How to get federal financial aid, how to spend the money properly and how to mop up after the money is gone or the emergency is over were the main questions from attendees to Providence Business News’ Coronavirus Stimulus Program Summit on Thursday.
Experts from R.I. Commerce Corp., the U.S. Small Business Administration and other business professionals tried mightily to answer the questions during the online event, but the unprecedented nature of the coronavirus pandemic and the step-by-step nature of government responses make some answers unclear or simply unknown right now.
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View PBN’s Coronavirus Stimulus Program Summit here.
Panelist Gina McDonald, an accountant and lead consultant at Fiscal Management Associates LLC, counseled businesses to take the response and recovery process one bite at a time and to focus on what can be known and done in the present moment.
“We have to acknowledge that we are all in this unusual moment,” McDonald said. “We just cannot see to the end; we might just have to try to foresee a few weeks at a time.”
McDonald was joined on the summit panel by Stefan Pryor, R.I. commerce secretary; Mark Hayward, Rhode Island district director of the SBA; Doris Blanchard, assistant director of SupplyRI at Commerce RI; Stephen Del Sesto, partner at Pierce Atwood LLP; and Kelly Yeates, vice president of service operations at Insperity.
The panelists participated by web conferencing at separate locations, and an audience of about 250 people watched at their computers.
Major topics of discussion included the $349 billion federal Paycheck Protection Program, which is distributing forgivable loans, via lenders, to small businesses. Requirements include that 75% of each loan must be used to cover payroll and related costs over eight weeks.
Hayward said Rhode Island businesses have been approved for something over 8,000 PPP loans, representing $1.3 billion, an amount he called “significant.”
Congress is considering putting an addition $250 billion for the Paycheck protection Program because the original funding is now mostly depleted.
Also under discussion was the SBA’s Economic Injury Disaster Loan program, part of the Small Business Administration, which received $10 billion for grants to businesses in Congress’s $2 trillion coronavirus rescue package of late March. This money is supposed to be used as long-term working capital. Hayward said 58 EIDL applications had been approved for Rhode Island businesses as of April 8.
The rollout of the loan and grant programs have been hampered by the blizzard of applications and unpreparedness of banks and government agencies to manage the flow, panelist said.
Pryor said his department is offering small bridge loans of up to $5,000 for businesses with fewer than 10 workers and for restaurants. So far, 162 Rhode Island businesses have received these microloans, he said.
Pryor urged people to learn more about various paths of assistance for businesses at the CommerceRI.com or by call (401) 521-HELP.
One bit of help for employers is the approved delay in payment of the Social Security payroll taxes, McDonald explained. Starting in the second quarter of this year, employers can put off paying these taxes. The payment deadline, without penalty, happens in two phases, at the end of 2021 and the end of 2022.
Employers who receive Paycheck Protection Program loans must manage them with care to ensure they are used for the intended purposes and in the right amounts. Seventy-five percent of the loans must be used for payroll and associated costs, such has benefits, over a period of eight weeks from the time they are received, and employers must be able to document this use. The part of the loan used for payroll may be ultimately forgiven.
Businesses “need to carefully track the use of this money in a segregated payroll account so that you can track it more easily. If you don’t have a dedicated account for payroll you should open one,” Del Sesto said.
Yeates said businesses also need to be very informed about the new federal Families First Coronavirus Response Act, which requires paid leave for workers sick or quarantined with coronavirus, or needing to stay home to care for sick family members or children without day care. The required length of paid time off and proportion of regular pay varies, according to whether a worker is sick or caring for others. Many other conditions add complications to these rules.
“This is an incredible amount [of new rules] for employers to absorb all at once,” said Hayward.
Because the loan and grant applications are oriented toward small businesses, McDonald said, nonprofits and organizations that work in tandem and receive funds from nonprofits are also confused about applying the rules to their organizations.
Correction: The statement about businesses needing to use a segregated payroll account was incorrectly attributed in an early version. Stephen Del Sesto made this comment.
