President signs third COVID-19 stimulus package

April 27, 2020
Although there are several programs and other incentives included in this third package for small businesses, by far the most popular in the auto repair community is the new Paycheck Protection Program (PPP).

Last month we discussed the first two COVID-19 stimulus bills passed the U.S. Congress and signed by the President, the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020 and the Families First Coronavirus Response Act. Important for auto repairers is the third stimulus package, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) that Congress finalized on March 27 and the President signed into law later that day. 

Although there are several programs and other incentives included in this third package for small businesses, by far the most popular in the auto repair community is the new Paycheck Protection Program (PPP). This $350 billion program for small businesses with 500 employees or fewer can provide up to eight weeks of cash-flow assistance through a 100 percent federally guaranteed loan to employers who maintain their payroll during the COVID-19 emergency.  According to the U.S. Senate Small Business Committee, “if the employer maintains its payroll, then the portion of the loan used for covered payroll costs, interest on mortgage obligations, rent and utilities would be forgiven, which would help workers to remain employed and affected small businesses and our economy to recover quickly from this crisis.” Congress gave the Small Business Administration (SBA) the flexibility for a loan term of up to 10 years. SBA opted to cap the term at 2 years.   

In addition, Congress enhanced the Economic Injury Disaster Loan (EIDL) program and shops can apply for both the EIDL and PPP programs as long as they are used for different purposes.  EIDL’s are low interest loans of up to $2 million that are available to pay for expenses that could not have been met had the disaster not occurred, including payroll and other operating expense. Principal and interest deferment are at the SBA Administrator’s discretion. The CARES Act also provides businesses applying for EIDL expedited access to capital through an Emergency Grant, an advance of $10,000 within three days to maintain payroll, provide paid sick leave and to service other debt obligations.   

With states and municipalities moving forward with their own directives as to what businesses are deemed essential and allowed to remain open and those that are nonessential, the Automotive Service Association (ASA) has been very concerned that automotive repair facilities would, in some cases, be determined to be nonessential.   

In a letter to the National Governors Association, National Association of Counties, U.S. Conference of Mayors and the National League of Cities, ASA and a coalition of aftermarket associations asked that “Motor vehicle supply and repair facilities provide vehicle and roadside services essential to maintaining critical operations and the flow of commerce. 

The U.S. Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) recommended that state and local governments include “Automotive repair and maintenance facilities” as Essential Critical Infrastructure Workforce within the Transportation Industry. 

The SBA’s programs required Governors to obtain an Economic Injury Disaster Loan Declaration.  ASA and a coalition of aftermarket associations, in a letter to the National Governors Association, noted:

“The crisis isn’t two months away. It’s here. Consumers are scared. Many of these businesses are already down by 40 percent to 75 percent. Their operating margins cannot sustain such losses. When they fail, millions of employees become unemployed with no other source of available income while thousands of business owners declare bankruptcy. In the meantime, they suffer daily with excessive emotional stress from loss of income and shortages of critical services such as affordable health care and affordable, safe child care due to sudden and prolonged school closings. 

We urge you to urge your members to take immediate action to obtain an Economic Injury Disaster Loan Declaration for their states so that suffering small businesses can have access to Small Business Administration disaster support.”

 

So, what’s next? The $350 billion allocated for the PPP program will not be sufficient for this first come first serve small business program. Congress is now preparing a $250 billion influx of funds to keep the PPP program moving forward. As of this writing, there are some disagreements as to how the new funds will be allocated or earmarked for the PPP program.    Despite some differences, Congress is expected to approve this additional funding soon.  Finally, both republicans and democrats are discussing a fourth stimulus package that will be considered when Congress returns to Washington.

About the Author

Robert L. Redding

Robert L. Redding Jr. is the Washington, D.C., representative for the Automotive Service Association (ASA).

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