From NY-GEO Board Member John Ciovacco
Updated 4/12/2020
Like many of the NY-GEO member companies, Aztech Geothermal is diligently looking for ways to survive this very disruptive period. I have talked to lots of other contractors and participated in webinars and have begun to apply for the programs available to save our companies through an indefinite period of severely reduced operation. I often refer to it as trying to achieve a state of hibernation. Most of you have already initiated many of these things and NY-GEO is interested in what you are doing or any different angles on how to maximize NYS and Federal assistance.
Paycheck Protection Program (PPP)
The PPP pays 8 weeks of payroll, mortgage interest or rent, and utilities and is available on a first come, first serve basis. So, we do not know when the funding will run out, but this is not something you should put off. We are recommending ALL SMALL BUSINESSES NEGATIVELY IMPACTED BY THE COVID-19 CRISIS SHOULD CONSIDER APPLYING FOR THE PPP !! That includes Independent Contractors and Sole Proprietors.
It is structured as a largely forgivable loan - which should be the equivalent of a grant as long as you do not overreach on your calculations and you retain the majority of your staff.
So, take some action if you have not already!
STEP 1: Contact your primary bank to see if they are a PPP Lender.
Most banks are taking applications at this point. Since there is a big need for the PPP, most banks are serving their regular customers first, so start with your bank before looking elsewhere.
STEP 2: Pull together whatever information your bank requests.
Certainly, the business basics like the Tax ID number, SIC code and Ownership Structure. You will be asked to produce an Average Monthly Payroll or maybe an Annual Payroll figure. I was asked to provide the background calculations too, so they know how we arrived at our number. My bank’s online application calculated the loan amount automatically in my case. My bank requested for Other Supporting Information, but your bank may request different information. You may need to ask your accountant for some of the supporting reports.
STEP 3: Receiving and Using PPP Proceeds
- The PPP loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made.
- Employee and compensation levels need to be reinstated to 75% of your previous levels to qualify for forgiveness and 75% of the proceeds ($) need to be use for qualified payroll expenses.
- The 8-week period begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The lender must make the first disbursement of the loan no later than ten calendar days from the date of loan approval.
For the most up-to-date details see the PPP FAQ posted by the SBA.
SBA Disaster Loan, including Advance:
This is a fast-track advance up to $10K for small businesses interested in the SBA Disaster Relief Loan. The SBA Disaster Relieve Loan is a separate program from the PPP above and you can apply for both. Most companies will just apply for the PPP since it has a large forgivable element, where this loan does not. If you are looking for financing/loan with a longer term and low interest rate (3.75% I believe), beyond what's covered in the PPP it might be for you.
Aztech did apply for this loan early and again when they put out a new simpler application, which included this $10K advance component which is the only forgivable component of the Disaster Loan. The application is relatively short and easy to do once you pull together some very basic business and financial information. The loan advance turns out to be $1,000 for each employee – not including owners. So, if you have 8 employees, you will receive $8,000 as a forgivable advance. This loan advance will not have to be repaid. Apply for the Disaster Loan including the Advance here. The SBA will contact you for additional documentation once this initial application is complete.
Unemployment Assistance - employees & owners too!
- Unemployment for Employees
Employees can apply online. People apply on a specific day of the week depending on their last name: A - F file on Monday | G - N file on Tuesday | O - Z file on Wednesday and if you missed your day, you could file on Thurs-Fri-Sat. Here's a good link that walks employees through what they need to do.
- Unemployment for Owners, Independent Contractors, Sole Proprietors
Under these very special circumstances owners can file unemployment claims too - if their business has been negatively impacted by the COVID-19 situation. The system continues to change almost weekly and there were special instructions for owners but we’ve heard the online forms have changes so just pay attention for special instructions as you begin to file a claim.
- Federal CARE Act adds $600/week to Unemployment
This is great but as far as we can tell it may not get added into someone's unemployment compensation until the week starting April 6th. So, if anyone was laid off prior to April 6th they will only receive their NYS DOL reimbursement for that prior week(s). A person receiving unemployment does not need to do anything to activate this additional $600/week - it is supposed to be added in automatically starting next week. Also, as far as we can tell, if someone is receiving unemployment the additional $600 would remain in full, even if they worked part time – like the options mentioned below.
- What if you need to keep some employees on part time?
Partial Benefits: If a claimant works less than four days in a week and earns $504 or less, the claimant may receive partial benefits. Receiving partial benefits extends the length of time a claimant may collect benefits, until they receive their maximum benefit amount or until the benefit year ends. Link to FAQ – “What if I work part-time?” & “How is my weekly benefit rate determined?”
Shared Work Option: The Shared Work program is typically used by businesses with seasonal employment levels. The Shared Work program allows employees to collect partial unemployment benefits if your hours and wages have been reduced by 20% to 60%, for employers who have been approved by the Department of Labor to participate in this program. For instance, if an employee work hours and wages have been reduced by 50% on a given week, they would receive 50% of their unemployment weekly benefit rate. Good FAQ on Shared Work plus Video Background & Instructions
Note: Aztech decided not to register for the Shared Work program since we do not anticipate having enough work under the current restrictions to maintain the minimum hours required by the program for employees to work. Others may find this to be a good fit, so make your own judgement. I believe Jens Ponikau at Buffalo Geothermal is participating. jponikau@yahoo.com
Please email Bill Nowak billnowa@gmail.com or John Ciovacco jciovacco@aztechgeo.com .if you want help or to share your experience with this process. We will do our best to get everyone moving in the right direction!
I spent some time looking into this but decided to lay people off instead of calling it a furlough. In the interest of time, I wanted to get out the above information but if anyone thinks furlough is the way to go and can provide some perspective or resources, we want to hear it!