Unemployment and Loan Resources
SharedWork to Reduce Hours
To encourage businesses from laying off employees, Employment Security Department encourages employers to use the SharedWork program. If you are reducing the hours of your employees, Unemployment will pay for a portion of the reduced hours. Employees on the SharedWork program will also receive the additional $600 of Pandemic Unemployment Benefit weekly.
i.e. All staff is reduced to 30 hours per week. The business pays for the 30 hours actually worked, Shared Work compensates them the equivalent of 10 hours of pay, so that the employees receive 40 hours pay for the week.
SBA Economic Disaster Injury Loans (EIDLS)
Economic Disaster Injury Loans are an SBA program that has been around for years being used for disasters such as hurricanes, earthquakes, etc. These loans can be made based solely on credit scores and are available to all businesses and nonprofits. Loans less than $200,000 can be approved without a personal guarantee. No collateral is required for loans of $25,000 or less. General security interest in business assets will be used for collateral instead of real estate for loans of more than $25,000.
You may receive up to $10,000 without having to accept an EIDL loan. However, if you also secure a PPP loan, the advance will be subtracted from the amount forgiven.
The Small Business Administration (SBA) announced the conclusion of the Economic Injury Disaster Loan Advance program on July 11, 2020 having allocated the full $20 billion that was appropriated by Congress. EIDL loan applications will still be processed even though the Advance is no longer available. The loan portion of the EIDL continues to have funds available at very affordable terms including a 3.75% interest rate for small businesses and 2.75% for non-profit organizations, a 30-year maturity, and an automatic deferment of one year before monthly payments begin.
Borrowers can no longer receive up to a $10,000 cash advance that is forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments, or repaying obligations that cannot be met due to revenue losses.
The SBA announced on May 4, 2020 that agricultural businesses are now eligible for EIDL programs and must submit a streamlined application. Also, any business that submitted a COVID-19 EIDL application prior to March 30 and has a “2” as the lead number in their application confirmation number must also reapply using the new streamlined application for their application to be processed.
Unemployment Changes & Updates
All those not working because of COVID-19 are eligible to File for Unemployment. The previous 680-hour requirement is waived as is the waiting week. For the first time, owners, sole proprietors, independent contractors, gig workers, etc. will also qualify; the system goes live on Saturday, April 18. Until then, keep track of when you stopped working and/or when your hours reduced so that you can get retro pay.
Be prepared by reviewing the Unemployment Benefits Application Checklist and please be patient. Employment Security Department (ESD) is reporting huge volume of calls. Their staff is trying their best in an overwhelming situation. Call (800) 318-6022, 8:00a-4:00p, Mon-Sat.
All workers receiving Unemployment Benefits receive their last $600 Pandemic Employment Benefit on July 25, unless it is extended by Congress. Anyone waiting on back payments will still get the additional $600 when those payments are made (for eligible claims March 29-July 25, 2020).
Update for People Awaiting Unemployment Benefits
ESD continued outbound calls through July 19, 2020 in continuing efforts to ensure “all benefits to all eligible applicants” and has provided additional information for people who have not successfully qualified or received unemployment insurance benefits.
Hear more from ESD’s commissioner, Suzi Levine.
Paycheck Protection Program (PPP)
The application deadline for this program was extended until August 8. Approximately $129 billion of funding is still available using relaxed loan forgiveness rules were finalized under the PPP Flexibility Act last week.
In effort to keep employees on payroll, the Paycheck Protection Program is available for small businesses; generally up to 500 employees, but up to 1,500 employees (depending). Businesses in the Accommodation and Food Services Sector are eligible up to 500 employees per location. 501 (c)(3) nonprofits, sole proprietors, the self-employed, and independent contractors are also eligible.
This loan requires no personal guarantee or collateral. The lender defers fees, principal, and interest for 6-12 months. Generally, business qualify for 2.5 months of payroll costs. The loan will be forgiven if it is used for payroll costs, interest payments on mortgages, rent payments, and utility payments between February 15 and June 30, 2020. Go to sba.gov to see local assistance.
Paycheck Protection Program (PPP) Loan Forgiveness
Loan forgiveness will be reduced if the borrower reduces employment by more than 25%.
New and revised forgiveness applications posted June 5, 2020:
The EZ application requires fewer calculations and less documentation for eligible borrowers that:
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
Guide to PPP Loan Forgiveness, by US Chamber of Commerce
Revised Guidance dated June 12, 2020 This guidance implements the Paycheck Protection Program Flexibility Act (PPPFA), signed into law by President Trump on June 5, 2020 and expands eligibility for businesses with owners who have past felony convictions. The new rule updates provisions relating to loan maturity, deferral of loan payments, and forgiveness provisions. Complete Revisions to First Interim Final Rule can be viewed here.
Additional guidance on PPP loan forgiveness was released on May 22 and covers several important and previously undiscussed topics relevant to most PPP borrowers, including timing of eligible payroll and non-payroll expenses, eligible forms of pay to employees and owners, and how to calculate the earnings of sole proprietors and general partners.
These updates are being provided as a convenience. This information does not, and is not intended to, constitute legal advice; instead, all information, content and materials are for general informational purposes only. Contact an attorney to obtain advice with respect to any particular legal matter.