PPP Flexibility Act and HR Best Practices as Employees

Return to Work

Tom MazurekPartnerTronconi Segarra & Associates

Chuck PezzinoPartnerTronconi Segarra & Associates

Liz WarrenEVP & Chief People OfficerEmployer Services Corporation

June 18, 2020

SBA Loan Approvals

Summary of PPP and EIDL Loan Approvals

Paycheck Protection Program (thru June 16, 2020)

• Over 75,000 new PPP loans for almost $1.7 billion have been approved since the PPP Flexibility Act was signed into law on June 5.

Economic Injury Disaster Loans (thru June 12, 2020)

• SBA has also disbursed 3,245,006 EIDL Advances amounting to over $10.7 billion.

• On June 15, SBA began accepting applications for new EIDL loans and EIDL Advances from qualified small businesses and U.S. agricultural businesses.

Approved Loans Approved Dollars

4,607,098 $513,046,529,867

Approved Loans Approved Dollars

1,332,955 $90,928,747,622

Paycheck Protection Program

Paycheck Protection Program Flexibility Act

• Bipartisan legislation signed into law by the President on June 5, 2020.

• The Flexibility Act makes the following revisions to the PPP:

• The last day on which a PPP loan application can be approved is June 30, 2020.

• For loans made before June 5, 2020, the maturity is two years; however, borrowers and lenders may mutually agree to extend the maturity of such loans to five years. For loans made on or after June 5, the maturity is five years.

• Amends the definition of “covered period” to mean the period beginning on February 15, 2020 and ending on December 31, 2020.

• For loan forgiveness purposes, the covered period now means the period beginning on the date of origination of a covered loan and ending the earlier of 24 weeks after the date of origination or December 31, 2020. An eligible borrower whose loan was made before June 5, 2020 may elect to apply the original 8-week covered period under the CARES Act instead of the 24-week covered period referenced above.

Paycheck Protection Program

Paycheck Protection Program Flexibility Act

• Loan forgiveness shall be determined without regard to a proportional reduction in the number of FTE employees if the borrower, in good faith:

• is able to document (i) an inability to rehire individuals who were employees of the eligible recipient on February 15, 2020; and (ii) an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020; or

• is able to document an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with Federal government safety or health requirements during the period beginning on March 1 to December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.

Paycheck Protection Program

Paycheck Protection Program Flexibility Act

• A borrower needs to use at least 60% of their covered loan amount for payroll costs, and may use up to 40% of such amount for any payment of eligible non-payroll costs. If a borrower uses only 59% of its loan for payroll costs, it will not receive the full amount of loan forgiveness it might otherwise be eligible to receive. Instead, the borrower will receive partial loan forgiveness, based on the requirement that 60% of the forgiveness amount must be attributable to payroll costs.

• A borrower who submits their loan forgiveness application within 10 months after the end of the covered period, will not have to make any payments of principal or interest on their loan before the date on which SBA remits the loan forgiveness amount to their lender. If a borrower does not submit their loan forgiveness application within 10 months after the end of the covered period, the borrower must begin paying principal and interest after that period.

• A borrower can continue to defer the payment of the 6.2% employer portion of the social security tax after their PPP loan is forgiven.

Main Street Lending Program

Main Street Lending Program - Expanded and Ready to Launch

• On June 8, 2020, the Federal Reserve Board expanded the Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support.

• The Federal Reserve Board made the following changes:

• Lowered the minimum loan size for certain loans to $250,000 from $500,000;• Increased the maximum loan size for all facilities;• Increased the term of each loan option to five years, from four years;• Extended the repayment period for all loans by delaying principal payments for two

years, rather than one; and• Raised the Reserve Bank’s participation to 95% for all loans.

• On June 15, 2020, the Federal Reserve Bank of Boston opened the Main Street Lending Program for lender registration. Lenders can find the necessary registration documents on the program site and are encouraged to begin making Main Street program loans immediately.

• The Federal Reserve Board also announced on Monday that it will be seeking public feedback on a proposal to expand its Main Street Lending Program to provide access to credit for small and medium-sized 501(c)(3) and (c)(19) non-profit organizations.

Main Street Lending Program

Visit our Main Street Lending Program webpage for additional information resources.https://www.tsacpa.com/coronavirus-covid-19-resource-center/main-street-lending-program/

Available Relief Options

PPP

EligibilitySmall businesses,

certain nonprofits or tribal business with

less than 500 employees or that

meet SBA size standards, sole

proprietors, independent

contractors, self-employed individuals

TermsLoans are forgivable if used for at least 60% payroll costs and up-to-40% eligible non-payroll costs during

up-to-24 week covered period

Benefit2.5x average monthly

payroll up to $10M

RestrictionsForgiveness subject to FTE employee & salary

reductions

Amounts not forgiven convert to 2 or 5 year

term loans with 1% interest

EIDL

EligibilitySmall businesses & nonprofits that are

suffering “substantial economic injury” as a

result of COVID-19

Terms• Loans capped at

$150K• Up-to-30 year term• Interest of 3.75%

for businesses; 2.75% for NFPs

• First payment deferred one year

BenefitLoans may be used to

pay debts, payroll, accounts payable & other bills that can’t

be paid because of the disaster’s impact, that

are not already covered by a PPP loan

May request an EIDL Advance of up to

$10,000 ($1,000 per employee) that does not have to be repaid

even if loan is not approved

Main Street Lending

EligibilityBusinesses with up to 15,000 employees or

up to $5 billion in 2019 annual revenue and

significant operations or majority of

employees in the U.S.

