SBA Relief Options for Vermont Attorneys Presented by: Vermont - PowerPoint PPT Presentation

SBA Relief Options for Vermont Attorneys Presented by: Vermont Association for Justice & Vermont Bar Association

Cassandra LaRae-Perez Special Counsel JD, Boston University School of Law BA, University of California, San Diego ◦ Leiden University Law School, Netherlands ◦ Birmingham University, England ◦ University of Burgundy, France An experienced litigator, regulatory and business attorney across a range of industries, Cassandra has tailored her claraeperez@gravelshea.com practice for New England’s food and beverage producers, 802-658-0220 most of which are small- and medium-sized companies. She also heads Gravel & Shea’s Intellectual Property practice, managing a global trademark portfolio spanning more than 50 countries. https://www.gravelshea.com/category/covid-19/

As partner in charge of tax service, John coordinates tax compliance and planning services to individuals and small and medium-size businesses. He works closely with clients to develop strategies to improve their companies' performance. He serves professional service firms, manufacturing concerns, contractors, hospitality, and distribution businesses. His expertise includes: • Corporation, S-corporation and individual taxes • Business valuations • Compensation and succession issues • Business advisory services John McSoley, CPA McSoley McCoy & Co. EDUCATION BS, University of Vermont 118 Tilley Drive, Suite 202 ABV – AICPA’s Accreditation in Business Valuation South Burlington, VT, 05403 Phone: 802-658-1808 PROFESSIONAL AFFILIATIONS Member - American Institute of Certified Public Accountants Email: jmcsoley@cpavt.com Member of Vermont Society of CPAs Treasurer, Howard Center

Disclaimer: This is not legal advice. Do not rely on it. These are the personal observations of the participants, who have been kind enough to help out in a time of crisis. Please refer to original official government resources for the final word. Information is being updated daily. We will share links. Please use the capable Vermonters who are willing and able to help, get you the $$$ that you need to carry on. Procedure: Please ask questions in the chat function.

Selection of the COVID-19 events leading to legislation • January 21 First confirmed COVID-19 case in the US • February 26 First case of suspected local transmission in the U.S. • February 29 First Death in the U.S. • March 13 President Trump declares National Emergency Governor Scott declares State of Emergency and National Guard Call-out • March 15 Vermont schools closed • March 16 Prohibition of mass gatherings >50, in-person restaurant/bar services • March 21 Closure of Close-Contact Businesses , gatherings >10 people, require CDC guidance to ensure social distancing for businesses that remain open • March 21 Work from home for all “non - essential” businesses/non -profits • March 25 Vermont Stay/Home Stay Safe Order (until 4/15) • March 30 Quarantine Restrictions on Travelers Arriving in Vermont (until 4/15) • April 6 Governor Scott announces that April 15 deadline will be extended

The problem:

The problem:

The problem: Economist Art Woolf: “The state labor department received 14,784 claims for unemployment last week. The huge spike in claims came in the wake of coronavirus-related layoffs. “Michael Harrington, interim commissioner, told lawmakers Thursday that the total number of claims — processed and unprocessed — is an all- time record.”

The problem:

Selection of the COVID-19 Legislation • March 6 P.L. 116-123 deems COVID-19 Outbreak a declarable disaster under the Small Business Act • March 19 Families First Coronavirus Bill (effective April 2) Dramatically expands FMLA, giving 12 weeks job-protected leave for COVID-19-related reasons (e.g., caring for children when schools have closed); provides up to 80 hours of paid sick leave for employees unable to work for COVID-19-related reasons; employers must pay for the benefits but receive tax credits to compensate. • March 26 Vermont passes its COVID-19 Relief Measures, H.681 and H.742 H.681 addresses safe conduct of public meetings and elections H.742 significantly broadens availability of unemployment benefits to persons who are unable to work due to reasons related to COVID-19 and exempts certain benefits from employers’ experience ratings. • March 27 CARES Act

Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) Purpose Keeping Workers Paid and Employed; Health Care System Enhancements; and Economic Stabilization $2T allocated

$377 billion for small business

Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) Title I Keeping workers Paid and Employed Act Paycheck Protection Program Loan forgiveness Emergency (EIDL) grants Title II Assistance for American Workers, Families and Businesses Unemployment Insurance Provisions, 2020 recovery rebates, special rules for retirement funds, exclusion for employer payments of student loans, employee retention tax credit, other tax relief Title III Supporting America’s Health Care System in the Fight Against the Coronavirus Title IV Economic Stabilization and Assistance to Severely Distressed Sectors of the United States Economy Title V Coronavirus Relief Funds

Title I: Keeping workers employed Paycheck Protection Program Creates a new loan program primarily for the purpose of keeping businesses afloat and workers employed and paid during this period of economic shutdown. Available loan amounts are calculated from pre-pandemic monthly payroll costs and some or all of the loan may be forgiven and paid for by the US Government. Expansion of the SBA Disaster Loan Program Expansion of the existing SBA Disaster Loan Program (Emergency Economic Injury Disaster Loan (“EIDL”) Program) Requirements have been relaxed or waived so that businesses can access funding more quickly The Program allows for a grant for up to $10,000, which is to be disbursed within 3 days of the application – before the application is decided - and which does not have to be paid back.

Emergency EIDL • Expansion of a current program • Additional $10 billion in funding • Funds come directly from the U.S. Treasury • Obtained directly from the SBA - apply online https://www.sba.gov/page/disaster-loan-applications * Business Loan Application (Form 5) / Sole Proprietor Loan App * Economic Injury Disaster Loan Supporting Information Form • Maximum loan amount $2 million; maximum unsecured loan is $25,000 • Interest Rate 3.75% fixed for small business; 2.75% fixed non-profits • Up to 30 year term – interest deferment up to 4 years

Emergency EIDL • Applicants may request an emergency advance of up to $10,000 • Must be needed to cover allowable operational expenses • The Act provides that the advance is to be disbursed within 3 days, while the application is pending • The only requirement before disbursing the funds should be verification that the applicant is an eligible entity by accepting a self-certification from the applicant under penalty of perjury. • It is a grant – it does not have to be repaid even if the application is ultimately denied

Emergency EIDL Who can apply? ◦ Businesses, cooperatives, and ESOPs with 500 or fewer employees ◦ Nonprofits ◦ Small agriculture cooperatives ◦ Sole proprietors, independent contractors, employees are not required ◦ Tribal small businesses ◦ Any other entity already eligible

Emergency EIDL If I am a nonprofit, but I am not a 501(c)(3), can I apply for an Emergency EIDL? Yes. “If you are a private non -profit with an effective ruling letter from the IRS, granting tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, or if you can provide satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law.” https://accd.vermont.gov/covid-19/business/economic-injury-disaster-loans-and-emergency-economic- injury-grants

Emergency EIDL • Must demonstrate “substantial economic injury” due to COVID -19 • The injury is the basis for the amount of loan to which you are entitled (less any amount covered by insurance or by other source) • If you applied prior to March 30 for a COVID-19-related injury, the SBA encourages you to apply again and representatives have said it won’t disturb your place in the queue

Emergency EIDL “Covered Period” is January 31, 2020 - December 31, 2020 Eligible uses: Ordinary operating expenses: ◦ providing sick leave to employees unable to work due to “a direct effect” of COVID -19; ◦ maintaining payroll during business disruptions, meeting supply chain costs; ◦ making rent or mortgage payments; ◦ repaying debts that cannot be paid due to lost revenue ◦ provided all due to effects of COVID-19 ◦ (and others)