3/30/20 COVID19 Update on DOL Paid Sick Leave; Illinois loan programs
Update from the Technology & Manufacturing Association President Steve Rauschenberger on March 30, 2020 –
I wanted to update you on two important issues.
FIRST – The US Department of Labor has issued guidance on the Paid Sick Leave and Paid Family Medical Leave Act and some of the guidance differs from what we understood last week. The US DOL Q&A is a link below.
SECOND – I wanted to provide a quick overview of the various announced loan programs we believe TMA members (in Illinois) will qualify for. Please be aware that it appears you can only apply for ONE of the SBA loan programs, not both.
- Please note as you review the US DOL Question and Answer attachment, employees of companies that closed pursuant to Governor Pritzker’s “shelter in place” order are NOT eligible to use the new Paid Sick Leave or the new Paid FMLA until the company is reopened and there is work for the employees. Employees of these closed companies are instead directed to immediately apply for Unemployment Insurance. After these employees are called back to work, they would then be eligible for Paid Sick Time and Paid FMLA. This is different from the interpretations that were circulated last week… The rest of the Q & A tracks pretty closely to the analysis available last week.
- There are at least four loan programs available to TMA members as of today. Details and procedures are still emerging, and in some cases websites are somewhat overwhelmed, but in a nutshell:
- SBA Disaster Relief Program: Loans up to $2 million, can defer payment for up to 1 year, maximum term 30 years, interest rate likely 3.75%, can be used for nearly all business expenses. Loan directly from SBA, likely time application to proceeds 60+ days.
- Illinois Small Business Emergency Loan: Loans up to $50,000, 6 month deferral of payments, low interest rate, funds used for working capital, proceeds hopefully 30 days from application, apply after 4/1 to Illinois Department of Commerce and Economic Opportunity (DCEO).
- Illinois Small Business COVID-19 Relief Program: Linked deposit low interest loan program. Apply through your local lender, must be impacted by COVID, less than 1 million liquid assets, or less than $8 million annual receipts.
- US CARES Act Loans (potentially all or part of principal may be forgivable): Loan through local lenders, 100% SBA guarantee, must have less than 500 employees, up to the lesser of 2.5 times average monthly payroll (excluding employee compensation per that exceeds $100,000) plus other disaster loan balances originated after 1/1/2020 or $10,000,000.0. Can be used to pay payroll and related costs, mortgage, rent, utilities, and interest on existing debt.
- Terms same as SBA 7(A) except no personal guarantees and no recourse to principals except misuse of proceeds. Borrower MUST support payroll costs and certify that i) “that the uncertainty of the current economic conditions makes necessary the loan request to support ongoing operations; ii) acknowledge that the funds will be used to retain workers, and maintain payroll or make mortgage, lease, and/or utility payments;” iii) that there is no pending application for a SBA 7(A) loan for the same purpose and no proceeds have or will be received from such a loan.
- Forgivable portion of a covered loan is equal to the sum of following payroll related costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (less compensation over $100,000) plus payment of interest on mortgage obligation, cover rent obligation, and any covered utility payment. In addition, eligible payroll costs include: compensation below $100,000, vacation, parental, family, medical or sick leave pay, allowance for dismissal or separation, payment for group health care benefits, & payment of State & local taxes assessed on the compensation of employees.
We will try and keep you updated as more details become available, but if you are considering a loan, the US CARES Act loans would be the first to review. These are originated by your banker, so if you are interested reach out to your banker or contact TMA ([email protected]) for a list of TMA affiliate Members that are interested in originating these loans.
HELPFUL LINKS & DOCUMENTS
Be safe, stay calm, and manufacture on.