In our last Coronavirus update on March 17, we provided early information on employee furloughs, unemployment qualifications, small business loans and the like. Obviously, the illness has run rampant since and Massachusetts is now under a business shutdown order through May 4 at least. There now exist many more governmental assistance programs than existed just two weeks ago. Here’s a rundown on the new lay of the land, as it were, for small companies operating in Massachusetts and elsewhere across the U.S.
Governor Charlie Baker’s March 23, 2020 order that all non-essential businesses close their doors came with a long list of exceptions. Companies that operate in the healthcare, public safety, and food industries, e.g., can remain open, as can companies that support them. Because civil penalties and even criminal sanctions can be leveled against violators of the order, all companies that remain open should ensure they fit within one of the Governor’s exceptions. For more information, click here.
Companies that remain open must now deal with mandated federal benefits to employees under the Families First Coronavirus Response Act, signed by President Trump on March 19. It requires payment of two weeks of sick leave for employees who suffer Coronavirus symptoms, are quarantined, or must stay home to care for a child whose school is closed. The leave is in addition to any sick leave available under Massachusetts law. Rates vary and can be at a workers’ regular rate or 2/3 of that depending on the purpose it is used for. Families First also requires granting up to 12 weeks of leave to employees caring for children under 18 who are home from school. The payments in each category are capped on a weekly basis and are recoverable by employers through Social Security tax credits. Those, of course, get credited only later, when employee tax filings are made.
Unemployment pay for workers who are furloughed due to the Coronavirus remains available through the Massachusetts Department of Unemployment Assistance. Under the recently enacted CARES Act at the federal level, the amount and duration of benefits was broadly expanded, as was eligibility. Employees who cannot work due to the virus should apply for benefits online. Click here for information and to access the application link.
On March 31, the U.S. Department of the Treasury issued information on the Small Business Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. The PPP is intended to provide short term loans to small businesses (under 500 employees) affected by the current pandemic. Click here for a summary of PPP features. The link to information for Borrowers is particularly helpful. PPP loans can only be issued by existing SBA lenders (typically federal banks and credit unions), and it is recommended that you contact your current banker before seeking assistance elsewhere. Applications will be accepted starting April 3, 2020. See the Treasury summaries for details and important limitations, but generally certain loan proceeds can be forgiven if used for payroll and rent, and employees are kept on payroll or rehired soon. The PPP loans are for a two-year term and provide a 0.5% fixed interest rate with payments deferred for six months.
For immediate relief, the SBA also has emergency loans/grants in the amount of $10,000. The funds should be provided to the business within three days of applying for an economic injury disaster loan. The applicant must provide a self-certification that it is an eligible entity to apply. Even if applicants are later not approved for an economic injury disaster loan they are not required to repay this advance payment, provided that the grant must be used for allowable purposes, including payroll, sick leave, rent or mortgage, or other obligations that cannot be met due to the crisis. Click here to find the application.
For help on employee-related issues, please contact Jack Merrill at 781-418-5116 or jmerrill@ksrlawfirm.com. For information and help on SBA and other loan programs, contact Lloyd Sanders at 781-418-5121 or lsanders@ksrlawfirm.com. We hope this information is helpful and are available, as always, to answer any questions you may have.
