COVID-19 Financial Advisory
Wednesday, March 25, 2020
The COVID-19 pandemic has impacted many people financially, including many of our members' practices. Below are resources and news on recent legislation, actions to take now, and assistance programs available in your area.
Families First Coronavirus Response Act
The Families First Coronavirus Response Act was signed into law, which requires employers to provide employees with paid FMLA and sick time under certain circumstances.
Both new Sick and FMLA rules:
- Are effective within 15 days.
- Apply to employers with fewer than 500 employees.
- Include exceptions to their respective requirements for:
- An employer of an employee who is a healthcare provider or an emergency responder may elect to exclude those employees
- Two additional exceptions designated in forthcoming regulations under the Department of Labor.
Paid FMLA Leave for Public Health Emergency
- Creates a new category of FMLA-covered leave for up to 12 weeks of job-protected leave for employees unable to work (or telework) due to the need to care for his or her child (under 18 years) if their school or daycare has been closed due to a public health emergency. Leave under this category makes employees eligible.
- Payment during new category of leave:
- The first 10 days of leave is not paid and the employee is allowed to substitute any accrued vacation, personal or medical/sick leave for unpaid leave.
- After the first ten days, the employer must provide the employee no less than two-thirds of the employee's usual pay, capped at $200/day ($10,000 aggregate).
Tax credit for employers: Provides a refundable tax credit equal to 100% of qualified family leave wages paid by an employer for each calendar quarter, capped at $200/day and $10,000 for all calendar quarters.
Emergency Paid Sick Leave
- Covered employers must make up to 80 hours of paid sick leave available for certain coronavirus-related absences, in addition to any current paid time off provided by the employer.
- Reasons for sick leave:
- Employee is subject to federal, state or local quarantine or isolation order
- Employee has be advised by healthcare provider to self-quarantine
- Employee is experiencing COVID-19 symptoms and seeking medical diagnosis
- Employee is caring for individual who is subject to order described in #1 above
- Employee is caring for his or her child if school or place of care is closed due to COVID-19 precautions
- Employee is experiencing nay other substantially similar condition specified by Secretary of Labor
- Payment during sick leave:
- For sick leave under reasons 1-3 (e.g., employee is sick), leave is paid at the employee's regular rate of pay, capped at $511 per day ($5,110 aggregate).
- For sick leave under reasons 4-6 (e.g., employee is caring for someone else), leave is capped at $200/day ($2,00 aggregate).
Federal Income Tax Filing and Payment Deadline Extension
The federal tax return filing deadline is now July 15, 2020. For tax payments of up to $10 million, the IRS has also extended the deadline for both individuals and businesses to July 15, 2020. Estimated tax payments for 2020 originally due on April 15 will now be due on July 15. Check with your state tax agency to find out if your practice has more time to file or more time to pay state and local taxes this year as a result of the coronavirus. Several states have already aligned their tax filing and payment deadlines with the new federal deadline. States also may waive or reduce penalties on late tax payments.
Insurance Coverage Issues
Many practices have business interruption insurance. Now is the time to contact your insurance agent to review your policy to understand precisely what you are and are not covered under COVID-19. Be certain that you review your policy before calling to inquire.
The Secretary of the U.S. Department of Health and Human Services has issued a declaration providing liability protection for certain COVID-19 related activities and medical countermeasures.
The AMA advises that members should immediately examine their budget and operating expenses to ensure ongoing liquidity of your practice in the event of less clinical revenue (e.g., due to cancelled elective surgery; fewer outpatient visits) and whole or partial closure of practice locations. Develop a contingency plan based on estimates of minimum cash flow to stay afloat. Review existing loan documents and financial covenants to determine if a slow-down of business or collections could trigger a default situation.
Proactively communicate with these third parties, such as vendors, landlords and creditors, to discuss reasonable accommodations for cash flow disruptions.
U.S. Small Business Administration
The U.S. Small Business Administration (SBA) has created a relief plan to help small businesses affected by coronavirus through affordable loan options. The disaster assistance loans for small businesses program will offer interest rates of 3.75% for small businesses without credit available elsewhere, and interest rates of 2.75% for nonprofits. The SBA offers long-term repayment options on these loans of up to 30 years. Businesses with credit available elsewhere are not eligible for these loans. To find out if these loan options are available in your region and your business is eligible, visit the disaster loan assistance application page.
Banks Offering Loan Relief
Many banks have offered deferment and forbearance to business loan customers having trouble making payments. Check Forbes' list of banks offering relief. You can also search for your bank on the American Bankers Association's ongoing A-Z list of coronavirus response programs.
State and Local Coronavirus Small Business Assistance
Atlanta: The Atlanta City Council approved Mayor Keisha Lance Bottoms' call for a $7 million coronavirus emergency fund that will allocate $1.5 million to small businesses.
Chicago: Mayor Lori Lightfoot revealed a $100 million Chicago Small Business Resiliency Loan Fund that will provide low-interest loans to the city's struggling small businesses.
Denver: The city's business owners can apply for cash grants up to $7,500 as part of Denver Economic Development and Opportunity's emergency relief program. Denver Mayor Michael Hancock also announced the creation of a $4 million small business relief fund.
Florida: The Florida Small Business Emergency Bridge Loan Program is providing loans up to $50,000 with 1-year terms to small businesses with two to 100 employees.
Iowa: Governor Kim Reynolds announced the creation of an Iowa Small Business Relief Program that will allocate grants ranging from $5,000 to $25,000 as well as tax deferrals.
