COVID-19 News

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  • 05 Apr 2020 3:58 PM | Myron Rau (Administrator)


    NADA Issues FAQs on SBA Paycheck Protection Program

    Late last night the Small Business Administration issued an interim final rule (IFR) on the implementation of the Payroll Protection Program (PPP) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This IFR offers guidance on and outlines the key provisions of the PPP. As this is an interim final rule, this guidance is effective immediately. Importantly, this guidance has confirmed that PPP loans will be made first-come, first-served, with funds available until they are exhausted. Dealers interested in PPP funding should contact their lenders as soon as possible to secure funding before the appropriated money has been exhausted. 

    Today NADA released CARES Act FAQs that include information on the PPP. The FAQs incorporate the new guidance on PPP loans and information on SBA Economic Injury Disaster Loans, tax provisions and changes to unemployment assistance.  

    Additional guidance from the SBA on the affiliation rules under the PPP is pending. NADA will continue to work with the SBA and Department of Treasury to implement the provisions of the CARES Act and will update these FAQs as more information becomes available. 

  • 31 Mar 2020 11:56 AM | Myron Rau (Administrator)

    National Automobile Dealers Association

    For updates on the coronavirus and its impact on local dealerships, visit NADA’s Coronavirus Hub.

  • 29 Mar 2020 4:11 PM | Myron Rau (Administrator)


    The Department of Labor has just issued an updated version of its FAQs on the emergency paid sick and childcare leave provisions of the Family First Coronavirus Response Act (FFCRA). Reminder: these emergency leave mandates do not take effect until April 1 and do not apply retroactively. 

    For now, please note the following five items. 

    1. What do I have to show to qualify for the under 50 hardship exemption? The DOL will address this in regulations issued next month. The DOL is not requiring that anything be submitted to it. See, DOL FAQ 4. 

    2. What information should employees have to show to qualify for leave? The DOL details what information employees must provide in order to demonstrate that they are qualified for emergency paid sick or childcare leave. See, DOL FAQs 15 and 16. The DOL also notes that employees requesting emergency leave must show that they “cannot work or telework.” See, DOL FAQs 17-19. 

    3. Can qualified employees take emergency leave “intermittingly”? Generally, yes. See, DOL FAQs 20-22. 

    4. Are employees eligible for emergency leave due to federal, state or local “shut-down” or “stay at home” directives or because the dealership partially or fully closed or laid off employees “voluntarily”? No. See, DOL FAQs 23-28. 

    5. May employees collect both unemployment and emergency leave pay? No. See, DOL FAQ 29. 

    NADA intends to issue an updated version of its emergency leave FAQs later today to reflect these clarifications and other new info on DOL’s website. Stay tuned: we fully expect both DOL and the IRS to issue additional clarifications prior to the April 1, 2020, effective date.

    National Automobile Dealers Association

  • 29 Mar 2020 4:09 PM | Myron Rau (Administrator)


    U.S. House Passes CARES Act

    Today the U.S. House passed Covid-3, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, clearing the $2.2 trillion measure; the President is expected to sign the bill into law promptly. Congress acted with extraordinary speed: the measure was drafted in the Senate and approved by the entire Congress in just over a week. 

    The bill contains NADA-supported provisions which we have previously summarized, such as the new guaranteed loan program for small businesses and the extensive tax relief for individuals and businesses. One aspect of the bill is especially noteworthy for dealers: in general, the new small business loan will be limited to businesses with 500 or fewer employees.  However, as explained in the attached memo, the bill includes a provision that will enable certain franchised dealers to qualify for a waiver of the affiliation rules that typically apply for SBA loans. 

    Thanks to the many dealers, NADA directors and state and metro association executives who worked in support of this bill and the provisions favorable to dealers.

    National Automobile Dealers Association

  • 26 Mar 2020 1:33 PM | Anonymous

    Federated Insurance is committed to helping our clients navigate the newly announced mandates affecting business owners as a result of the spread of COVID-19. In collaboration with our friends at Enquiron®, we are providing you with three valuable documents designed to help provide information to organizations facing challenging employment issues during these uncertain times. Below you will find an Employer COVID-19 FAQs document, an overview of the Families First Coronavirus Response Act, and Important Rules for Employers to Know in the Wake of COVID-19.

    Additional helpful resources and Federated Insurance’s response to Coronavirus are found HERE.

     
    As a reminder, you can leverage Federated risk management resources by directing clients with questions to your Account Executive.
     
    Our mission at Federated Insurance continues to be enhancing your success and protecting your business. I sincerely hope the materials provided above help you during these trying times. I wish all the best for you, your business, your employees, and their families.
     
