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COVID-19 Update for May 1: Here’s What Massachusetts Businesses Need to Know

As the news surrounding the global COVID-19 pandemic continues to evolve, our team at blumshapiro is staying focused on answering the local business community’s most pressing questions. As of Friday, May 1, 2020, here are the latest updates leaders in Massachusetts’s business community need to know.   

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Insights  <  COVID-19 Update for May 1: Here’s What Massachusetts Businesses Need to Know

As the news surrounding the global COVID-19 pandemic continues to evolve, our team at blumshapiro is staying focused on answering the local business community’s most pressing questions. As of Friday, May 1, 2020, here are the latest updates leaders in Massachusetts’s business community need to know.   

The Latest News

The second round of the Paycheck Protection Program begins

After the initial $349 billion in small business loans was distributed through the PPP in less than two weeks, Congress approved an additional $310 billion to fund the program, which restarted on Monday.  Expectations were that money would first go to applications already in the pipeline but left unfunded from the first go-round.  Within the first five hours of the new program being open, 100,000 loans submitted by over 4,000 lending institutions had already been processed, and as of Tuesday afternoon, the SBA was reporting almost 500,000 new PPP loans approved, amounting to more than $55 billion.  So far in the second round, the average PPP loan size is $94,000, compared with $206,000 from the first round.  More than 85% of loans have been under $150,000.

IRS guidance states forgiven PPP costs not deductible

The IRS released guidance yesterday addressing the deductibility of otherwise deductible expenses incurred in a taxpayer’s trade or business when the taxpayer receives a PPP loan.  IRS guidance provides that forgiven PPP costs are not deductible.

PPP loans might not be the answer for everyone

Restaurants are beginning to realize that, with the requirement of hiring back employees to qualify for the PPP loan forgiveness aspect, combined with eligibility for another coronavirus relief program – Employee Retention Credits (but only if they don’t also receive PPP funding) – it may not make fiscal sense for them to keep PPP funding.

Increased scrutiny for certain PPP loans

Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza also issued a statement regarding the second round, stating that all loans in excess of $2 million will be reviewed by the SBA.

CDC announces reopening guidance

The CDC recently announced guidance on reopening workplaces.  The guidance includes information on cleaning and disinfection practices, as well as the importance of creating a plan specific to each place of work.

Update to Main Street Lending Program

The Federal Reserve Board yesterday announced that it was expanding the scope and eligibility of the Main Street Lending Program.  Changes include adding a third loan option, lowering the minimum loan size, and expanding the pool of potential borrowers.  A start date for the program still has not been announced, but is expected soon.

COVID-19 Consortium releases survey

The COVID-19 Consortium for Understanding the Public’s Policy Preferences across States surveyed 22,912 people across the country between April 17 and April 26.  Yesterday they released the results.

Massachusetts News

Governor Baker extends business closure, stay-at-home advisory until May 18

On Tuesday, Governor Baker extended the state’s non-essential business closures and stay-at-home advisory to May 18.  The original advisory was set to expire on May 4.  Although COVID-19 hospitalizations have flattened in recent days, the governor is waiting for a definitive declining trend before reopening businesses widely.

Governor Baker forms Reopening Advisory Board

In preparation for reopening, Governor Baker announced the formation of a 17-member Reopening Advisory Board, led by Lt. Gov. Karyn Polito and Housing and Economic Development Secretary Mike Kennealy.  The Board also includes public health officials and members of the business community and municipal government.

Remote notarization signed into law

After passing the state Senate and House last week, on Monday Governor Baker signed the Remote Notarization Act, which permits notaries to notarize documents remotely with the assistance of electronic videoconferencing technology while Massachusetts remains under the COVID-19 state of emergency.

MACDC updates policy recommendations

Earlier this week the Massachusetts Association of Community Development Corporations (MACDC) updated its policy recommendations in response to the public health and economic crisis.  The MACDC notes that some of its initial recommendations have been partially or fully implemented, but stresses that more needs to be done.  Recommendations address small business relief and recovery, housing relief and recovery, neighborhood stabilization, and public health and health equity.

