The U.S. Government is acting on COVID19, with two major pieces of news this past weekend in the CARES relief act and new Federal Guidance on shut-ins and social distancing. We're working closely directly with the SBA and lenders to understand impacts. Read below for what the news means and what to do.
Friday 3/27 - COVID-19 Disaster Relief bill called the CARES Act is signed. There is $350B allocated for the Paycheck Protection Program which provides loans for small businesses. You can get a loan for up to 2.5x average monthly payroll, inclusive of your contributions to retirement, benefits and payroll taxes. Loans will be offered through SBA approved lenders. Incredibly important to note - there is no requirement of a Personal Guarantees (PG) or collateral to secure the loans. Additionally, the loans may be forgiven if you keep headcount and payroll consistent. Additional Detail from the U.S. Chamber of Commerce
- Why this matters: If you’re under 500 employees, this is essentially no-risk money for payroll for April and May, to theoretically replace any revenue impact from COVID-19.
- What to know: Our sources at SBA and lenders indicate applications will open April 11th, though may be sooner. Our SBA contacts tell us it is most important that the application is complete and accurate, any missing information will delay your approval. It is more important to be accurate than early. The SBA hasn't released the list of approved CARES lenders, though the SBA
- What to do: Make contact with your local SBA office. Reach out to your lender to find out if they've an approved SBA lender and if they're participating in the CARES act. Our partners have recommended gathering the following: Financial statements (interim 2020 and full year 2019 income statement and balance sheet); Tax returns (prior 3 years of federal returns); 2019 payroll information by month; Organizational documents (bylaws, articles and operating agreements); General liability insurance information; Current building lease & any amendments
Sunday 3/29 - Trump hosts Press Conference with Industry and Health leaders. It's a good sign that Transportation leaders like FedEx were represented at Trump’s press conference, signaling that our industry is providing input into policy and procedure. The new Federal guidance is to continue social distancing and shut-ins through April 30th. This extends previous guidance set through early April. Under the new guidance, businesses will beginning opening in May, with a goal of returning to normalcy June 1.
- Why does this matter? These dates line up with the CARES Act funding. If we are able to contain the virus in the next 6-8 weeks, the provisions in the CARES Act are sufficient. In the event the timeline is extended beyond a June 1 return, the measures in the Act should curb unemployment, and help give consumers spending money.
- What to know: The Bureau of Labor Statistics (BLS) posts unemployment numbers for prior week every Thursday. Theoretically, the Government could have preliminary unemployment claims from this past week, which may have influenced this bill.
- What to do: The takeaway from these points is that the Federal Government believes today’s normal is going to continue for at least another month, and is optimistic that business will be operating as usual by June 1st. In our belief, the CARES Act and new Federal Guidelines provide certainty for the next 2 months. Your business now has the ability to stabilize, focus on maximizing your remote work force and get back to serving your customers and team members.
We are working closely with the SBA office, lenders and attorneys to make sure we’re educated on the latest developments. If you’re looking for guidance or references to navigate this situation, please reach out to me directly at prentschler@carrierdirect.com=
DISCLAIMER: CarrierDirect is a Consulting and Technology services company focused on Transportation and Logistics. We are not attorneys or bankers, please review any legislation directly with your legal counsel.