    NOTE: The materials provided contain information developed solely by Enquiron, a third party wholly independent from Federated. Federated provides this information as a courtesy to its clients. This content should not be considered legal advice from Federated and may be subject to additional rules and regulations in your state. The materials are provided as general information and intended to serve only as a guide. Since each business situation is unique, qualified legal counsel should be sought regarding questions specific to your circumstances and in responding specifically to the COVID-19 situation.

    Dave Szymanski |First Vice President-Director of ARMS & H. O. Marketing Services
    Federated Insurance – Marketing
    121 East Park Square
    Owatonna, MN 55060
    Mail Code CII-102

    O: 507.455.5153  |  E: dgszymanski@fedins.com

  • 26 Mar 2020 12:35 PM | Myron Rau (Administrator)

     

    • U.S. Department of Labor continues to release new guidance on the new federal emergency leave mandates, including additional fact sheets, questions and answers, guidance on the mandated poster(s) and clarification regarding the 30-day enforcement policy. NADA is working to incorporate these updates into its dealer-specific FAQs, intended for distribution to dealers tomorrow.

     

    • NADA launches Coronavirus Hub, a special website section, to keep dealers current on coronavirus developments, including health and safety; government advocacy; regulatory and compliance issues; industry and business operations; workplace concerns; media updates; and more

     

     

  • 26 Mar 2020 10:14 AM | Myron Rau (Administrator)

     

    Senate Passes Phase 3 Coronavirus Response 

    Late last evening, the Senate passed the nearly $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. This bill, known as Phase 3, is extremely beneficial for dealerships of all sizes and includes generous and unprecedented provisions to help provide liquidity for dealerships and to help businesses keep their employees on the payroll. The House of Representatives is expected to vote on the Senate measure tomorrow; and the President has pledged to sign the bill into law quickly. 

    NADA advocated for provisions included in the Senate bill, such as new federal funding to cover operational and payroll expenses for small businesses through June 30, deferring payroll tax payments for employers, and other important tax relief. NADA continues to advocate for the broadest possible business relief to help dealerships continue in operations and retain employees. 

    The following provides a preliminary summary of provisions of most interest to franchised dealers.
     

    Small Business Loan Provisions 

    A completely new, temporary lending program to aid small business The bill will provide $349 billion to support  loans through a new Paycheck Protection Program, which Congress designed to keep employees on the payroll and save small businesses. The Small Business Administration (SBA) will stand up a completely new program that will only nominally be part of the existing SBA Section 7(a) loan program. To expedite the funding of the new loans, the Treasury Department and SBA will expand the number of participating banks and credit unions, and captive finance companies may also be included. 

    Minimal eligibility requirements Any business operational on February 15, 2020, that paid salaries and payroll taxes will be eligible, but there is a limit of no more than 500 employees. Fortunately, the bill includes provisions to waive normal affiliation rules which should be applicable to many dealers. For dealers, there will be no test for total revenue. 

    Borrower certification to obtain loan Borrowers will be required to make a good-faith certification that the loan is necessary due to economic conditions caused by COVID-19 and that it will use the funds to retain workers and maintain payroll, lease and utility payments. 

    Loans have terms NOT found in traditional bank loans Lenders will not require application fees, closing costs, collateral or personal guarantees. The maximum interest rate will be 4%, and the first six months' payments (principal and interest) will be automatically deferred. Finally, the lenders are not expected to perform credit analysis, because the loans will be 100% guaranteed by the SBA.  

    Maximum loan amount The maximum amount will be 250% of an employer’s average monthly payroll (based on a 12-month look back from the date of the loan), but NOT MORE than $10 million. 

    Permitted uses of the loan The loan can be used for “payroll costs,” which include salary, commission, or similar compensation (up to an annual rate of pay of $100,000 per employee); employee group health care benefits, including insurance premiums; retirement contributions; and covered leave from February 15, 2020, to June 30, 2020. Permitted uses also include payments of interest on mortgages, rent, utilities and interest on any other debt obligations that were incurred before February 15, 2020. 

    Loans may be forgiven In general, borrowers will be eligible for loan forgiveness equal to the amount of certain expenses spent during an eight-week period after the origination date of the loan. These expenses are payroll costs, interest payments on any secured debt incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020.  

    Percentage of employee retention related to amount of loan forgiveness The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year, and by the reduction in pay of any employee in excess of 25% of the employee’s prior-year compensation. However, to encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that rehire previously laid-off workers by June 30, 2020, will still qualify and not be penalized for having a reduced payroll during the loan period. 

    No effect on federal Income tax Canceled indebtedness under this program will not be included in the borrower’s taxable income.   

    Loan amounts not forgiven Any loan amounts not forgiven at the end of one year will be carried forward as an ongoing loan with terms of a maximum of 10 years at 4% interest or less. 

    Tax Provisions Applicable to All Businesses 

    The CARES Act contains many dealer-friendly tax provisions that will assist dealers in maintaining liquidity during the disruptions caused by the ongoing coronavirus outbreak.  

