The federal government sent a message to America’s corporations and small businesses last week by enacting a $2 trillion stimulus package. As companies and employees are held up by the effects of the coronavirus, lawmakers assured them that help is on the way.
After days of deliberation between political parties, the Coronavirus Aid, Relief, and Economic Security Act (also known as CARES) was signed into law, appropriating $377 billion for companies with 500 employees or less. The resulting program is designed to provide immediate relief through grants, while allowing the Small Business Administration (SBA) to administer loans of up to $10 million per small business—portions of which are labeled as forgivable.
As glass companies face fallout from COVID-19, officials say they’re busy looking forward, weighing those benefits.
“From the 1,000-foot view, it looks like it could be not only be helpful to FeneTech, but to our clients as well,” says Ron Crowl, the company’s president and CEO. “We’re actively talking to our accountants and having them direct this for us, so we understand the fine print and what we need to do to move forward on it … it looks pretty encouraging.”
Some of that fine print is yet to be provided, as government officials establish specific guidelines for emergency lending. In the meantime, not every company falls within the range of 500 employees or less established for small businesses. At the discretion of SBA officials, those requirements could be loosened on a case-by-case basis, however, as the program allows for exemptions to the 500-employee cutoff when company sizes are “no greater than the number of employees set by the SBA as the size standard for certain industries,” officials say.
Regarding when CARES will take effect, SBA officials say they expect to have the program up and running by today, after which business owners can turn to participating SBA lenders, banks or credit unions to apply for assistance. In some cases, officials say loans could be approved on a same-day basis.
“Speed is the operative word,” says SBA administrator Jovita Carranza. “Applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans. We remain committed to supporting our nation’s more than 30 million small businesses and their employees, so that they can continue to be the fuel for our nation’s economic engine.”
All loans issued under the program will be 100% guaranteed by SBA, administration officials say, with no requirements for collateral, no personal guarantees, and no borrower or lender fees payable to SBA. Loans will carry interest rates of 0.5%, with maturity set for two years, and first payments will be deferred for six months. In some cases, loans will be available on a retroactive basis, through February 15, 2020, allowing employers to rehire recently laid-off employees through June 30, 2020.
In the meantime, “We have a relief package that looks pretty good, but we can’t use it presently or at least not to its full intended potential,” says Morgan Donohue, vice president of Erdman Automation.
While Erdman continues to operate its parts and services division, for the sake of social distancing, the company has dialed back production for at least a two-week period, Donohue says.
Giroux Glass director of finance Haik Khatchatrian is hopeful that the CARES Act will save jobs.
“Programs like the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP)—created by the CARES Act—will help businesses with 500 employees or less to continue their operations without laying off their employees,” he says. “Specifically, in the construction industry, we are relieved that this would save millions of jobs nationwide and help sustain these businesses throughout this turmoil.”
Chuck Mowrey, CEO of JPI Glass in Kansas City, Mo., says the COVID-19 situation has put two of the company’s vision statements at odds with each other: safety and benefits for employees and families. Prior to learning about government assistance, Mowrey was weighing whether the company should stay open or whether it should close, leaving employees without a paycheck. However, the company has decided to remain open with new policies in place.
Other industry companies are facing this question globally. Glaston, based in Finland, will lay off all of its approximately 180 employees in stages during 2020. The timing and execution of the layoffs are reviewed function-by-function and can be at most 90 days per employee by the end of year 2020.