https://ramlcpa.link/3d56d | ​Journal of Accountancy

While not law just yet, it is expected to be signed by the president as soon as today.

While we know many key details, there are some key details we don't know, especially regarding the PPP Loan Program. The most pressing in my mind are bank participation and when applications will be accepted as some time will be needed to restart the program.
 
Additional details will be forthcoming and the below summary will probably be updated over the coming days for additional details and clarifications.

Below, I summarize the key provisions in the bill:​

 $325 billion in aid for small businesses struggling after nine months of pandemic-induced economic hardships.  
    Allocations           

• $284 billion to the U.S. Small Business Association (SBA) for first and second PPP forgivable small business loans and 
• $20 billion to provide Economic Injury Disaster Loan (EIDL) Grants to businesses in low-income communities. 
• $15 billion in dedicated funding  for shuttered live venues, independent movie theaters, and cultural institutions 
• $12 billion will be set aside to help business in low-income and minority communities.   

$120 billion to provide workers receiving unemployment benefits a       

• $300 per week supplement from Dec. 26 until March 14, 2021.       
• This bill also extends the Pandemic Unemployment Assistance (PUA) program, with expanded coverage to the self-employed, gig workers, and others in nontraditional employment, and the Pandemic Emergency  Unemployment Compensation (PEUC) program, which provides additional weeks of federally funded unemployment benefits to individuals who exhaust their regular state benefits. 

Other Provisions           
               
 $25 billion in emergency rental aid and an extension of the national eviction moratorium through Jan. 31, 2021.  
               
 $45 billion in transportation funding, including          

• $16 billion for airlines,          
• $14 billion for transit systems,          
• $10 billion for state highways,         
• $2 billion each for airports and intercity buses, and        
• $1 billion for Amtrak.          

               
$82 billion in funding for colleges and schools, including support for HVAC repair and replacement to mitigate virus transmission, and  
  
$10 billion in child care assistance.          
                           
$22 billion for health-related expenses incurred by state, local, Tribal, and territorial governments.   
               
$13 billion for emergency food assistance, including a 15% increase for six months in Supplemental Nutrition Assistance Program benefits. 
  
$7 billion for broadband expansion.          
               
  The bill also extends the           

• Employee retention tax credit and several expiring tax provisions

​
​   and temporarily allows a             

PPP Round one (1) recipients (PPP1) may apply for another loan of up to $2 million, provided they:             

•  Have 300 or fewer employees.         
•  Have used or will use the full amount of their first PPP loan.       
•  Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
•      

First-time PPP borrowers will also permitted from the following groups:      

• Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.    
• Sole proprietors, independent contractors, and eligible self-employed individuals.    
• Not-for-profits, including churches.         
• Accommodation and food services operations (those with North American Industry Classification System (NAICS) codes starting with 72) with fewer than 300 employees per physical location.  

PPP loan terms           
               
As with PPP Round 1 (PPP1), the costs eligible for loan forgiveness in PPP Round 2 (PPP2) include payroll, rent, covered mortgage interest, and utilities. 
 
PPP2 also makes (adds) the following potentially forgivable:       

• Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.  
• Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.  
• Covered operating costs such as software and cloud computing services and accounting needs.   

               
To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight (8) or twenty-four (24) weeks — the same parameters PPP1 had when it stopped accepting applications in August.
       
PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, the same as with PPP1, but the maximum loan amount has been cut from $10 million in the first round to the previously mentioned $2 million maximum. PPP borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum.
 
​
Simplified application and other terms of note              
               
 The new COVID-19 relief bill also:          

• Creates a simplified forgiveness application process for loans of $150,000 or less. Specifically, a borrower shall receive forgiveness if a borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. The SBA must create the simplified application form within 24 days of the bill’s enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements. Borrowers are required to retain relevant records related to employment for four years and other records for three years, as the SBA may review and audit these loans to check for fraud. 

• Repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount. 
• Includes set-asides to support first-time and second-time PPP borrowers with 10 or fewer employees, first-time PPP borrowers that have recently been made eligible, and for loans made by community lenders. 

The bill also specifies that business expenses paid with forgiven PPP loans are tax-deductible. This supersedes IRS guidance that such expenses could not be deducted and brings the policy in line with what the AICPA and hundreds of other business associations have argued was Congress’s intent when it created the original PPP as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136 (see the Dec. 3 letter from the AICPA and state societies to congressional leaders). 
               
The COVID-19 relief bill clarifies that “no deduction shall be denied, no tax attribute shall be reduced, and no basis e shall be denied, by reason of the exclusion from gross income provided” by Section 1106 of the CARES Act (which has been redesignated as Section 7A of the Small Business Act). This provision applies to loans under both the original PPP and subsequent PPP loans.