    Net operating loss (NOL) carryback Dealers will be permitted to offset losses in 2018, 2019 and 2020 against profits from the prior five years. NOL carryback was previously eliminated by the Tax Cuts and Jobs Act (TCJA) in 2017. This provision may provide dealers with losses in 2020 with substantial refunds. Losses that are used to offset pre-TCJA profits, which were taxed at a higher rate, will be refunded at pre-TCJA tax rates, providing an additional boost. 

    Modification on losses for taxpayers other than corporations TheTCJA generally limited the amount of losses noncorporate taxpayers, including pass throughs, could claim to $500,000. Under the bill this limitation is suspended, allowing dealers to utilize excess business losses along with the new NOL carryback provisions to access critical cashflow.  

    Qualified improvement property (QIP) technical fix The TCJA intended for businesses to deduct improvements made to retail property immediately under the TCJA’s bonus depreciation provisions, but due to a drafting error the depreciation lifespan was set at 39 years. This bill corrects this error retroactive to 2018. Dealers with significant outlays on QIP in previous years should consider amending their 2018 and 2019 returns to claim the deductions and receive a refund. 

    Interest deductibility limit increased. The TCJA limited the deductibility of business interest to 30% of a dealership’s adjusted taxable income, except for floor plan financing interest, which remained 100% deductible. The bill allows businesses to deduct up to 50% of their adjusted taxable income for 2019 and 2020. Dealers should note that, coupled with the proposed IRS rules on the interplay between bonus depreciation and floor plan financing interest, if their total business interest, including floor plan financing interest, amounts to less than 50% of adjusted taxable income for these years, they may also be able to avail themselves of the bonus depreciation provisions in TCJA. Dealers unable to use full expensing in 2019 due to interest expenses between 30% and 50% of their adjusted taxable income may be able to generate refunds by filing an amended 2019 return.  

    Employee retention credit Dealers who have been forced to close their business due to a government-mandated shutdown will be allowed a refundable payroll tax credit for retaining their employees. The credit is generally available to dealers whose operations have been fully or partially closed due to a government mandate and whose gross receipts have declined by more than 50%. For dealers with 100 or fewer employees, all employee wages qualify for the credit regardless of whether the business is shut down or not. The credit is limited to the first $10,000 of compensation paid per employee. This credit is available through the end of 2020. 

    Delay of payroll taxes The bill allows businesses to delay the 6.2% employer portion of the Social Security payroll tax for the remainder of 2020. The delayed tax liability would then be paid back apportioned equally over the following two years.

    As further details become available, NADA will release a more extensive summary of these provisions. For any questions, contact legislative@nada.org.

     

    03/26/2020

     

  • 25 Mar 2020 11:31 AM | Myron Rau (Administrator)

    This resource is brought to you by The Avitus Group, a business partner of the SDADA.

    The COVID-19 (coronavirus) is continuing to present unique challenges around the globe—and it may feel that there are more questions than answers. As an Avitus Group partner, however, we want to let you know that we’re here for you with the latest alerts and authoritative information. 

    We encourage you to explore our COVID-19 Business Resource Library (link below) for information that can assist you and those with whom you work. We’re always happy to help. 

    COVID-19 Business Resource Library
  • 25 Mar 2020 10:51 AM | Myron Rau (Administrator)

    The Keeping American Workers Paid and Employed Act would provide $350 billion to help prevent workersfrom losing their jobs and small businesses from going under due to economic losses caused by the COVID-19 pandemic. The Paycheck Protection Program would provide 8 weeks of cash-flow assistance through 100percent federally guaranteed loans to small employers who maintain their payroll during this emergency. If theemployer maintains its payroll, the portion of the loans used for covered payroll costs, interest on mortgageobligations, rent, and utilities would be forgiven, which would help workers to remain employed and affectedsmall businesses and our economy to recover quickly from this crisis. This proposal would be retroactive toFebruary 15, 2020, to help bring workers who may have already been laid off back onto payrolls.

  • 25 Mar 2020 10:24 AM | Myron Rau (Administrator)


    From NADA

    Last week, President Trump signed into law a multibillion-dollar emergency aid package, aimed at helping employees impacted by the coronavirus. The Families First Coronavirus Response Act provides certain eligible employees with potential coronavirus-relatead emergency paid sick leave, emergency family and medical leave, expanded unemployment insurance, as well as tax credits for employers to offset the costs of providing such leaves.

    NADA covered the top employment-related legal issues, including the new law, in its webinar on key pandemic-related legal issues and mandates for automobile dealerships. The webinar, Running a Dealership during a Pandemic: Legal Issues and Federal Mandates had more than 3,000 participants on the all.

    To view the webinar, click here.

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