are flexible and consistent with public health guidance and that employees are aware of these policies.
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Talk with companies that provide your business with contract or temporary employees about the importance of sick employees staying home and encourage them to develop non-punitive leave policies.
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Do not require a healthcare provider’s note for employees who are sick with acute respiratory illness to validate their illness or to return to work, as healthcare provider offices and medical facilities may be extremely busy and not able to provide such documentation in a timely way.
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Employers should maintain flexible policies that permit employees to stay home to care for a sick family member. Employers should be aware that more employees may need to stay at home to care for sick children or other sick family members than is usual.
Separate sick employees:
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CDC recommends that employees who appear to have acute respiratory illness symptoms (i.e. cough, shortness of breath) upon arrival to work or become sick during the day should be separated from other employees and be sent home immediately. Sick employees should cover their noses and mouths with a tissue when coughing or sneezing (or an elbow or shoulder if no tissue is available).
Emphasize staying home when sick, respiratory etiquette and hand hygiene by all employees:
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Place posters that encourage staying home when sick, cough and sneeze etiquette, and hand hygiene at the entrance to your workplace and in other workplace areas where they are likely to be seen.
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Provide tissues and no-touch disposal receptacles for use by employees.
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Instruct employees to clean their hands often with an alcohol-based hand sanitizer that contains at least 60-95% alcohol, or wash their hands with soap and water for at least 20 seconds. Soap and water should be used preferentially if hands are visibly dirty.
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Provide soap and water and alcohol-based hand rubs in the workplace. Ensure that adequate supplies are maintained. Place hand rubs in multiple locations or in conference rooms to encourage hand hygiene.
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Visit the coughing and sneezing etiquette and clean hands webpage for more information.
Perform routine environmental cleaning:
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Routinely clean all frequently touched surfaces in the workplace, such as workstations, countertops, and doorknobs. Use the cleaning agents that are usually used in these areas and follow the directions on the label.
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No additional disinfection beyond routine cleaning is recommended at this time.
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Provide disposable wipes so that commonly used surfaces (for example, doorknobs, keyboards, remote controls, desks) can be wiped down by employees before each use.
Advise employees before traveling to take certain steps:
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Check the CDC’s Traveler’s Health Notices for the latest guidance and recommendations for each country to which you will travel. Specific travel information for travelers going to and returning from China, and information for aircrew, can be found at on the CDC website.
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Advise employees to check themselves for symptoms of acute respiratory illness before starting travel and notify their supervisor and stay home if they are sick.
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Ensure employees who become sick while traveling or on temporary assignment understand that they should notify their supervisor and should promptly call a healthcare provider for advice if needed.
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If outside the United States, sick employees should follow your company’s policy for obtaining medical care or contact a healthcare provider or overseas medical assistance company to assist them with finding an appropriate healthcare provider in that country. A U.S. consular officer can help locate healthcare services. However, U.S. embassies, consulates, and military facilities do not have the legal authority, capability, and resources to evacuate or give medicines, vaccines, or medical care to private U.S. citizens overseas.
Additional Measures in Response to Currently Occurring Sporadic Importations of the COVID-19:
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Employees who are well but who have a sick family member at home with COVID-19 should notify their supervisor and refer to CDC guidance for how to conduct a risk assessment of their potential exposure.
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If an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure to COVID-19 in the workplace but maintain confidentiality as required by the Americans with Disabilities Act (ADA). Employees exposed to a co-worker with confirmed COVID-19 should refer to CDC guidance for how to conduct a risk assessment of their potential exposure.
Warren's Channel
Warren Vega, CEO, Expert Bookkeeper, Santa Barbara, Santa Maria, Santa Ynez, Solvang, Pismo Beach, and SLO, Coronavirus, 805Bookkeeper, Accounting, Tax Preparation, Start-up, Business, Nonprofit, QuickBooks, QB, Pro Advisor, 805, Central Coast, Xpert, Book keeper, CPA, Audit, SBA, SBA Loans, Human Resources, PPP Loans, CDPH, SB County, Consultant, SBA Santa Barbara, SBA Santa Maria, EIDL, Economic Injury Disaster Loans, 805, Paycheck Protection Program, Business Strategies, Expert Bookkeeper, COVID19, Coronavirus Loan Resources, Goleta, Warren Vega, 805 Bookkeeper, Small Business Loans