It's important to note that Governor Hogan signed an executive order (copy below, FAQs) that excludes 2020 employer data from the formula used to determine the 2021 unemployment rate. If the Governor had not done this, all employers would have had an even higher tax rate for 2021.

​While obviously not good news, at first glace it might not sound all that punitive at first glance. However, imagine you have 50 employees, all of which require an unemployment contribution. That comes out to an extra $8,075 that employers will have to pay in for 2021. In higher turnover businesses such as retail and hospitality, it's very possible to have on average 10 to 15 employees per year, but because of attrition this equals 50 or more total employees per year, all of which require their own unemployment contribution.

While unemployment rates will reduce over time as we saw a similar situation occur during and after the financial crisis (great recession). Unfortunately, in the short term, this is one more hit businesses are going to have to contend with.

1. Provide a medical evaluation before a worker is fit-tested or uses a respirator.
2. Perform an appropriate fit test for workers using tight fitting respirators.  
3. Assess the workplace to determine if COVID-19 hazards are present, or likely to be present, which will require the use of a respirator and/or other personal protective equipment (PPE). 
4. Establish, implement, and update a written respiratory protection program with required worksite-specific procedures.  
5. Provide an appropriate respirator and/or other PPE to each employee when necessary to protect the health of the employees (ensuring the respirator and/or PPE used is the correct type and size). 
6. Train workers to safely use respirators and/or other PPE in the workplace and retrain workers about changes in the workplace that might make previous training obsolete. 
7. Store respirators and other PPE properly in a way to protect them from damage, contamination, and, where applicable, deformation of the facepiece and exhalation valve.  
8. For any fatality that occurs within 30 days of a work-related incident, report the fatality to OSHA within eight hours of finding out about it. 
9. Keep required records of work-related fatalities, injuries, and illness.

OSHA 1-Page Frequently Cited Issues

OSHA Full Report

The timing of the Forrester blog post is almost just as good as the message. While the events of 2020 impacted the entire world, winners and losers have emerged which happens almost always with any kind of major event. A significant issue with COVID is the list is heavily skewed to few (bigger and better capitalized businesses) winners, and far too many losers.

That's a bit of what drew my attention to this post  as while we continue to deal with new waves of the pandemic, we're also entering a critical business phase with many businesses intently focused on the upcoming holiday shopping season and making the most of Q4 2020. However, if that is to the detriment of 2021, it could be disastrous.
All too often businesses (especially small businesses) expect Q4 to be the quarter that you make up for the rest of the year, but it often comes as a detriment to sales in the first part of the following year. Why, well everything else is secondary, and plans and strategies are often developed to late in the process with the new year just a couple weeks away or already here. Additionally, because the plans come together in a hasty manner, lessons learned, new insights, and data analysis are glossed over, thus causing more problems in the new year.

To this point, since the events of this year destroyed most business plans in early 2020, almost all businesses have been stuck in a cycle of reacting to each problem without solving them.  While that's not going to change much for the rest of the year, to get any kind of control over the situation in 2021, the process needs to start now and include plenty of planning and analysis.

A few of the key areas Stephanie highlighted that can be adopted by almost any business are:

• Develop a yearlong [channel] sales enablement plan - If we're honest most businesses don't even know what sales enablement is, and when an individual or business is not selling or missing sales targets, it becomes convenient to use any excuse imaginable without considering your own deficiencies. The fact is, if you're not prepared to sell and sell effectively the chances of you meeting or exceeding your sales targets is unlikely. If you don't know where to start with sales enablement here is a link to a great resource I posted in a LinkedIn post. At a minimum it will get you moving in the right direction and leave you much better off regardless of knowledge on the subject.

​

• Refine your [channel] sales strategy - The post mentions "to ensure it's alighted with the company's sales goals and objectives" and "This includes centering your strategy on meeting the need of your target customers or buyers", which is 100% true,  I would only add, to make sure your strategy aligns with market conditions and the possible changing needs of your customers or clients. 

Personally, I believe these points can be applied to any business by adding or dropping a few words or terms.

One of my own that I will add and important to keep in mind:

• Consider an alternative & more flexible sales strategy for 2021 - The point being, a measure of uncertainty (likely great, and elevated for a while) is going to follow us into 2021, even with all the best news possible for the remainder of the year. A quick and easy way to start this is by utilizing some or all of the strategies in the book "the 12 week year" (link to the 41 page summary). While there is no guarantee for success, by focusing on quarterly goals, learning along the way, and applying & modifying what you've learned in subsequent quarters, a framework and pathway for better business results in the future can be developed, something we need now more than ever.

