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FAQ: COVID-19 and Businesses

What are some of the important provisions in the CARES Act?

Please read this memo written by our team members at Bose Public Affairs Group.

Do I qualify for a Payroll Protection Loan?

Please read this article for information. CAUTION: The article is based on H.R. 748 passed by the Senate on March 25, 2020. Such legislation must be approved by the House and signed into law by President Trump, expected on March 27, 2020. The Paycheck Protection Program is not currently available.

Where can I find the initial SBA guidelines for borrowers for the Paycheck Protection Program? Also, is there any help available to assist me in preparation of the PPP application?

Here is a link to the SBA information sheet for borrowers. Bose McKinney & Evans has attorneys available to help in the Paycheck Protection Program application process; for more information, contact Chad Walker.

As a lender, where do I find the guidelines for my business from the SBA regarding the Paycheck Protection Program?

Here is a link to the SBA information sheet for lenders.

Can provisions in the CARES Act help me with funding toward my SBA loan?

If you are participating in an SBA loan program (7(a), 504, Microloan, Community Advantage, etc.), please note that the CARES Act, passed on March 27, 2020, provides funding for SBA payment of borrower principal, interest and fees for a 6-month period beginning with next payment due date. THIS IS NOT A DEFERMENT, but is actual debt forgiveness for the borrower and payments will be made by the SBA automatically (borrowers don’t need to do anything). However, if a borrower is already on deferment, the CARES Act debt forgiveness payments will activate at the end of the deferment period.

What is the definition of a small business related to the Economic Injury Disaster Loans?

The SBA continues to push out updated information regarding Economic Injury Disaster Loans.  As a general rule, these loans are available to SMALL BUSINESSES as defined by the SBA (though they are encouraging businesses of all sizes to apply).  The SBA determines size limitations based on NAICS codes and has a size standards tool at https://www.sba.gov/size-standards/ which helps a business determine if it meets this requirement.  As of March 21, 2020, small businesses located in all 50 states, the District of Columbia, and the U.S. territories of American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the Virgin Islands are now eligible to apply for SBA Disaster Assistance. If your business was economically impacted by Coronavirus (COVID-19) you may apply online at https://disasterloan.sba.gov/ela. If you are unable to apply online, you may download an application at https://disasterloan.sba.gov/ela, under the Loan Information tab.  For questions about SBA loans, contact Chad Walker.

How are essential business designations determined?

On March 19, 2020, the Department of Homeland Security (DHS) released the Essential Critical Infrastructure document.  The document is a broad overview of facilities that might be designated as “critical” and therefore need to continue their operations and work within Indiana or in other states.  State, local, tribal, and territorial governments are ultimately in charge of implementing and executing response activities in communities under their jurisdiction, while the federal government is in a supporting role. If you have questions about the designation, qualifications or step to take for those organizations most likely to qualify, please consult with Victor Smith.

I run an essential business, but what should my employees do if they are stopped by law enforcement commuting to and from work while the Stay at Home Executive Order is in effect in Indiana?

In light of Governor Holcomb’s Stay at Home Executive Order issued March 23, 2020, we are advising that, if you are continuing to operate as an essential business and your employees must report to a work site (i.e., not telecommuting), it is advisable to provide your employees with a Travel Letter that they keep with them while commuting for work.  For assistance in developing a letter specific to your business, please contact your BME attorney or John Millspaugh.

Can work on construction projects continue in Indiana while the Stay at Home Executive Order is in effect?

In the majority of cases, construction projects will be allowed to continue in Indiana.  The Stay at Home Executive Order includes a number of exemptions to shutting down Indiana businesses.  Most construction is included in an exemption as part of “Essential Infrastructure,” in support of “Essential Businesses and Operations” (including all businesses in their supply chains), or as part of the “Critical Trades” category.  For clarification related to your specific business and projects, please contact your BME attorney or R.J. McConnell.

Remember, businesses remaining open have to take specified steps to ensure the safety of employees and others who will be on the premises.  Also, all businesses remaining open should maximize use of remote working and meeting capabilities where possible without compromising the company’s or individuals’ ability to perform the exempt or essential business functions. Finally, businesses should continue to follow all federal, state, CDC and Indiana State Department of Health recommendations to the fullest extent possible.

What changes did the Family First Coronavirus Response Act make to the Family Medical Leave Act (“FMLA”), and how does mandatory emergency paid leave under certain circumstances and Emergency Paid Sick Leave Act play into the situation?

Please read this article from the Labor and Employment Group of Bose McKinney & Evans for detailed information.  Also, the U.S. Department of Labor addressed the availability of tax credits associated with paid leave under the FFCRA, and the Wage and Hour Division of the Department of Labor issued additional guidance for employers regarding compliance with the FFCRA.

Is paid leave under the Families First Coronavirus Response Act subject to tax withholdings?

According to the Joint Committee on Taxation: “Under the provision [Sec. 7005], any wages or compensation required to be paid to employees by reason of the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act are not considered wages of the employer for purposes of FICA tax [i.e., Social Security and Medicare tax]. As a result, no federal employment taxes will be collected on such amounts from employers or employees to be contributed to the OASDI or railroad retirement programs.”  However, income tax withholding is required on payments of paid leave made under the FFCRA. For more information, contact Kevin Halloran.

By when do I need to file and pay my business and personal federal and Indiana 2019 taxes?

