For small outdoor recreation business owners across the U.S., there is no time to waste. This community has been one of the hardest hit. Dependence on serving clients, and the social interactions they require, is a large part of doing business outside. With that in mind, Americans are craving these experiences as states continue to make and sustain stay-at-home orders, and we will need a release from being indoors. Many employers are tasking workers with maintenance and small construction projects, anything to help their seasonal workers survive our current crisis. They are optimistic that when America is finally cut loose, they’ll be ready to lead the way back outside.
Watching and waiting for the decisions being made in Congress requires razor sharp focus and steadfast hope. Many are caught in a whirlwind of uncertainty that may require the same stamina as endurance athletes as the pandemic and economic downturn stretches on into the summer. An aid station equivalent is the Paycheck Protection Program (PPP), signed into law on March 27th as part of the $2.2 trillion-dollar CARES Act. The PPP program, now available to small businesses and nonprofits, is approved to cover expenses related to payroll, benefits, mortgage interest, rent, leases, utilities, and interest on existing debt. This program is designed to assist employers with 500 employees or less retain workers, make payroll and continue day-to-day functions, so that when the recovery begins, we can all hit the ground running.
Policy analysts and specialists everywhere have spent hours poring over these mega-bills, some hundreds of pages long, to extract the most important bits to help businesses and nonprofits make good, sustainable decisions about the coming months. When is the deadline? How large can my loan be? What do I need to apply? These questions and more have been asked by managers everywhere. For the PPP, the deadline to apply is June 30th, 2020, which will come quick, and the loan ceiling for the entire country is $349 billion (another stimulus bill currently in the works may increase this total to $600 billion). Some banks have already maxed out their allotment of loan funds, so you may need to consider lenders other than your primary bank. The SBA has put together a website to help borrowers find PPP lenders. Loans can be up to 250% of the “average monthly payroll costs” for the period between February 15 – June 30, 2019; for example, if payroll costs were $100,00 during this period, then the maximum loan amount would be $250,000. To apply, a business will need payroll and expense information including mortgage, rent and utilities for the previous 12-month period , and complete 2019 financial documents, including the business’s profit and loss balance sheet.
As the economy continues to build new coping mechanisms around the projected timeline for recovery, there is one more incentive for employers to retain and care for their employees: loan forgiveness. Under the PPP, payroll, interest payments, rent, and utility payments for an 8-week period following the origination date of the loan principal may be forgiven in full, so long as the contracts and agreements were placed prior to February 15, 2020. This eight-week period must be within the February 15 – June 30, 2020 timeframe. Additionally, comparisons between the number of full-time employees from 2019 to the current period in 2020—and seasonal employees from February 15 – June 30, 2019—will condition how much of the loan is forgiven. Any business or non-profit who applied for and received an Economic Injury Disaster Loan (EIDL) can also obtain a PPP loan so long as each loan is not used for the same purposes during the same timeframe. Come tax time, eligible employers can get a tax credit for 50% of employment taxes, up to $10,000 per worker. If an employer is a recipient of the PPP loan and receives forgiveness, they will not be eligible for the tax credit. Employers and self-employed individuals also may defer the payroll taxes they pay on wages. If an employer is a recipient of an PPP, they will not be eligible for the payroll tax deferment. There are many more details and future legislation could change requirements and eligibility. For more details and any changes to these programs, stay tuned to the SBA’s website or sign up for SBA’s e-Newsletter.
Many regions are gearing up for warmer weather, but will most likely have to wait before opening their communities to visitors. For small outdoor recreation businesses who had the means to continue paying employees in the hopes that part of their busy season could be salvaged, the time has come to reach out to their local lenders for help with a PPP loan. All across the nation, businesses and nonprofits are doing everything they can to help their workers and themselves. As quoted by billboards in cities and towns across the nation persevering in spite of this challenge, “we are all in this together.”