COVID-19 Weekly Update – August 5th 2020
It’s no surprise to most Americans that the U.S. economy has suffered greatly from the impacts of the COVID-19 pandemic. But what may surprise you is the extent of the decline: a record 32.9% contraction during the second quarter of 2020, the biggest drop since 1947. The virus is still spreading across much of the country, and for 19 straight weeks, more than 1 million people have submitted new claims for unemployment benefits.
But among the dire news, there have been a few bright spots, as this article in USA Today points out, with a listing of 100 positive things that have happened so far in 2020. For example, drive-in movie theaters are showing a resurgence, adoption and fostering of homeless animals has risen, and museums around the world have opened for virtual tours.
Focusing on the positive while also taking precautions to keep safe will help us get through these difficult days!
CARES ACT UPDATES
Cares Act 2
With the House and Senate running out of time before their next recess, we are still waiting to see what the next economic recovery plan contains. A second round of stimulus checks is likely, and may go out as soon as a week after a deal is finalized. Another likely component may be a second round of PPP loans to small businesses. However, part of the impasse in getting a deal through both houses centers around unemployment benefits. The expansion of benefits under the original CARES Act included a $600 per week additional payment on top of regular state benefits. This additional payment expired on July 31. Competing proposals include decreasing the additional federal unemployment benefit over the next several months or capping the total benefit at a specific percentage of a person’s previous income.
Paycheck Protection Program (PPP)
The deadline to apply for funding under this round of the PPP is August 8, and the SBA will begin accepting applications for loan forgiveness on August 10. Until then just continue to work on your businesses and let us worry about loan forgiveness. According to a recent AICPA Roundtable, one of the professional groups I belong to, there’s no reason to rush to apply. There is a good possibility that Congress will relax forgiveness requirements in the relief package currently under discussion. The SBA and Treasury still have not issued answers to a series of FAQs for how forgiveness will work. Plus, the real deadline for application is 10 months after the end of the covered period, which may be 24 weeks after receiving the funding. A new PPP forgiveness Q & A document was published just yesterday August 4th
Economic Injury Disaster Loans (EIDL) from the SBA
Since June 15, the SBA’s EIDL loan program has been accepting applications for loans with interest rates of up to 3.75% for businesses and up to 2.75% for nonprofits. However, although loans of up to $2 million were initially authorized, loans have been capped at $150,000 with little communication to applicants about the reduction. The unexpected limitation has been a hardship to some business owners who were expecting to receive much more. In addition, many small business owners are unsure about accepting an EIDL loan, or how accepting the funds will impact them in the long run, especially when the loan comes due.
Over the past few weeks our office has been speaking with clients who have applied for, set up their portals and been approved for these much needed funds. I urge you to consider this option and also call your attention to a recent video blog I posted with information about the SBA loans associated with your EIDL application. Please click through and please remember this, like the other programs out there may be a great resource for you, but there are specific guidelines for spending the funds.
If you have not replied to the emails from SBA, they may have interpreted this as a rejection of their offer. This may have been unintentional. If so and you are still interested in accepting the loan offer please contact us as we can help you request reconsideration.
Rollover Relief for Unwanted RMDs
Under the CARES Act, retirees do not need to take required minimum distributions (RMDs) from retirement accounts during 2020. In addition, back in June, the IRS announced that anyone who had already taken any unwanted RMDs could roll all of the funds back into a retirement account penalty-free, as long as this was completed by the later of August 31, 2020 or 60 days after the funds are received. That date will be here sooner than you think, so make sure you take advantage of this opportunity to save on your 2020 tax bill and let your funds continue to grow.
HELP FOR SMALL BUSINESS
Main Street Lending Program
The Federal Reserve’s Main Street Lending Program is now underway, and additional FAQs were posted on July 15. Prospective borrowers should review the Boston Fed’s borrower page, and contact a participating lender. There has been concern, however, that the stringent requirements of the program mean that it may not be of benefit to businesses that need help the most. For example, business with heavy debt loads or that were struggling before the pandemic are not eligible. The program’s many rules and requirements are off-putting to both banks and borrowers, so this program may not help as many small businesses as intended.
Employees working in a different state than their employer may run into state tax problems. States and local tax districts follow a patchwork of rules with varying filing thresholds and requirements. For example, a “California-based business with remote employees in Texas would have to comply with Texas franchise, sales, and other tax laws. A resident of Florida temporarily working in New York would be liable for New York income tax.” Thirteen states have agreed to not enforce rules for workers who are working in that state due to the pandemic, but others have not. If this applies to you, we suggest you contact our office to ensure you won’t have a state tax surprise for 2020.
WORKING FROM HOME
If you’re still struggling to get into the groove of working from home, this list of eight tips of super-productive people who work from home might help. For example, starting work as early as possible may give you some uninterrupted time to work while everyone else in the household is still sleeping. But if you’re not a morning person, tune into your body’s rhythms and schedule your most demanding work for the time when you feel most energetic.
LIVING WITH AND AFTER THE PANDEMIC
Work in the post-pandemic world
Are there upsides and downsides to working remotely? To answer this, Harvard Business Review began surveying remote workers across the country in mid-March and following up at two-week intervals. They found consistent upsides, such as an increase In productivity, shorter meetings and more time with family as workers found their groove of working at home. However, with everyone at home, the chance encounters between people who usually don’t work closely together, but who have the opportunity to meet up randomly in hallways or in break rooms, vanish, and with that, the possibility for unique perspectives on problems. Also, onboarding new team members becomes more challenging, as does building the kinds of relationships that help to define the culture of a workplace.
Back to school
As schools prepare to reopen, with varying models of remote, in-person and hybrid teaching, the biggest worry for parents is the safety of their children. The few summer camps that opened during the summer have a few lessons for how complicated it will be. Summer camps, like schools, have always had to find ways to keep infectious agents at bay. One camp in Maine enforced social distancing, required masks to be worn outside of cabins, and kept campers and staff in tight social bubbles – and did not have a single case of COVID-19 all summer. At the other extreme, at a camp in Georgia, 260 of 597 campers tested positive for the virus. Daily health monitoring, frequent hand washing, additional cleaning, and extra ventilation also seem to help. However, all of these extra precautions take a toll on staff’s stress levels, and cost more, which will be a challenge for schools and child care facilities.
- Payroll, HR and benefits company Gusto has put together An Employer’s Guide to Navigating the Coronavirus
- Accounting Today has a special page for articles on COVID-19
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- The CDC also has recommendations for businesses and employers
- The Red Cross has pointers to help young adults stay safe
- Entrepreneur put together a listing of free tech resources for remote work
- Kiplinger has a state-by-state guide to absentee ballot voting.
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
I am also happy to share today’s NYT morning briefing…
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!