With many small businesses across the country uncertain of how the COVID-19 outbreak will temporarily, or permanently, affect their bottom lines, the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act may offer some immediate relief, and fleets need to understand their possible eligibility.
The Paycheck Protection Program, or PPP, offers loans that cover up to eight weeks of payroll costs, with the possibility of loan forgiveness if employers maintain payroll. The program covers small businesses with 500 or fewer employers. That includes self-employed individuals, sole proprietorships, and independent contractors, i.e., owner-operators.
“All the information available right now indicates that our owner-operator and small carrier members should generally qualify,” said Norita Taylor, director of public relations at the Owner-Operator Independent Drivers Association (OOIDA).
According to Eric DeGesero from New Jersey-based Edge Consulting, “any business in America with under 500 employees, including independent contractors and sole proprietors, should contact their local bank and apply.”
Some Weary of Loan
While some might be wary of a government loan, DeGesero did not see any reason fleets shouldn’t apply for the program. The Congressional intent in allowing the loan to be forgiven, according to DeGesero, is that employers will not lay off employees in the period between Feb. 15, 2020, and June 30, 2020.
The program defines payroll costs as employee salary, wages, commissions, vacation, parental leave, family leave, medical leave, sick leave, group health benefits (including insurance premiums), retirement benefits, and state or local taxes assessed on employee compensation.
And as long as the loans are used to cover payroll costs, rent, mortgage interest, and utilities for the period of Feb. 15 to June 30, the loans will be forgiven.
In an email to his clients, DeGesero further explained that medical and sick leave costs are not for the leave allowed under the Family First Coronavirus Response Act (FFCRA). The FFCRA is a separate law requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.
“Those expenses will be reimbursed to employers through retaining the withholding on employee federal income tax and the employer and employee portions of Social Security and Medicare,” DeGesero said.
Small Business Owners Relief
In response to the coronavirus pandemic, small business owners in all U.S. are also eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The U.S. Small Business Administration’s (SBA) Economic Injury Disaster Loan program provides working capital loans of up to $2 million, providing the economic support small businesses need to overcome the current financial hurdles caused by the COVID-19 crisis. Funds are made available within three days of a successful application, and the loan advance will not have to be repaid.
For an overview of all the COVID-19 relief programs, visit the Small Business Guidance and Loan Resources page on the SBA website.
The U.S. Chamber of Commerce has also released guides for businesses of all sizes to secure relief under the CARES Act, including:
- Economic Injury Disaster Loan Guide
- Employee Retention Tax Credit Guide
- Small Business Emergency Loan Guide
While these resources are currently up to date, they, like the current economic landscape, are fluid and might change day to day.
“We need to see how SBA actually interprets this and distributes funds,” added OOIDA’s Taylor. “We are constantly watching for updates or new information and we disseminate it daily to our members.”