Mass. unemployment claims swell

After the first week of eligibility for self-employed and gig workers to file for unemployment, totals in claims reached 893,000, or 24% of labor force.

Industry News

Education

With much uncertainty surrounding the near future, Harvard University announced earlier this week that it is planning for the possibility of remote learning for the upcoming fall semester, although it still plans to be open for fall 2020.

Food and Beverage

On Tuesday, President Trump signed an executive order invoking the Defense Production Act to keep meat processing plants open.  While concerns exist surrounding the nation’s food supply chain, some food processing plants have struggled with employee coronavirus outbreaks.

Health Care

Earlier this week, Governor Baker allocated an additional $130 million to nursing homes and other long-term care facilities, which will support hiring, cleaning, and other initiatives at the facilities.

Massachusetts is home to more than two dozen companies working to create vaccines, treatments, or devices in the fight against COVID-19.

Monster.com is partnering with the MIT-based COVID-19 Policy Alliance and the Massachusetts Senior Care Association to recruit workers at long-term care facilities.

Human Resources and Employment Law

With an increased amount of legislative changes and programs created in response to the COVID-19 crisis, the blumshapiro HR Advisory team has created a toolkit to augment understanding of the Families First Coronavirus Response Act (FFCRA) policies around paid family and sick leave.

Also, as businesses prepare to reopen, they may face various legal issues, ranging from sickness and death of employees, missed payments, employment discrimination, and more.

Restaurants and Hospitality

In an effort to help support restaurants and food businesses while also addressing social distancing concerns at grocery stores, the city of Boston announced it is allowing restaurants to also sell grocery and other essential items.

Also, the American Hotel & Lodging Association issued a study earlier this week that demonstrates hotel owners could be better off financially if they close rather than take PPP loans.

And the National Restaurant Association released new guidance for reopening restaurants, focused on food safety, cleaning and sanitizing, employee health monitoring and personal hygiene, and social distancing.

Transportation

The Federal Transit Administration on Friday committed to expedite the delivery of $12 million to the Cape Cod Regional Transit Authority and the Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority.

MBTA officials approved of the rollout of an automated fare collection system, resulting in $212 million in added costs.

Available Resources for Massachusetts Businesses 

Additional and previously mentioned resources:

How You Can Help

The community-minded response of Massachusetts’ business community has been nothing short of extraordinary. There are plenty of ways to contribute to the statewide effort to navigate this crisis.  Here are few:

Future Updates and Additional Resources

We will be providing regular updates over the next several weeks as new developments are made available. If you have any questions whatsoever, please do not hesitate to reach out. We are here to help you with your tax and business advisory needs.

In the meantime, you can refer to the following state agencies and associations for the latest information:

And a Last Good Word…

We all need some good news right now – here’s some from this week:

Shawmut Corp. normally produces interior fabrics and materials for the automotive industry, but with the auto industry at a standstill, and after receiving help by way of a Paycheck Protection Program loan, Shawmut CEO James Wyner (with his full team on board) is working with the state’s Manufacturing Emergency Response Team (M-ERT) and federal officials to create and supply approximately 2.5 million medical gowns every week!

After realizing significant business disruptions in the wake of shutdowns, Katsiroubas Bros., a food delivery business, teamed up with nonprofit Fresh Truck, which had been providing groceries to “food desert” neighborhoods in Boston, to help feed hungry families safely as well as keep as many people employed as possible.

 

COVID-19 Business Resources

 

Disclaimer:  The contents of this resource are for general informational purposes only. While every effort has been made to ensure its accuracy, the information is provided “as is” and no representations are made that the content is error-free. We have no obligation to update any content, comments or other information for retroactive or prospective interpretations or guidance provided by regulators, financial institutions or others. The information is not intended to constitute legal advice or replace the advice of a qualified professional. There are areas of the CARES Act where additional clarification from the Treasury Department and the SBA is needed. Your judgment and interpretation of the act may be needed. Users should consult with their legal counsel and representatives of the lending institution regarding the proper completion of their application and supporting documentation.

Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statutes, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law. 

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