Though the full financial impact of COVID-19 is yet to be determined, many Wilmington businesses have had to close their doors in an effort to slow the spread of the virus. This has led to tremendous losses in revenue, unprecedented unemployment, and steep wage cuts. No business has been unaffected by COVID-19, and that data indicates that we are likely entering into an economic recession.
In response to this crisis, the local, state, and federal governments have created initiatives to help small businesses survive the COVID-19 pandemic by restoring lost revenue with low interest loans and other forms of financial relief. It is still too early to tell what impact these measures will have on our local economy, but businesses and their employees stand to benefit immediately from these programs.
At Rountree Losee, we work with Wilmington businesses of all sizes and at all stages, providing full life-cycle business planning, general corporate advising, and guidance on business financing. If your business needs assistance navigating the COVID-19 pandemic, our office remains open and we are here to take your call.
Federal Resources for Small Businesses
Coronavirus Aid, Relief, and Economic Security (CARES) Act (Phase 3)
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress on March 27th, 2020. The $2 trillion economic relief package was intended to provide direct economic assistance for workers, families, and small businesses, and preserve jobs.
For individuals and families, the CARES Act provides households of up to $1,200 per adult for individuals whose income was less than $99,000 (or $198,000 for joint filers) and $500 per child under 17 years old – or up to $3,400 for a family of four.
In addition to individual economic relief, the CARES Act includes provisions for American small businesses through the Payroll Protection Program and Economic Injury Disaster Loans.
Economic Injury Disaster Loans
Small business owners in Wilmington are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The loan provides assistance to businesses that are experiencing a temporary loss of revenue caused by COVID-19. Loan funds will be made available to businesses that successfully apply for the advance and will not have to be repaid.
Economic Injury Disaster Loans are for small businesses with fewer than 500 employees, including sole proprietorships, independent contractors, and self-employed individuals. Private non-profit organizations or 501(c)(19) veterans organizations affected by COVID-19 are also eligible to apply.
For more information about Economic Injury Disaster Loans, visit the SBA’s website here:
Paycheck Protection Program
Another critical provision under the CARES Act is the Paycheck Protection Program, or PPP. This program has authorized up to $349 billion in forgivable loans for small businesses so that they will be able to pay their employees during the COVID-19 crisis.
PPP loan amounts will be forgiven as long as:
- Proceeds from the loan are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
- Employee and compensation levels are maintained.
Small businesses can borrow up to 2.5 times their average monthly payroll from the previous year through the Paycheck Protection Program. Payroll costs are capped at $100,000 on an annualized basis for each employee.
Small businesses and sole proprietorships started applying for loans on Friday, April 3, and independent contractors and self-employed individuals were eligible to apply on April 10.
In order to get full loan forgiveness under the program, businesses need to maintain pre-COVID-19 levels of full-time employees. Companies are able to lay off staff while they have the SBA loan, but forgiveness of the loan will be reduced in the event they have reduced full-time staff or salaries. Small businesses have until June 30, 2020, to restore full-time employment and salary levels for any changes made between Feb. 15, 2020, and April 26, 2020 for forgiveness of the loan.
The PPP loans were given on a first-come, first-serve basis and already the funds have been depleted. Federal lawmakers indicated that they are close to approving a spending bill that will give the Payroll Protection Program a major boost, proving more opportunities for small businesses to benefit from this program.
For more information and updates about the PPP, you can visit the NC Chamber of Commerce’s website here:
COVID-19 Continuity Planning for Wilmington Businesses
In addition to various forms of financial relief, there is a wealth of informational resources and guidance available to Wilmington businesses to help them prepare for, respond to, and survive the COVID-19 pandemic. There are a myriad of employment, regulatory, and compliance challenges that businesses will have to overcome in the coming days in addition to financial burdens.
These issues may include:
- titles I and V of the Americans with Disabilities Act (ADA) and pandemic planning in the workplace,
- the impact of the Coronavirus on contracts and other business relationships,
- influenza planning guidance from the Occupational Safety and Health Administration (OSHA),
- the U.S. Environmental Protection Agency’s enforcement of compliance issues for regulated businesses, and
- business interruption insurance claims and disputes.
Although stay-at-home orders have caused some local businesses to shut their doors to the public, there are many businesses that are considered essential and remain open to the public. There are even more businesses that continue to operate remotely. As we work to slow the spread of the virus, businesses will continue to confront novel and challenging issues affecting their day-to-day operations.
Rountree Losee is Here to Help Your Business
The North Carolina Governor’s stay-at-home order is set to expire on April 29; however, the order may be extended beyond this date. In New Hanover County, there have been 72 confirmed cases of the Coronavirus and 3 deaths. Statewide, 7,608 people have been diagnosed with COVID-19, and at least 253 people have died.
Even after the local economy opens back up for business, it won’t be business as usual. Many of the regulatory and compliance issues that businesses face now will likely continue as lawmakers and business owners make plans for a safe return to work.
The Wilmington business attorneys at Rountree Losee are here to help. We realize that this is a confusing and frustrating time for many businesses. If you have any questions about how this virus affects your business, we encourage you to call our office at 910-763-3404. Our attorneys are keeping abreast of COVID-19-related legal developments, and are available to schedule video or audio conferences through Zoom for both new and existing clients. To schedule a virtual meeting, please email our attorneys individually.