|Coronavirus update 4/10/20|
MRA Common Questions
Will my unemployment insurance rate skyrocket?
On today's Government Administration call, Secretary of Labor Acosta reiterated that she was well aware of the experience rating issue. As rates are not set until next January, the Administration is committed to addressing this issue on the other side of the crisis.
With the additional $600 for employees on UI, there is no incentive for my employees to come back to work, even if I have hours to offer?
Eventually the state will catch up to the employee. The employee is supposed to certify that they are not being offered work opportunities. Under the current situation, initially the state will be hesitant to remove employees from UI, but ultimately, the employer will get the opportunity to inform the state that the employee has rejected employment hours.
Important Survey: How is COVID-19 impacting restaurants?
The National Restaurant Association Research Group developed a new survey designed to collect data that will inform our ongoing advocacy activities. Please take a few minutes to complete this survey.
This information is important to both federal and state efforts moving forward, as it gets attention from both lawmakers and the media.
Complete survey here: Restaurant Impact Survey
Reminder of action alert sent this morning:
Tell Congress: Support Bipartisan Efforts to Improve Relief Efforts and To Provide Additional Funding
Congress has created new loan programs to help small businesses, but restaurant owners are finding that they are not being implemented in a way that provides the relief they need now.
Make your voice heard so that restaurants can survive today and once again thrive in the future.
Click here to send an email to Congress
Week in ReviewIs the PPP right for my business?
The PPP, on it's surface, sounds like a great idea. The government will lend you funds and if you spend it a certain way, that loan will be forgiven. However, many operators have realized that this loan program may not provide the relief needed for the restaurant industry.
Why might the PPP not work for me?
Something to consider....the clock on the 8 weeks starts ticking as soon as the money hits your account. For some operators, it might not make sense to take employees off UI because they will not be in operation. Our industry will most likely need a ramp up period back to capacity. It might make more sense for operators to use that money in 5-8 weeks, which is currently not permitted.Reminder, the PPP was written to take into account all businesses. As we know, our industry is different due to it's size, labor intensity and disproportionate COVID-19 impact.
What about the EIDL Loan?There are two SBA emergency capital programs that are available to the public in addition to the PPP.
- First is a Low interest, long term "Economic Injury Disaster Loan" for up to 2 million. The first payment is deferred for 12 months. The application can be completed online at www.sba.gov/DISASTER
- Second, if you apply for that Disaster Loan – you can ask for an "Economic Injury Disaster Loan Advance" for up to $10,000 as part of the loan application. If approved, these funds can be used for payroll and other operating expenses and can be FORGIVEN.
What is the major difference between the PPP and EIDL?
The EIDL loan is a standard loan and may be spent in a variety of ways. The downside is the loan is not forgiven. The PPP has restrictions on how the money can be spent, but does offers the potential for forgiveness. In order to be forgiven, the PPP applicant must meet all the criteria set forth for forgiveness.
What about employee retention tax credits?
The employee retention tax credit (ERTC) for employers subject to closure due to coronavirus. The provision provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the crisis. The credit is available to employers whose operations were fully or partially suspended, due to a coronavirus-related shut-down order, or gross receipts declined by more than 50% when compared to the same quarter in the prior year.
For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the coronavirus-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.
ERTC credits cannot be combined with the PPP.
Which is better for my operation?The MRA can't advise what specific course of action to take (whether it's PPP, EIDL, Employee Retention Tax Credits or some combination of each.T he best advice we can offer is to work with your trusted banking and accounting professionals to come to a solution that works for you.
Consideration needs to to be given to:
- how much of your business is currently generating revenue (totally closed vs. partial operating);
- how this may evolve in June/July/August/into the Fall;
- which employees are invaluable and what will the restaurant see with expected/usual turnover;
Other non-PPP news from this week
The Department of Unemployment Assistance has updated their unemployment assistance request contact form:
More people applied for UI benefits in the last two weeks than the entirety of 2019. The DUA is working through claims and trying to process every person that is eligible. If employees are having difficulty they are encouraged to use this form: https://www.mass.gov/forms/covid-19-department-of-unemployment-assistance-contact-request
If you are selling beer and wine as part of your take-out menu, be sure to update your profile on the CarryoutMA website.
Reinforce best practices
Many government officials are projecting the next two weeks as the toughest for Massachusetts. This is an important time to reinforce best practices, including: paying in advance or over the phone; curbside pickup whenever possible; strictly enforcing social distancing for waiting customers.