Terms• 5-year loan term• Interest of LIBOR +

300 basis points• Principal payments

deferred for 2 years & interest payments deferred for 1 year

Loan AmountMSNLF min. $250K MSPLF min. $250KMSELF min. $10M

RestrictionsLoans are not

forgivable

Make commercially reasonable effort to maintain payroll &

employees

Other covenants & restrictions apply

Payroll Tax Deferral

EligibilityAll businesses

regardless of their size (Incl. self-employed

individuals)

BenefitDefer payment of the employer share (6.2%) of Social Security tax from 3/27/20 thru

12/31/20

Repayment Deferred amount paid

in two equal installments:

50% by 12/31/2150% by 12/31/22

RestrictionsPPP Flexibility Act now

allows borrowers to continue deferring Social Security tax after PPP loan is

forgiven

Employee Retention Credit

EligibilityEligible businesses

that fully or partially suspended operations due to gov’t COVID-19 order or experienced significant decline (at

least 50%) in gross receipts compared to same quarter in 2019

BenefitFully refundable tax

credit equal to 50% of qualified wages (up- to

$10,000 per employee)

RestrictionsUnder 100 employees:

Wages paid to any employee

Over 100 employees:Only wages paid to

employees not providing services

A business cannot receive a PPP loan &

use Employee Retention Credit

SBA Loan Programs

ProgramsSBA loan programs

include:Basic 7(a) loans

(standard, small loans, SBA Express, SBA

Express Bridge Loan, SBA Veteran’s

Advantage), 504 loans, Microloans

TermsLoan amounts &

repayment terms vary depending on loan

type (see SBA website or eligible lender for

more info.)

BenefitSBA will pay 6 months of principal, interest &

any associated fees related to new 7(a), 504, and Microloans

disbursed prior to 9/27/20

SAFETY PLAN NARRATIVE

HEALTH AND SAFETY POLICY

RISK MANAGEMENT ASSESSMENT

SAFETY DATA SHEETS

EMPLOYEE RETURN PLAN

COMMUNICATION PLAN

SCREENING FORMS OTHER FORMS

Safety Plan

Handling Illness

Screening (Employees and Visitors)

General Hygiene

Avoiding Exposures at

WorkAbsenteeism

Social Distancing

Additional Resources

TravelWho to contact

Safety Policy

Screening

Handling a Positive COVID-19 Result

Employees Who Refuse to Return

Policies to Consider

Navigating the “New Normal”

Culture Implications: Conflict

• Passed by House, expected to be reviewed by the Senate this summer• The bill passed the House by only 9 votes• Highly unlikely to be passed as is by the Senate, negotiation is expected • The President has said he won’t sign it. Some of the difference in philosophy

between the parties are based on the Republican belief that this bill as the Democrats passed it focuses too much on assistance to states and localities

• Republicans want business liability relief included in any bill they pass

• The Bill includes:• HAZARD pay

• Given to a wide variety of “essential” workers, including doctors, nurses and other frontline medical personnel, police officers, firefighters, social workers, grocery clerks, postal workers, and childcare and cafeteria workers.

• A $13-an-hour raise paid until workers receive a total of $10,000 if their regular pay is less than $200,000 per year. Or up to $5,000 total if they make more than $200,000 a year.

• Paid for 60 days after the pandemic ends if the $10,000 or $5,000 totals aren’t reached first.

• Distributed by employers, who will apply to the government for hazard pay, add it to their workers’ paychecks, deduct payroll taxes from all hazard payments.

• Expansion of the unemployment from the CARES Act, including the extra $600 weekly federal unemployment benefit, through January 31, 2021 For those already receiving federal pandemic unemployment compensation, payments could be extended into March 2021 (minus the $600)

HEROES Act: Update

• Other things in the bill that will most likely be negotiated:• Student loan debt collections stopped for an additional year• Mortgage relief• Rental Assistance• 2nd stimulus check to individuals up to $6,000 for a family

• Additional enrollment period for health insurance under the ACA exchanges for uninsured

• Expands the CARES Act’s employee retention tax credit, increasing the credit from 50% to 80% of qualified wages and increasing the employee wage limit from $10,000 per year to $15,000 per quarter

• Requires the Occupational Safety and Health Administration to require all workplaces to implement infection control plans

• $3.1 billion for workforce training at the Department of Labor

HEROES Act: Update

For additional questions and information:

Tronconi Segarra & Associates716.633.1373www.tsacpa.com

Visit our COVID-19 Resource Center:https://www.tsacpa.com/coronavirus-covid-19-resource-center/

Email our Response Team: covid19team@tsacpa.com

For additional questions and information:

Employer Services Corporation716.691.4455https://myesc.com/

Coronavirus Resources:https://myesc.com/category/news-events/coronavirus-update/

Contact: Rachael Brownrbrown@myesc.com

Contact Tronconi Segarra Contact ESC

Thank You