#sales #strategy #pandemic #covid19 #salesenablement #businessplan #smallbusiness #business #budget

1. Get a Guarantor for the Contracts
2. Ask for Payment Upfront
3. Get a Lawyer
4. Begin Negotiating ASAP
5. Ensure Constant Communication
6. Get a Realistic Projection
7. Offer a Reduced Payment
8. Auto-Charge Credit Cards
9. Restructure Your Payment Terms
​10. Get Trade Credit Insurance
11. Move On and Find New Clients
12. Diversify Your Client Base

Welcome to the Growth, Profits, and Wealth Blog where we'll be featuring this new and yet to named series where we’ll look at the accounting, tax, advisory and business angle of topics such as Risk Management, Restructuring, Distressed Assets, Automation, Best Practices, and Growth Initiatives.  This is our introductory post and cast which is about was delayed close to a month because of the never-ending tax season.

The idea is to touch on a range of matters affected by the Pandemic for just about a minute or two, to get you informed, help you be better prepared as a practitioner or business owner, give you some reference material, and get you back to work.


First topic is Pandemic Insurance of course, and we'll be coming back to this topic in the weeks and months ahead.

The insurance Industry is moving pretty quickly to provide some measure of Pandemic Insurance, now that we're several months into the pandemic, and also because this is what Fintechs, InsurTechs, and specialty insurers are really designed for. What's interesting is seeing the formation of these insurers and the ownership mix of their backers.  May are tied to large insurance companies, private equity, and wealthy individual investors. While these are newer insurers or startups a number of those research have very experienced insurance professionals at every level.

These setups makes a lot of sense as the close ties to large existing insurers gives them access to ReInsurance so the risk can be diversified by other insurers who want to take on some of the risk for a portion of the premiums. On the operations and startup cost side, the ties so private equity and wealthy investors gives them access to capital to create, operate, and administer these policies.

The problems, well where to begin:

First, while this sounds all well and good, these initial insurers and policies are here to make money not do the world or economy a favor.  Thus, these policies are going to be some of the most expensive insurance available.  Not only is it a hot topic with limited data, but the spike and second closure in some areas makes this about the worst possible time to buy and likely the policy would not even pay out immediately.

In the U.S. News Article "Pandemic-Proofing..." it mentioned policies that offer up to $1MM in coverage, however that coverage comes with eye popping premiums of $80,000 - $100,000 annually.  Part of the problem here is with very limited data to model (if even possible) most policies at the moment are using all worst case scenarios to make sure if they do find a buyer they're likely to come out break even or better in the short and medium term.  

Perhaps this is why back in May Warren Buffet said he would interested in offering in offering Pandemic coverage, but only at the right price, which is a great leading to something that is overlooked with insurance coverage, which is as one's risk protection is another’s investment. 

In the July 23rd Insurance Journal article the insurer One80 was able to write polices up to $100MM ,  I don't see this as a realistic offering by traditional insurance companies or a solution for small businesses. It's much more likely that these policies fill a niche that needs can actually afford them, perhaps Hollywood, perhaps live entertainment, but will almost certainly have lo effect on the economy. Instead insurers and businesses appear much more likely to wait to see if the Federal Government provides a backstop for insurers or something similar.

Another major issue I see is, if the language and terms are not broad enough these policies could very easily still leaving gaps in coverage, setting things up for this same type of problem in just some other form.  

Lastly, and most importantly in my opinion, while these policies might be associated or have some backing by major insurance brokers and carriers, it's very important for the businesses, advisors, & agents to know who is actually underwriting and backing the policy. 

Insurers and policies have ratings for a reason but the fragmented structure of these new insurance makes them susceptible for abuse.  A little bit of clever or confusing marketing slight of hand is to and the ability to use a large carriers name and ratings to:

• mask who's the actual underwriter,
• is the insurer or policy even rated, and
• what effect does this have on getting paid if you do file a claim.

I'm not accusing anyone, but the opportunity for abuse and risk is real, and insurance that is at high risk for nonpayment might very well be worthless in the end.

We'll call that a wrap for now and let you all get back to work!

That's enough for now, thanks for listening and I'll be back with one or two more casts by this weekend, and then back next week as we'll being our normal schedule.


https://www.usnews.com/news/top-news/articles/2020-07-10/pandemic-proofing-insurance-may-never-be-the-same-again

https://www.insurancejournal.com/news/national/2020/05/07/567764.htm

https://www.insurancejournal.com/news/national/2020/07/23/576695.htm

​https://www.carriermanagement.com/features/2019/11/12/200256.htm