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COVID-19 Update for May 15: 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 15, 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 15: 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 15, 2020, here are the latest updates leaders in Massachusetts’s business community need to know.   

The Latest News

Phase Four relief bill takes shape

Congressional Democrats have outlined their goals for Phase Four of federal relief – the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act – which calls for nearly $3 trillion in spending.  Proposed allocations include $500 billion to help state governments, $375 billion to local governments, $20 billion to tribal governments and $20 billion to territories, all meant to lessen the financial impacts of the pandemic.  Another $190 billion would provide premium pay for essential employees on the front lines of fighting the COVID-19 outbreak.  Another round of direct payments to Americans is also being called for, this time with expanded eligibility for college students and non-child dependents.  Expanded unemployment benefits would also last through January 2021.  The bill also proposes $100 billion for K-12 schools and higher education, $100 billion for hospitals and health care providers, $15.75 billion in grants to transit agencies, $25 billion to the United States Postal Service, $100 billion to help low-income renters avoid eviction, $75 billion to help homeowners in need, and $75 billion to expand testing and contact tracing.  PPP-related elements in the HEROES Act include an extension for how long businesses have to spend their loan, from eight weeks to 24 weeks, while also extending the “covered expenses” period from June 30 to December 31.  The proposed bill would also allow businesses to deduct expenses paid for with PPP loan money, and sets aside some of the remaining PPP funding for businesses with 10 or fewer employees, and some for nonprofit organizations.  Discussions, and a possible first vote on the bill, are expected later today.

Updates to the Paycheck Protection Program

Because of the fast rollout of the PPP, the SBA continues to update its guidance regarding how the loan forgiveness aspects will work, including just recently extending the deadline for when money needs to be returned to May 18.  Additional guidance is still expected. That said, the second round is lasting considerably longer than the first round; as of May 8, the SBA had more than $120 billion in PPP funds still available.  Also, Congress is reviewing other avenues of distributing PPP funding to business owners other than through banks, given the challenges they have faced.  Additionally, on Wednesday, the SBA came out with safe harbor for PPP loans under $2 million.

Continued update to Main Street Lending Program

The Federal Reserve’s Main Street Lending Program is designed to provide support to small and medium-sized businesses and their employees across the United States during the current period of financial strain by supporting the provision of credit to such businesses.  The availability of additional credit is intended to help companies that were in sound financial condition prior to the onset of the COVID-19 pandemic maintain their operations and payroll until conditions normalize. The Federal Reserve is currently working to create the infrastructure to operationalize the program.  A start date will be announced soon.

Concerns expressed around reopening too quickly

On Tuesday, Dr. Anthony Fauci and other top federal health officials testified before the Senate Health, Education, Labor, and Pensions Committee about reopening the U.S. economy.  Dr. Fauci warned of new outbreaks if restrictions are lifted too quickly.

Massachusetts News

Governor Baker announces four-phased reopening

On Monday, Governor Baker announced the reopening of the Massachusetts economy in four phases.  Here’s what that looks like:

The reopening will be conditional based on public health metrics.  More guidance regarding the reopening is expected on May 18, when the Governor’s emergency order that shut down all non-essential businesses is set to expire.

Latest update on PPP lending in Massachusetts

PPP funding is still available, although lending rates in Massachusetts have slowed considerably since the beginning of the second rollout.  Last week saw an average of about 1,100 loans per day (equaling around $45 million), compared with 10,000 per day (and $870 million) the previous week.

Governor asking Legislature for $1 billion in state spending

Governor Baker is asking the state Legislature to authorize $1 billion in spending related to the COVID-19 pandemic, with an expectation that the federal government will eventually reimburse the state.

Massachusetts updating paid family leave program

The Department of Family and Medical Leave announced updates to rules for the paid family and medical leave program, designed to help workers take care of themselves and their families without facing financial crises.  The DFML released a revised set of regulations for the new benefit program, which is expected to start making some benefits available on January 1, 2021.

Unemployment numbers offer “sliver of hope”

John Regan, president and CEO of the Associated Industries of Massachusetts, recently offered a “sliver of hope” within the latest unemployment numbers.  A survey conducted by AIM that found 52% of companies that have laid off or furloughed employees as a result of the pandemic plan to bring all of these workers back once the pandemic has abated.  Another 14.5% of companies expect to bring back 75% of the affected workers.

More Massachusetts businesses file lawsuits surrounding business interruption coverage

Following the lead of Legal Seafoods LLC, which sued its insurer earlier this month over denial of coverage, a family of North Shore restaurants and a Somerville screen printing business have also filed separate lawsuits to force payouts on business interruption coverage.

