We hope that you had an enjoyable weekend! As we begin our first full week of May, we will continue to review and share information on moving forward to a responsible reopening. A lot has changed and developed since mid-March and we anticipate a continuance of change as we move through this month.
Illinois Chamber President and CEO, Todd Maisch, shared his vision for re-balancing government response to the duel crises that we face in an op-ed to Crain’s Chicago Business at the end of last week:
Attached to this email is a letter to Governor Pritzker from the women of the House Republican Caucus calling on the Governor to request he calls a special legislative session to start work on reopening Illinois safely and regionally.
As a reminder, especially for those that have not received SBA’s EIDL or PPP loans, there is the Employee Retention Credit under the CARES Act that encourages businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19. See more info and FAQ’s here: https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act?utm_medium=email&utm_source=govdelivery
Good news and bad news regarding the stalled EIDL loans. SBA has resumed processing EIDL applications that were submitted before the portal stopped accepting new applications on April 15 and will be processing these applications on a first-come, first-served basis. SBA will begin accepting new Economic Injury Disaster Loan (EIDL) and EIDL Advance applications on a limited basis only to provide relief to U.S. agricultural businesses.
Let’s not forget about the Main Street Lending Program
This program was announced (what seems like way back) on March 23 by the Fed, but still has no planned launch date. They have recently changed some eligibility requirements and loan sizes for borrowers. For those again that have not been able to access the EIDL and/or PPP funds, this may be an alternate route. As a refresher, this program is aimed at small and midsize businesses that were in good financial standing before the crisis. It is expected to run directly through federally insured depository institutions, including banks, savings associations, and credit unions, and the Fed says it will support up to $600 billion in new loans. Business owners who have received PPP loans are permitted to apply as well.
The program has three different routes: one for new borrowers, one for borrowers who may have existing debt but lower fiscal needs, and one for borrowers who have an existing loan or credit line with outsize fiscal needs. None of these routes contain a minimum company size requirement for eligibility, so self-employed business owners and companies with fewer than 500 employees may apply.
Look at the requirements and/or adjustments recently made by the Fed:
- Companies need to have at minimum around $83,000 in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2019 and no debt. Companies with debt have higher adjusted EBITDA requirements. Previously, companies needed to generate at least $250,000 in adjusted EBITDA to be eligible. The upper-end range of companies include those with as much as $5 billion in annual revenue or fewer than 15,000 employees. That is up from a maximum of $2.5 billion in annual revenue and 10,000 employees.
- The minimum loan amounts have also come down. For two of the three routes, the minimum loan amount is now $500,000, down from $1 million. The third route offers loans that start at $10 million.
- Pricing for these loans also has changed. Main Street loans, which must be repaid, carry interest charges, which are variable–and equal to LIBOR + 300 basis points–but are now flat across all three loan routes. Currently, that means rates are around 3 percent. Under the original terms of loans, rates were again variable, but they were based on a different interbank lending rate and the basis points ranged, which meant loans could have rates from 2.5 percent to 4 percent.
- While borrowers still will have four years to repay the loans, the repayment terms will differ depending on the lending route they elect. The program for new borrowers, for instance, requires 33 percent of the loan to be repaid in years two, three, and four. For the other two routes, borrowers need to repay 15 percent in years two and three. In year four, borrowers must repay 70 percent. Loan payments can be deferred for up to one year.
Treasury Department releases new guidance on PPP loan forgiveness provisions
The Treasury has advised that an employer will not be penalized with reduced PPP loan forgiveness if an employee rejects an offer to return to their job. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.
Here is a link to the PPP loan Frequently Asked Questions document that was updated on May 3rd: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf
Here are a few good review points from the extended stay at home order for essential retail businesses to make sure they are following the new rules:
- Provide face coverings to all employees who are not able to maintain a minimum six-foot social distance at all times.
- Cap occupancy at 50 percent of store capacity, or, alternatively, at the occupancy limits based on store square footage set by the Department of Commerce and Economic Opportunity.
- Set up store aisles to be one-way where practicable to maximize spacing between customers and identify the one-way aisles with conspicuous signage and/or floor markings.
Here is a link to a Frequently Asked Question document from the Illinois DCEO: https://www2.illinois.gov/dceo/Documents/Essential%20Business%20FAQ.pdf
Finally, we are learning some of the rules surrounding the Paycheck Protection Program loans might not be set in stone. Currently, the Treasury Department will only forgive payroll expenses for the eight weeks from when business owners receive their loan. Many business owners want to spread those funds over a longer period. This is especially true here in Illinois where the extended stay at home order complicates this timeline as a number of companies aren’t sure if they can get up and fully running once the order has been relaxed (on June 1 at earliest) Additionally, owners must use at least 75 percent of the loan for payroll expenses to be eligible for the maximum amount of forgiveness. Again, we’ve heard from a number of businesses that would like to utilize more than the 25 percent allowed to go towards rent, utilities, etc. We brought those concerns up with Congressman Foster during our Friday virtual conference. You can view that conference in its entirety here if you missed the opportunity to join us: https://transcripts.gotomeeting.com/#/s/8780977067cc19beece76e415d17ff9a92283841944d0fda6d6cefacebe99671
Don’t miss out on two more topics this week as part of our virtual conference series. The first is this Wednesday at noon with Susan Olenek, Executive Director of Will County Health Department & Community Health Center as she presents COVID-19 Perspectives from a Public Health Professional. You can register here: http://jolietchamber.chambermaster.com/events/details/2020-webinar-may-6-the-role-of-the-will-county-health-department-in-today-s-pandemic-5895
The second this week will feature Joliet Mayor Bob O’Dekirk as he brings us up to date on the city’s response to COVID-19, city finances, and ongoing economic development. Register here for that conference: http://jolietchamber.chambermaster.com/events/details/2020-webinar-may-8-city-update-with-mayor-o-dekirk-5896
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry