First, I want to thank everyone for sending us emails, and all the great conversations I have been able to have with so many schools and directors in the last 2 weeks. Thank you! These last few weeks have been an interesting and tough adventure as we all have been trying to navigate the new world that has been put in front of us. It has been an adventure to say the least! EastBayPreschools has been busy trying to keep you up to date with the various informational webinars, ECE classes and information from Licensing.
We’ve received a lot of questions about what to do next. A lot of schools are feeling stressed, overwhelmed and under pressure to keep up with and ahead of the learning curve of what’s to come. Below is some basic information that I’ve gathered that can help you in making plans to move forward with the most success for you, your school, and your community.
First, there are a couple things I recommend you think about over the next few days:
- How are you functioning right now?
- Are you keeping detailed records of all money moving within your schools?
- Is it better to furlough your staff? In a lot of cases YES! They can get an additional $600 per week, while saving your funds for other costs.
- Have you called everyone and asked for a pause in service, delay in billing, or discount?
- If you’re collecting tuition or fees, check with your bank, it might be hard to show damages.
- If you’re an in-home or a small school, there is help for you.
I have gathered some information from the U.S. Chamber of Commerce, SBA.gov and a few banks and have put together a little cheat sheet. I have also spoken with a few grocery stores, utility companies, and attorneys, so while we might not have a specific answer, we might be able to point you in the right direction for help. Feel free to send an email to [email protected] with questions.
While a lot of us struggle with different concerns, we still need to make sound business decisions. You need to make sure you have a school for staff and families to return to when this done.
All the “loans” (and yes, they are loans) are continuing to change their rules and guidelines and say they will continue to do so over the next few months as they figure out the details. Example, the interest rate went up on part of the CARES ACT this past Friday, two weeks after it passed.
As all of the loans, grants, and forgiveness programs begin the reconciliation process, “proof” of expenses will be required. One item I noticed on the SBA site is when payroll is being justified, in most cases the numbers are based on 2019 not 2020.
If you currently have an SBA loan, check with your bank immediately. Depending on the type of loan you have, the government is going to PAY principle and interest for a few months. In the long term this would be better than a Deferral of Payment request.
I understand that there are a lot of different beliefs on how the CARES ACT will function. I have grabbed facts from the SBA.gov site and U.S. Chamber of Commerce. These are the 2 groups tasked with administering the Payroll Protection Plan (PPP) and EIDL Loan and are through your bank so terms may be a little different from bank to bank.
A few things to keep in mind when we consider layoffs/furloughs/wage reductions.
Under the CARES ACT:
- Increased Unemployment Benefits:
- In addition to unemployment benefits paid by the States, the federal government will pay an additional $600/week thru July 31, 2020.
- State unemployment benefits vary widely by state but average $385/week. $600/ week under CARES ACT is in addition to state amounts.
- Typically, state unemployment benefits last for 26 weeks. The CARES ACT provides for an additional 13 weeks through December 31, 2020.
- CARES ACT allows employees to obtain unemployment benefits immediately without typical waiting periods.
- Furloughed workers are eligible to receive unemployment benefits.
- CARES ACT Cash Payments:
- Individual making less than $75K = $1,200
- Individual payments are reduced by $5 for every $100 over $75K and completely phased out at $99K
- Married couples making less than $150K = $2,400
- Married payments are reduced by $5 for every $100 over $150K and completely phased out at $198K
- Additional $500 payment for each child under the age of 17.
- Retirement Account Changes:
- The 10% early withdrawal penalty is waived on withdrawals up to $100,000.
- Any amount withdrawn can be paid back into retirement account within 3 years without regard to contribution limits.
- The amount of available loans has been increased from $50,000 to $100,000.
- Homeowners and Renters:
- Servicers of federally back mortgages for homeowners must agree to postpone mortgage payments up to 180 days as the request of the borrower if the borrower affirms financial hardship due to COVID-19. 180-day extensions are available.
- Landlords with mortgages backed by HUD, Fannie Mae, Freddie Mac or other federal entitles cannot pursue evictions for 120 days.
- Student Loans:
- Payments automatically suspended through September 30, 2020 without interest accruing or penalties through period of suspension.
I hope that this has helped a little to answer some of your questions.
CEO, Little Blue Truck inc.