Black Economic Council of Massachusetts launches www.protectma.com

The Black Economic Council of Massachusetts launched a new online portal this week – www.protectma.com – which matches businesses looking for protective equipment with black- and Latino-owned manufacturers and distributors that are selling the equipment.  The council’s executive director said he is starting with minority-owned businesses on the supply-side first, but will expand it to include others if demand is high.

OEE now accepting applications for Empowerment Grants for Small Businesses program

Also, the State Treasurer’s Office of Economic Empowerment (OEE) is accepting applications for the Empowerment Grants for Small Businesses program.  Grants of up to $2,500 are being offered to small businesses and eligible nonprofits serving Massachusetts’ Gateway Cities.  Applications are due by Friday, May 29.

Massachusetts DOR issues telecommuting guidance

In an attempt to minimize the disruptions experienced by businesses whose workforce is mandated to function remotely due to COVID-19, the DOR has issued a TIR and emergency regulations covering a broad base of telecommuting-related topics.

Industry News

Dealerships

The auto industry is beginning to rebound as consumers want to begin to travel again, but do so in their own space.  AutoNation Inc., the biggest car dealership chain in the country, noted the rebound, which matches independent market research.

Education

As uncertainty continues to surround fall semesters for colleges, new federal data shows a substantial drop in renewals of the Free Application for Federal Student Aid by returning college students.

Meanwhile, the California State University system became the largest institution to announce that fall classes will predominantly be held online.  CSU is the nation’s largest four-year university system, with approximately 480,000 students enrolled.

And the Massachusetts Commissioner of Higher Education Carlos Santiago recently discussed the uncertain impact for Massachusetts colleges and universities, stating that he’s never seen anything affect higher education more strongly than the COVID-19 pandemic.

On Wednesday, Harvard Medical School announced that new students will learn remotely in the fall, although they are planning for returning students to have some access to on-site research and clinical facilities.  Meanwhile, UMass Medical School is planning for on-campus classes.

Government

The COVID-19 pandemic has changed the way we all manage our processes and business – especially for cities and towns. Join our upcoming webinar, The Future is Now, as we discuss best practices and new protocols for municipalities to implement along with providing an economic update.  Join our presenters from blumshapiro, Webster Bank, Elan and Fiserv as they will highlight areas your municipality should be focused on.

 Health Care

Massachusetts hospitals, starting to see a decrease in COVID-19-related hospitalizations, are now recognizing the financial impact of the pandemic as well.  Currently, state hospitals are losing $1.4 billion in revenue monthly, which is projected out to $5 billion through July.  Normally, the industry usually generates around $30 billion annually.

Meanwhile, hospitals in Massachusetts are also starting the slow transition away from COVID-19 care and back to routine healthcare visits.

And as a result of the COVID-19 crisis, telehealth services have continued to expand.

Human Resources

In response to pressure from key members of Congress, the IRS has changed its position on the treatment of certain employer-paid health plan expenses for purposes of the Employee Retention Credit (ERC) when the employer is not otherwise paying wages to the employee.  In its new guidance, the IRS provided that allocable health plan expenses paid on behalf of employees may be treated as qualified wages even if the employer isn’t otherwise paying wages to the employee.

Nonprofit

The Massachusetts Nonprofit Network, along with the Massachusetts Council of Human Service Providers, is advocating for full forgiveness of COVID-19-related unemployment claims owned by self-insured nonprofit organizations.

Real Estate

The COVID-19 pandemic is creating a new housing crisis that pits renters and landlords against each other, with Wall Street investors the potential beneficiaries.

Restaurants and Hospitality

Boston Mayor Marty Walsh recently suggested that the city could shut down some streets to help provide restaurants additional outdoor seating capacity as they reopen and seek some stability.

Meanwhile, some restaurant owners and others in hospitality are lobbying the Governor for a partial reopening by May 19, with the ability to open at full capacity by June.

Transportation

On Monday, the MBTA awarded another contract in the South Coast Rail project, which will allow work to begin on the commuter rail meant to reach Taunton, Fall River and New Bedford.  Passenger service is currently expected to begin in November 2023.

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:

With over 100 colleges throughout the state, and more than 30 in the city of Boston alone, May typically brings a slew of commencement ceremonies.  Of course, this is not the typical May, and already many universities have held virtual graduation ceremonies with more to come.  We thought we’d share a more unconventional one we’ve come across, held by someone who holds the market on good news, John Krasinski, who said it best:  “…no matter how hard things get, there is always good in the world.  And how do I know that?  Because, class of 2020, today you are the good in the world.”  Congratulations, class of 2020!

 

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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