Friends.
By now you know that the President signed the COVID Relief bill Sunday night. That is great news for the country and for our industry. I am being asked what are next steps.
There are 3 paths to discuss.
First, the Enhanced Unemployment programs, or Pandemic Unemployment acts are continued through March for certain.
At this moment, the funding is at an additional $300 per week, with “gig workers “ qualifying for an extra $100, but ONLY if your Governor signs off on the program. You were e-mailed about this last week.
While this is not perfect, it is a start.
Tied to that is an additional round of PPP for small business and 1099 workers and free-lance workers.
Individuals can apply.
You divide your last years 1099 wages by 12, multiply by 2.5, and that is what you receive. There is a $100,000 annual maximum for use as your 2019 wages.
Thus, if you made $100,000 or more, you qualify for $20,833.00 in PPP. This is not a loan and will be forgiven.
Second, here are the details for the next round of PPP for all.
- The Treasury has 10 days to write the relevant regulations. As they were written last April, May and June, the assumption is they will be completed in less time with a few alterations that broaden them.
- There is an assumption forgiveness will be simplified. Loans under $150,000 are already an almost automatic forgiveness absent fraud.
- It is projected applications will begin being taken between January 11 and 18.
- It is projected money will be distributed between the 3rd and 4th week of January.
- To qualify you must have suffered at least a 25% reduction in income in any quarter of 2020.
- You have up to 24 weeks to spend the money.
- The PPP will be 100% forgiven if you spend 60% or more on payroll, payroll related items (retirement, health insurance, vacation, severance, taxes, etc.), rent, utilities, internet, interest on loans, interest on mortgages, PPE, costs of repair caused by civil unrest, cost associated with alterations caused by COVID.
- Any balance created should you not receive 100% forgiveness will convert to a 5 year, 1% loan, with no payments in year one.
- You can both have the loan forgiven AND write off the expenses, sort of a double dip.
- The US Treasury is writing the exact regulations now, so some of this could change, but is expected to get better, not worse.
Many have asked about the deferred FICA. There are two types.
The first is the Employer match was suspended until 12/31/20. The total amount deferred by the Employer is due 50% on 12/31/21. The other 50% is due 12/31/22.
There is conversation about forgiving this. Either way, Employers have one year before anything is due.
The second is the fact that in September the President offered a suspension of the Employee FICA contribution, but it is due in early 2021 on an undefined schedule.
The President intended to, if reelected, forgive the Employee part. He was not reelected.
There is conversation as to exactly what will happen with this potential liability to those that did not pay it.
While the employee in some cases did not have it withheld, ultimately the Employer is responsible to the Treasury for payment of this deferred FICA.
If indeed the Employee is furloughed or terminated, the act of recovering the deferred FICA from the Employee is difficult and undefined clearly.
Many of you have reached out to me about this point.
In a strict point of view, the deferred Employee portion is due 1/1/21, but it is unclear when it is to be paid. It is on an expanded schedule.
The popular theory is this too will be forgiven in the next 6 to 8 weeks, but that is only a theory.
It is very clear that the Employer is the one liable to the Treasury for the deferred FICA.
Stay tuned for updates. Again, Treasury will be the ones to write this guideline.
Those are the first two mechanisms before us.
The third is Save Our Stages, which I will cover in a separate conversation to follow this one as it is very lengthy .
The RESTART Act continues to be our focus to provide broad from relief to every affect business and person in our industry.
That is something we will keep pushing for with hopes of a late January, early February delivery.
This new relief bill is at last enough money for most of those affected to survive through March 2021.
I want to thank all of you for everything you are doing and do not give up.
We will work until we receive RESTART and will be able to move successfully into the second half of 2021.
The vaccines continue to be highly effective and the end of this situation has begun.
I know many people that have been vaccinated and none have had issues.
While the decision to take a vaccine is a personal one, the results thus far are very good.
Yes, you have heard about less than 10 reactions, with zero deaths, but people die every year from taking Tylenol and other such drugs. When millions of people take a treatment, there will always be rare outliers.
Please do not let that steer your mindset. If you apply that logic you would never get in a car, as many people die daily in car accidents.
Thank you all again and we will continue to move toward a safe successful reopening, hopefully in June of 2021.
They still project 70% herd immunity in mid May 2021.
Onward and Upward.
Be safe.
Michael T. Strickland
Bandit Lites, Inc.
Chair and Founder