While the COVID-19 health emergency expands across the country and into our region, we are reaching out to our clients to be sure we are receptive to and meeting their various legal needs. The attorneys in our Business and Corporate practice group are ready to provide you with the assistance and guidance you need to participate in and maintain compliance with new and complex laws and programs.
As part of our efforts to provide support for businesses and families, we wish to share important information with you. Of particular note are several recently enacted and already existing federal and state laws, described in this brief article. These programs provide supportive resources that may be of immense value to your business and its employees. They should be thoroughly reviewed and carefully considered – our lawyers are ready to help you navigate the processes of applying and qualifying for these programs, interpret and understand their benefits and conditions, and prepare and provide the business documentation that your lender and the SBA will require.
THE CARES ACT:
The mammoth legislation enacted and signed into law last week in Washington, known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act, includes the Paycheck Protection Program (PPP), a low interest SBA loan program for businesses to maintain their payroll and cover other expenses.
Said Thomas J. Lentz, Mankato Market President of West Bank, earlier this week:
“The program is designed to help businesses with their immediate cash flow needs and to keep people employed. Every business that employs no more than 500 employees should go to the SBA’s website, read through their Frequently Asked Questions and determine whether the business is eligible.
Eligible businesses include sole-proprietors, independent contractors, and other self-employed individuals with fewer than 500 employees. The program applies during the period from February 15, 2020 and ending on June 30, 2020. During that period, an eligible business may receive up to 2.5 times its average monthly payroll costs to cover: payroll and salaries; costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums; interest payments on mortgages; rent and utility payments; and interest payments on any other debt obligations that were incurred before February 15, 2020. Businesses receiving a loan through the Paycheck Protection Program are eligible for loan forgiveness, subject to certain limits. Of further significance there are no collateral or personal guarantee requirements and typical SBA loan fees are waived.
The SBA is expected to provide specific additional guidance to lenders and borrowers beginning as early as Friday, April 3rd. Links to the SBA website are located at the end of this article.
ECONOMIC EMERGENCY LOAN PROGRAMS:
While a lot of attention is rightfully given to the CARES Act, Minnesota also has its own Small Business Emergency Loan Program, administered through the Department of Employment and Economic Development (DEED). It provides zero interest loans ranging from $2,500 to $30,000 to eligible businesses, with a term of five years and no payments for the first six months. Under certain circumstances, the loans may be partially forgiven.
The SBA Economic Injury Loan Program provides loans of up to $2 million for alleviating economic injury caused by disaster.
On-line applications are provided for both of these programs at the respective websites of DEED and SBA, which are cited and linked at the end of this article.
EFCRA and EFMLA:
The Families First Coronavirus Response Act (EFCRA), which includes the Emergency Family and Medical Leave Expansion Act (EFMLA), went into effect on April 1, 2020, and will remain so until December 31, 2020. While the Act includes many provisions, including free coronavirus testing, food assistance and medical services budget increases, four aspects of the law apply chiefly to and will have significant impact on businesses with fewer than 500 employees.
Broad changes include requiring some employers to provide paid sick leave, paid family and medical leave along with tax credits for the paid leave, and expansion of unemployment insurance. If your business has fewer than 50 employees, you may be able to apply for an exemption from the Secretary of Labor if providing either of the types of paid leave could “jeopardize the viability” of your business, according to the U.S Department of Labor.
For more specific information about EFCRA and EFMLA, an article recently posted by our firm’s Employment Law practice group is cited and linked at the end of this article.
YOUR LEGAL SUPPORT TEAM:
Gislason & Hunter is addressing many of the same challenges that our clients may be facing, and our attorneys are ready to provide you with the assistance and guidance you need, should it be helpful to you. Please contact us with questions or for a quick and easy consultation regarding the services we can provide to you and your business.
Coronavirus Aid, Relief, and Economic Security (CARES) Act:
Minnesota Small Business Emergency Loan Program:
SBA Economic Injury Loan Program:
Families First Coronavirus Response and Emergency Family and Medical Leave Expansion Acts:
This information is general in nature and should not be construed as tax or legal advice.