The Herring Group webinar recap: Understanding the CARES Act

Greg Herring, CEO of The Herring Group, delved deep into the newly created Coronavirus Aid, Relief, and Economic Security (CARES) Act during a webinar for landscape company owners.

“We have deep respect for business owners because they make our community great, they keep people employed and able to provide for their families,” says Greg Herring, CEO of The Herring Group. “It’s always difficult to be a business owner, but especially in times like these.”

The CARES Act was signed into law March 27 and revolves around five uncertainties concerning the coronavirus: the availability of testing, how contagious COVID-19 is, case fatality rate, whether people can people get re-infected and whether warm weather will reduce the number of cases.

Herring says the current focus in the industry is to get landscape companies designated as an essential service; keep employees healthy; and build liquidity.

Throughout the webinar, Herring broke down what applying for the Small Business Administration (SBA) Paycheck Production Program (PPP) might mean for landscape companies.

The amount allocated in the CARES Act is $2.2 trillion. Opening day to apply for PPP was Friday, April 3, but Herring warned that some banks may still not be accepting PPP applications.

The PPP loan would provide 10.8 weeks of payroll costs (2.5 months of average payroll). Employers can use for it 8 weeks of payroll, rent, utilities, certain interest obligations. Loan forgiveness for nonpayroll uses cannot exceed 25 percent of the loan.

Assuming there’s no reduction in full-time equivalent employees (FTEs), no reduction or less than 25 percent reduction in individuals’ salaries/wages and that payroll increases, rent, utilities, interest are greater than 2.8 weeks of payroll costs, there will be 100 percent loan forgiveness.

Payroll costs include salary, wages, commission, cash tip, vacation/parental leave, allowance for dismissal or separation, payment for provisions in group health care, payment of retirement benefits and payment of state or local tax assessed on the compensation of employees.

Not included is anyone who makes more than $100,000 (seasonal employees’ wages are prorated for $100,000) and any compensation of employees whose principal place of residence is outside of the U.S. National Association of Landscape Professionals recommends excluding wages related to the H-2B visa program.

Other benefits of the CARES act include an advance refund of 2020 tax credit for $1,200 for individuals, unemployment benefits and more.

Other provisions of the act include Small Business Debt Relief, where the government will also pay for principal, interest and fees of existing SBA loans for six months; Economic Injury Disaster Loans and Emergency Economic Injury Grants; SBA Express Loans; and Payroll Tax Delayed Payment; Families First Coronavirus Response Act; and Employee Retention Credit.

Herring recommends that for most companies, PPP is the best option.

Herring wrapped up his presentation with some words of advice: “The role you in the audience play is an incredible role because you get to impact dozens, or hundreds of lives, the lives of employees, their families, customers and the lives of your own family. Your customers, family have a certain amount of panic. Use this as an opportunity to lead well and endear yourselves with your employees, customers and your community because it’s important work that you do.”

For more information, visit this site or email Herring at greg.herring@herring-group.com.