Small business relief resources are here to help fabricators and manufacturers during the Coronavirus outbreak
By Kaylee Swearingen, Marketing Manager at Mazak Optonics Corp.
Fabricators and manufacturers are part of the Coronavirus frontline. We are being called on to be part of the solution and to help during this time. By manufacturing PPE and medical equipment to arm our healthcare workers but also, to help make daily life continue. This is essential.
But maybe money and resources are tight, or your fabrication operations are not considered essential. Relief for fabricators from COVID-19 comes in many forms by offering clear guidance from the Center for Disease Control along with multiple federal government acts.
As the Coronavirus continues to change, so do the recommendations and relief offerings. Below are the current COVID-19 relief offerings available to fabricators, manufacturers and small businesses.
Clear Guidance from the Center for Disease Control and Prevention (CDC)
The CDC has created clear interim health guidelines for businesses to plan and respond to COVID-19. The guidance is grouped into three areas: reducing transmission among employees, maintaining healthy business operations, and maintaining a healthy work environment.
Reducing the transmission among employees, employers need to:
- Actively encourage sick employees to stay home
- Identify where and how workers might be exposed at work
- Separate and send home sick employees
- Educate employees about how to reduce the spread of the virus
Maintaining healthy business operations is a must for companies that are deemed essential and can continue working. The CDC recommends:
- Implementing flexible sick leave and supportive policies and practices
- Assess your essential functions
- Determine how you will operate if absenteeism increases
- Establishing policies and practices for social distancing
While being operational, it is also necessary to maintain a healthy work environment:
- Consider improving the building ventilation system
- Support respiratory etiquette and hand hygiene for anyone onsite
- Perform routine environmental cleaning and disinfection (especially if an onsite person is suspected or confirmed to have COVID-19)
- Advise employees before traveling to take additional preparations
- Consider how to attend meetings and gatherings
As COVID-19 information continues, check the CDC website regarding updates to their planning, preparation and responding to Coronavirus Disease.
Families First Coronavirus Response Act (FFCRA)
This legislation benefits workers and employers. For American private employers that have fewer than 500 employees, the FFCRA offers tax credits for the cost of providing employees with paid sick leave and paid extended family and medical leave taken for specific reasons related to COVID-19.
The specifics of who qualifies and why can be found here:
Coronavirus Aid, Relief and Economic Security (CARES) Act
At $2 trillion, the CARES Act is a comprehensive rescue relief package that was unanimously passed by Senate leaders. It is not a long-term stimulus package but rather a short-term emergency relief package to help workers and businesses get the funds they need right now.
The CARES Act contains $376 billion in relief for American workers and small businesses to weather the COVID-19 crisis. While there is much more to the CARES Act, here are some of the initiatives that may help fabricators, manufacturers and other small businesses.
Paycheck Protection Program (PPP)
This loan is designed to provide small businesses with a direct incentive to maintain workers on the payroll. Loan payments will be deferred for six months. The SBA will forgive loans if the company maintains all employees on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. As of April 3, 2020, lenders can begin processing loan applications. The program will be available through June 30, 2020. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
There was an additional round of PPP loans approved by the federal government. The SBA has guaranteed an additional 2,571,167 loans. In total, the SBA guaranteed 4,426,118 Paycheck Protection Program loans through May 23, 2020.
Employee Retention Credit (ERC)
This is a fully refundable tax credit for employers equal to 50 percent of qualified wages that keep employees on their payroll, despite experiencing economic hardships related to COVID-19. This ERC applies to qualified wages paid after March 12, 2020, and before January 1, 2021. The maximum amount of qualified wages considered with respect to each employee for all calendar quarters is $10,000 so that the maximum credit for an Eligible Employer for qualified wages paid to any employee is $5,000. Employers who are eligible for ERC are those that carry on a trade or business during the calendar year that either:
- Fully or partially suspend operation during any calendar quarter in 2020 due to governmental authority limiting commerce, travel, or group meetings due to COVID-19; or
- Experience a significant decline in gross receipts during the calendar quarter
SBA Debt Relief
If you are a small business owner participating in 7(a), Community Advantage, 504, or microloan programs you are eligible for forgiveness of loan payments for these SBA loans. Once implemented, you will not have to make your next six months of loan payments. These payments will never have to be repaid. This is also applied to new borrows.
Expanded Economic Injury Disaster Loans (EIDL) and Emergency Advance
The SBA offers designated states and territories low-interest federal disaster loans for small businesses suffering economically as a result of Coronavirus. The EIDL offers up to $2 million in assistance. Upon a request received from a state’s or territory’s Governor, the SBA will issue under its own authority, an Economic Injury Disaster Loan declaration.
But through the CARES Act, the EIDL has expanded and created an emergency grant of up to $10,000 that provides economic relief to businesses that are currently experiencing a temporary loss of revenue. This loan advance will not have to be repaid and funds are made available within three days following a successful application. Any small business with less than 500 employees affected by COVID-19 is eligible for this program. There are exceptions for small businesses with more than 500 employees that meet the size standards by the SBA.
Currently, SBA not accepting anymore applicants. We are waiting to see if Congress will replenish this program.
SBA Express Bridge Loans
This enables small businesses to access up to $25,000 if there is a current business relationship with an SBA Express Lender. These loans can help support small businesses to overcome the temporary loss of revenue and can be term loans or used to bridge the gap while applying for a direct SBA EIDL.
Individual Recovery Rebates
One of the most noteworthy aspects of the CARES Act is the individual payments that are being sent to Americans. Individuals making up to $75,000 and couples making up to $150,000 will receive direct payments of $1,200 each. It will also provide $500 per child. Individuals making more than those thresholds will see $5 deducted for every $100 of income.
This helps both employees and business owners alike. American workers who receive IRS tax refunds through direct deposit and who filed a 2018 or 2019 tax return should see their deposits in the next few weeks.
There are so many different aspects to the CARES Act but there are two more aspects for manufacturers and fabricators to know.
The act also allows businesses to defer employer payroll taxes until the end of this year, with half of it due at the end of 2021 and the other half at the end of 2022.
It also temporarily increases allowable interest deductions from 30 percent to 50 percent of EBITDA for 2019 and 2020, helping to provide critical liquidity for businesses.
Relief at the State Level
There are a variety of resources available at the state level to assist small businesses during the Coronavirus pandemic.
For example, Illinois has the Illinois Emergency Small Business Grants and Loans Assistance and State Treasurer’s Small Business COVID-19 Relief Program. Some cities may also have relief assistance. The city of Chicago is also offering help to small businesses that are suffering during COVD-19.
Here is a source you can reference to see what is available in your state:
Be sure to consult an accountant regarding your options before making any major decisions regarding these resources.
In closing, American manufacturers are mobilizing to protect our communities and our country. These government actions will enable our businesses to respond most effectively. With hopes that the Coronavirus is an economic “v shape”, it is expected that there will be pent up demand and a resurgence of production, hiring, etc.
Stay home and stay healthy.