Los Angeles: The city's Small Business Emergency Microloan Program is offering loans ranging from $5,000 to $20,000 with 0-3% interest rates.
Maryland: The state's Department of Commerce released two initiatives for small businesses: a $50 million Emergency Relief Grant Fund that offers grant amounts up to $10,000 and a $75 million Emergency Relief Loan Fund that will provide businesses with 50 or fewer employees loans up to $50,000.
Massachusetts: Governor Charlie Baker announced a $10 million relief fund for Massachusetts businesses affected by coronavirus. Funds up to $75,000 are immediately available for companies with fewer than 50 full- and part-time employees.
Michigan: The Michigan Economic Development Corp. received approval to implement a Michigan Small Business Relief Program that will allocate $10 million in small business grants and $10 million in small business loans to local business owners.
Minnesota: The state's Department of Employment and Economic Development will be providing interest-free emergency loans ranging from $2,500 to $35,000 to Minnesota-based businesses in need.
New Mexico: The New Mexico Economic Development Department created the COVID-19 Business Loan Guarantee Program to aid small businesses seeking emergency loans or lines of credit. The program can guarantee a portion of a loan or line of credit up to 80% of principal or $50,000.
New York City: The NYC Small Business Services is offering businesses with fewer than five employees grants to cover 40% of payroll costs for two months. Businesses with fewer than 100 employees and sales decreases of 25% or more will be eligible for zero-interest loans up to $75,000.
Philadelphia: The city's COVID-19 Small Business Relief Fund is providing immediate relief to local small businesses in the form of grants and zero-interest loans.
Portland: Small businesses located in Portland's Jade District or Old Town Chinatown are eligible to receive support through the city's $190,000 emergency fund. Asian and Pacific Islander business owners will be prioritized.
Rhode Island: Governor Gina Raimondo partnered with Microsoft to provide web-based Microsoft Office applications to Rhode Island small businesses for free for six months.
Sacramento: The city established a $1 million economic relief fund for businesses that provides 0% interest loans up to $25,000 per business.
Salt Lake City: Business owners based in the area can apply for 0% interest loans up to $20,000 as part of the city's emergency loan program.
San Francisco: Small businesses with fewer than five employees are eligible to receive up to $10,000 for staff salaries and rent.
Seattle: The city's Office of Economic Development is providing $1.5 million in grants up to $10,000 to small businesses. The mayor is also deferring tax payments for business-owner candidates and will set up a small-business recovery task force.
Syracuse: The Syracuse Economic Development Corporation created a $500,000 fund to provide zero-percent interest, 180-day emergency loans up to $25,000 to the city's small businesses.
Wisconsin: The Wisconsin Economic Development Corp. launched Small Business 20/20, a $5 million grant program that will give companies with fewer than 20 employees up to $20,000.
Amazon announced a $5 million Neighborhood Small Business Relief Fund to provide cash grants to local Seattle small businesses.
Bacardi has pledged $3 million in relief to bars and restaurants affected by the COVID-19 shutdowns as part of its #RaiseYourSpirits campaign.
Facebook announced a $100 million grant for small businesses impacted by COVID-19 and launched the Business Resource Hub, which features recommendations to help small businesses stay connected to customers and stay on track.
Fattmerchant, a payment technology provider, has partnered with Gift Up! to allow its clients to sell virtual gift cards. Gift Up! is waiving its usual 3.49% fee for Fattmerchant's members' first $5,000 in gift card sales.
GoFundMe has partnered with Yelp to allow independent businesses to start fundraisers and accept donations through Yelp's pages. The Yelp Foundation and GoFundMe also both pledged to donate up to $1 million to the GoFundMe.org Small Business Relief Fund.
The James Beard Foundation started a Food and Beverage Industry Relief Fund to provide micro-grants to independent food and beverage small businesses in need.
JPMorgan pledged $50 million to help struggling customers, and $8 million in aid to small businesses, specifically.
Kabbage launched an online hub to help boost sales for U.S small businesses impacted by COVID-19, including a system through which businesses can sell gift cards to consumers for use at a later date.
Kangaroo wants to support business owners who are unable to be physical present at their offices. The security startup is offering free security camera and monitoring kits for three months.
Kiva is urging small businesses to apply for 0% interest loans up to $15,000. The company is also offering a longer grace period: new borrowers can access a grace period of up to 6 months.
MainVest, a crowdfunding platform, announced its new Main Street Initiative: a $2,000, zero-interest, 120 day loan for restaurants or other brick and mortars affected by the shutdown, in addition to its normal fundraising offerings.
Mark Cuban Cos. will reimburse employees for any lunch or coffee purchases from local independent small businesses.
Opportunity Fund, which specializes in money lending to small businesses owned by women, immigrants and people of color, is collaborating with investors and nonprofits to put together a coronavirus relief fund that will provide grants and low-interest rate loans to business owners in need.
Seated launched a hotline for restaurant owners to get advice from finance and law experts in the hospitality industry.
The Restaurant Workers' Community Foundation formed a COVID-19 Emergency Relief Fund for small businesses and their restaurant workers, and is accepting donations.
Wefunder, an investment crowdfunding platform, launched a Coronavirus Crisis Loans program enabling small businesses to crowdfund loans of $20,000 to $1 million from supporters.
Yelp CEO Jeremy Stoppelman announced the company is providing $25 million in coronavirus relief for independent restaurant and nightlife businesses in the form of waived advertising fees, and free advertising, products and services.