COVID Relief Packages (Federal And Maryland)

The coronavirus (“COVID-19”) pandemic has raised concerns and wide-ranging issues for many small businesses which continue to impact day-to-day operations and will likely persist for the foreseeable future. During this unprecedented time, Bagley & Rhody, P.C. remains ready, willing, and able to serve our clients and community. Our attorneys continue to closely monitor the legal implications for businesses and individuals in responding to COVID-19.  In an ongoing effort to address the many issues created by COVID-19, we have compiled the below summary of various relief programs that have been enacted at both the federal and state levels which are likely to have a significant impact on our small business clients:

FEDERAL RELIEF PROGRAMS

The CARES Act – The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) recently signed by President Trump allocates $350 billion to help small businesses in response to the coronavirus pandemic.  Section 1102 of the CARES Act creates the “Paycheck Protection Program” under the Small Business Administration’s current business loan program wherein qualified employers can obtain forgivable loans of up to $10 million to pay for business expenses including payroll, mortgage interest expenses, rent expenses, and utility expenses.  Subject to certain conditions, loans issued under the PPP may be forgiven up to 100% and essentially converted into a grant.  Please note that all applications for relief under the PPP must be completed by a qualified lender and that B&R has the relationships in place to help coordinate and expedite the filing of said applications.  Additional information regarding the CARES Act is available here.

The FFCRA – The Families First Coronavirus Response Act (the “FFCRA”) has been enacted to expand paid leave for covered employees and to create corresponding tax credits for employers via the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.  These two Acts can be summarized as follows:

•  Emergency Paid Sick Leave Act (“EPSL Act”) – The EPSL Act requires covered employers to provide up to 80 hours paid leave at the employee’s regular rate of pay (up to $511.00 per day and $5,110.00 total) for all full time employees who are unable to work (or telework) because the employee is ill or subject to a quarantine or isolation order related to COVID-19, or is caring for a child under the age of 18 because the child’s school or place of care has been closed.  Part-time employees are eligible for leave equal to the number of hours that the employee works, on average, over a two-week period.
•  Emergency Family and Medical Leave Expansion Act (“FMLA Expansion Act”) – The FFCRA expands the FMLA leave to now apply to employees who have been employed for at least 30 days at employers with less than 500 employees and who are unable to work because they are needed to care for a son or daughter under the age of 18 as a result of school or daycare closures.  The first 10 days of the 12-week job-protected leave is unpaid, though subsequent leave must be paid at a rate of two-thirds of the employee’s regular rate of pay, capped at $200 per day or $10,000.00 total per employee.

These provisions are to become effective on April 1, 2020, and will apply to leave taken between April 1, 2020 and December 31, 2020.  Additional information regarding the ESPL Act and the FMLA Expansion Act is available here.

 

MARYLAND RELIEF PROGRAMS

MD Emergency Relief Loans – The State of Maryland has allocated $75 million towards the creation of a loan fund to offer qualifying small businesses who have suffered financial stress or disrupted operations as a result of COVID-19 loans of up to $50,000.00 (not to exceed three months of cash operating expenses) with no interest or principal payments due for the first 12 months.  The loan then coverts to a 36-month term loan of principal and interest payments, with an interest rate at 2% per annum.  Additional information regarding the loan fund is available here.