As of March 20, 2020, the U.S. and Indiana income tax filing and payment deadlines for business and personal taxes have been extended from April 15, 2020 to July 15, 2020.  First quarter federal and Indiana estimated income tax payments are now due July 15, 2020 as well.  In Indiana, those returns that were originally due on May 15, 2020 are now due on August 17, 2020.  For more information, contact Kevin Halloran.

What is the due date for 2019 employer contributions to retirement accounts?

The IRS has release as FAQ on its website on special federal income tax return filing and payment deadline relief that was provided in recent guidance in response to the ongoing coronavirus pandemic. The date for 2019 employer contributions employer-sponsored retirement accounts is extended to July 15, 2020. Additionally, the date for 2019 contributions to Health Savings Accounts (HSAs) and Individual Retirement Accounts (IRAs) has been extended to July 15, 2020. For more information, contact Kevin Halloran.

My employees are working remotely; what steps should we take to keep our data and systems safe?

The bad guys will undoubtedly try to take advantage of remote workers. Management, IT and employees all have key roles to play in keeping the company’s systems safe. Aside from making sure that the IT department is staffed appropriately with sufficient resources and that employees are on guard for malicious emails and phone calls, management should review the company’s cyber-security policies to ensure they include certain provisions. For more information, read this article and/or contact Brian Jones.

My business is a non-profit; do I qualify for the Small Business Administration (SBA) economic injury disaster loans?

The SBA will work directly with state governors to provide targeted, low-interest loans to non-profits that have been severely impacted by the Coronavirus (COVID-19). The SBA’s Economic Injury Disaster Loan program provides working capital loans of up to $2 million that can provide vital economic support to help overcome the temporary loss of revenue they are experiencing. Applications may be made online at www.sba.gov/disaster.  For questions about SBA loans, contact Chad Walker.

What is the effect of the executive orders issued by Indiana Governor Holcomb on March 6 and March 16, 2020, limiting the amount of people that can attend an in-person event, on Indiana’s Open Door Law (“IODL”)?

The Indiana Public Access Counselor issued a FAQ to help explain how the Open Door Law has been amended considering new guidelines. Municipalities may contact Steve Unger, and public schools may contact Jon Mayes, to assist with questions or concerns.

How should corporate board meetings continue to be conducted?

Corporate statutes typically allow for board meetings to be conducted by telephone or some other method by which all of the parties can hear one another.  With the use of today’s technology, all board discussions can take place remotely.  You should consider looking at your corporate articles or by-laws (or operating agreement for LLCs) to confirm that you have not included a provision prohibiting any meetings other than face to face.  For more information, contact Rob Inveiss.

Will my Business Interruption Insurance (“BII”) cover losses related to the COVID-19 pandemic?

Business owners who have purchased Business Interruption Insurance (BII) should carefully review their policies to determine if coverage for COVID-19 related business interruption losses is available.  Most BII policies require “direct physical loss of or damage” to the insured’s property resulting in business interruption. Some policies also provide coverage when a governmental authority restricts or prohibits the business from continuing operations.  When coverage is provided, such governmental authority actions may or may not need to result in physical property damage. Policies, such as those insuring the hospitality and healthcare industries, occasionally contain an endorsement or enhancement providing coverage for communicable or infectious diseases, but generally such coverage is not provided in the basic BII language. If you are not sure whether your policy provides coverage for COVID-19 related interruption losses, you are encouraged to consult your insurance and legal advisers, as such coverage, exclusions and limitations are nuanced.  To learn more, please read this article and contact Chad Walker.

Do I still have to perform under a contract during the COVID-19 pandemic?

Typically, no party to a contract can simply decide to stop performing under a contract, even during difficult times. The determination of whether a party can delay, or halt, performance entirely depends on the language in the contract itself. While language permitting unilateral termination does exist in many types of contracts (usually with a notice period of about 30 days or so), it is not very common. More often, the determination comes down to the existence of a “force majeure” provision, which discusses contract performance in the wake of a “force majeure event”.  If the contract itself doesn’t have such a provision, it nevertheless might be possible for a person seeking relief to rely on the legal doctrines of impossibility or impracticability of performance or frustration of purpose.  These situations must be analyzed on a case by case basis.  For more information, contact Rob Inveiss.

What happens if I stop performing under a contract based on a claim that an event qualifies as a force majeure and a court or arbitrator determines that the event does not qualify as a force majeure event?

If a party stops performing under a contact without justification then the breaching party can be liable for damages under the contract and other remedies allowed by the contract or by law. For information about contract litigation, contact Sam Laurin.

My company is in crisis; how can I effectively communicate with key audiences as we right the ship and is that cost covered by insurance?

No two crisis situations are the same, but professional, experienced communications professionals can respond quickly to effectively develop a strategy specific to your situation and deliver succinct, effective messaging to employees, customers, vendors, government agencies, investors, media and other stakeholders to help your business. Some directors and officers liability insurance policies (or even commercial general liability policies) may include crisis management coverage. If this coverage is triggered, it can include public relations costs, travel and other expenses. It usually is capped at a lower policy limit, but it should be considered as companies navigate COVID-19. For information about insurance policy review and limitations, contact Seth Thomas. For assistance with crisis and strategic communications, contact Roger Harvey at Bose Public Affairs Group.

What are steps workplaces can take to reduce the risk of exposure to COVID-19?

Here is a link to an OSHA poster for employers that can be posted. https://www.osha.gov/Publications/OSHA3994.pdf.