Bonadio is here to assist you in navigating the CARES Act in relation to your multiemployer benefit plans. Certain provisions of the CARES Act or Families First Corona Virus Response Act might apply to your Training Fund and/or Health and Welfare Fund and while this is not to be construed as legal advice, contact your Bonadio Partner if you have any questions on the programs noted below. This information is based on current interpretations of the law and may change based on further guidance.
The Paycheck Protection Program
Typically, your Training Fund will qualify for this program if you maintain payroll and compliant under 501(c)(3). The loan is 2 1/2 times your average monthly payroll for 2019 and could be totally or partially forgiven if your hardship is justified within the qualified timeframe. Otherwise, the repayment terms are lucrative, and the rate of interest is 1.0%. Apply for these loans through your bank or credit union.
Economic Injury Disaster Program
Any 501(c) entity can qualify for this program. To qualify, you generally need to have fewer than 500 employees (including affiliates as defined by the SBA regulations) and again you need to demonstrate that your organization is unable to meet financial obligations and pay your normal operating expenses due to the pandemic. The maximum loan amount is $2 million, which will be determined by the SBA based on their determination of your needs, and amounts need to be spent by December 31, 2020. The interest rate is 2.75% for small businesses and repayable up to 30 years. It takes 30 minutes to apply online with the SBA, and regardless of the approval of the loan, the SBA has indicated that all eligible applicants will receive up to $10,000 Emergency Economic Injury Grant within 72 hours of submission of the application. They don’t ask for much information, but you will need your 2019 financial information available. To reiterate, the grant is yours, whether your application for the loan is approved or not.
Tax Credits for Paid Sick and Paid Family Medical Leave Program
Generally, employers who employ between 50 and 500 employees are required to pay emergency family and medical leave. The required paid sick leave is up to 80 hours for full-time employees and expanded medical leave requires payment for 12 weeks, allowing the first 2 weeks to be unpaid. There is the capability to take a credit against payroll taxes being paid for amounts paid under the extended sick leave or family medical leave program. There is also the interaction between this credit and the employee retention credit program below.
Employee Retention Credit Program
This is a payroll tax credit of up to $5,000 on qualifying wages through December 31, 2020. This credit may apply to eligible multiemployer benefit plans if your business was fully or partially suspended by government order due to COVID-19 during the calendar quarter or you can demonstrate economic hardship in any one quarter in which the credit is taken. If you take this credit, you will not be eligible for the PPP loan forgiveness, if applicable. The credit is taken on your federal payroll tax Form 941. This credit really benefits those multiemployer benefit plans with fewer than 100 employees and the credit will diminish if you have over 100 employees.
Employer Payroll Tax Deferment Program
You are allowed to defer 100% of your employer’s share of FICA payroll tax liability between now and December 31, 2020 with 50% of the amount due on December 31, 2021, and the remaining 50% of the amount due on December 31, 2022. You are eligible to receive the deferment if you take the credits for emergency family and medical leave, as well as the employee retention credit. This is limited for employers involved in the PPP program, but being involved in the EIDL program doesn’t seem to be limiting.
The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We therefore make no warranties, expressed or implied, on the services provided hereunder.