The following information was supplied by Matthew Daus, who also stated that he welcomes questions from anyone who would like to learn more about the CARES Act. He can be reached at [email protected] or (212) 237-1106.
The CARES Act is Law
In March, President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law. The transportation industry did not receive special consideration in the law but will generally benefit from it.
The CARES Act provides relief and assistance to small businesses, sole proprietors, independent contractors and self-employed individuals. It allocates $350 billion to the Paycheck Protection Plan, which is intended to aid small businesses with under 500 employees make payroll and cover expenses from February 15 to June 30.
Small businesses may qualify for up to $10 million in loans. These loans may be used for payroll, rent, utilities, interest payments on mortgages and debt obligations. The U.S. Small Business Administration (SBA) is required to enact these programs no later than 15 days after The CARES Act is signed into law.
The CARES Act includes tax benefits to provide relief for businesses that have been impacted by the spread of COVID-19, including a decrease in gross receipts of 50% or more (compared to the same quarter of the prior year); these businesses may receive a 50% refundable payroll tax credit on wages paid up to $10,000. Social Security payroll tax payments paid by employers can now be delayed until January 1, 2021.
The CARES Act expands eligibility for the Economic Injury Disaster Loans (EIDLs) administered by the Small Business Administration (SBA). The EIDLs had previously only been open to small businesses affected by COVID-19. Now, under the CARES Act, EIDLs are available to any business with not more than 500 employees, operating under a sole proprietorship or as an independent contractor, tribal businesses, cooperatives and ESOPs with fewer than 500 employees, all non-profit organizations, and individuals operating as sole proprietors or independent contractors.
Within three days of submitting an EIDL application, applicants may request a cash advance of up to $10,000, subject to verification that the entity is eligible for an EIDL. The advance does not have to be repaid if used for maintaining payroll costs, paid leave, increased costs due to supply chain disruption, mortgage or lease payments, or repaying obligations that cannot be met due to revenue losses.
Small businesses may receive an EIDL and a loan under the Paycheck Protection Program (PPP) as long as the EIDL is not being used to pay for the same expenses as the PPP loan. EIDLs may be refinanced into a Paycheck Protection Program loan. EIDL Loans are processed directly through the SBA.
Key Provisions of EIDLs under the CARES Act:
- Loans of up to $2 million at 3.75 % interest, plus principal and interest deferment for up to 4 years (maximum term is 30 years).
- SBA approval based solely on an applicant’s credit score.
- No personal guarantee required for EIDLs under $200,000; loans over $200,000 must be guaranteed by any owner having a 20% or greater interest in the applicant.
- $10,000 emergency cash advance within three days, which may be forgiven if used for certain expenses.
- May obtain an EIDL and a PPP loan if the funds are not used for the same expenses.
- EIDLs may be refinanced into a PPP loan.
Insurance Relief at the State, Local Levels for Transportation Companies
The transportation industry in New York received good news in March concerning payments due for a variety of insurance bills. As part of continuing actions to address the COVID-19 crisis, New York Governor Andrew Cuomo announced that consumers and small businesses experiencing financial hardship due to COVID-19 may defer paying premiums for property and casualty insurance, including auto, homeowners, renters, workers comp, medical malpractice, livery and taxi. The period for the deferment is 60 days.
In addition, no late fees will be assessed and no negative data will be reported to credit bureaus during this time. Late payments will be payable over a one-year period.
FHV License Storage to be Done Remotely
For-Hire Vehicle (FHV) owners received good news from the NYC Taxi & Limousine Commission (TLC) in late March: The TLC updated and modified its storage policy to allow FHV owners to place their FHV license in storage via electronic means.
As a result of the ongoing pandemic and the closure of NYS Department of Motor Vehicles (DMV) during the COVID-19 crisis, FHV owners will not be required to personally appear at the DMV or TLC. Any FHV owner seeking to utilize this option may complete the registration form and send it to the TLC via email.
According to the current rules, vehicle licenses cannot remain in storage for more than 90 days – but the TLC said it will allow vehicle owners to retain their TLC-issued DMV plates until such time as the DMV re-opens its offices and owners may surrender and obtain passenger plates for their vehicles.
Source: Windels Marx