Local experts discuss unemployment benefits, SBA loans

The Homewood Chamber of Commerce hosted a Zoom conference call Tuesday with local experts who discussed COVID-19 and shared resources for both employers and employees.

Kyle Smith, an employment attorney at Sirote & Permutt, PC, shared information about the recent developments in the area coming out of the coronavirus stimulus package. One of those developments is called the Families First Coronavirus Response Act.

This law applies to businesses with fewer than 500 employees and will go into effect April 1. It provides two types of leave. One is emergency pay sick leave, which is an opportunity for an employee to get up to two weeks of paid sick leave for a variety of coronavirus-related reasons. Employees who are required to be home to take care of a child because that child’s school or daycare is closed can also get up to 10 weeks of leave on top of the aforementioned two weeks. 

This means that employees could get up to 12 weeks leave at two-thirds of their regular pay.

The government is to provide tax credits to employers who provide this to their employees, Smith said.

“It has a cost, obviously, to pay employees not to work,” he said. “Those costs you can get back through reimbursement on your payroll taxes.”

The law requires employers to post a notice telling employees that this may be available to them.

Another recent development, he said, is the expansion of unemployment compensation benefits under the CARES Act. 

It now provides unemployment benefits to those who might not otherwise be entitled to them, such as those who are self-employed, independent contractors and more. 

It also increased the amount of benefits to which a person may be entitled. The federal government will now give $600 per week to a person in benefits on top of what that person qualifies for under his or her state unemployment plan.

“To put that into perspective, in Alabama, the most you can receive in unemployment benefits is $275 a week,” Smith said. “This federal benefit is $600 a week on top of the $275 that you could possibly receive under Alabama law.”

The unemployment benefits used to be capped at 29 weeks, he said. With this expansion, a person can now go up to 39 weeks and still receive benefits.

Part-time employees can get benefits too, Smith said — it will be a prorated amount based on the schedule they normally work.

Small Business Administration Loans

Di Dipiazza, an accountant at DLHC, discussed loan opportunities for small businesses. He said he has some clients with enough money to get their business through the next few weeks; other clients don’t have enough money to make the next payroll.

“The people who have no reserves — the people who are worried about paying rent or payroll — we’re saying we need to have them look at the SBA loan,” DiPiazza said.

It’s a payroll-based loan, he said. Banks will look at 2019 payroll for the calendar year and will take a monthly average. Every employer is eligible to borrow up to 2½ times what their average was the year before.

Banks are still working out all the details, he said, but as of right now, banks are telling Dipiazza that these loans don’t require collateral or guarantees. They have to be paid back, but there is a deferred period for payback, and the grant portion of it may be forgiven.

The grant portion is based on whether payroll dollars and number of employees is equivalent to the same period in the year before.

“If you’ve got as many people as you had before and you’re paying them as much as you did in the same period before, then there’s basically an eight-week period that the government will forgive this loan if the loan is used for that reason.”

Wages, commissions, vacation payments, parental or medical leave, healthcare premiums and retirement benefits, rent, utilities and business interest can be included in this forgivable amount.

“These costs over an eight-week period will be accumulated, they’re somehow going to be certified … and the amount of the loan that is used for these expenses over this eight-week period, beginning on the day of the loan, can be forgiven. The government would basically reduce your loan by that amount.”

Businesses who need this relief immediately should go ahead and pull their four quarterly payroll tax returns from 2019, he said. Banks are also asking for a financial statement or tax return, but they may waive this if it’s not readily available, he added.

“The banks can then tell you what your maximum loan amount is with those returns,” he said. “You can borrow up to that or part of that. You can borrow just what you think would be forgiven.”

For the amount that isn’t forgiven, the interest and the principle is deferred for six months. The rest will be financed for a period not to exceed 10 years and at an interest rate not to exceed 4%.

More online resources can be found on the Homewood Chamber of Commerce website at homewoodchamber.org/homewood-community-resources-available-during-covid-19-crisis. The recording of this webinar will also be posted online at the chamber’s website.