We get it: You have a lot of business-related questions during this time of coronavirus uncertainty. We’re here for you. As often as we can, we’ll provide a question (and answers from experts) on pressing issues for New Jersey’s businesses.
Today’s question: Some small businesses are considering (or have completed) large layoffs. If they do not have enough cash on hand to provide the 60 days’ notice and severance that the law requires because of the number of employees involved, will the state help cover these cash needs?
Daniel Mayo, Withum
There are more than 860,000 small businesses in New Jersey trying to navigate this crisis, but, as plentiful as the obstacles are, so are the avenues for relief. The $2.2 trillion Coronavirus Aid, Relief and Economic Security, or CARES, Act signed by President Donald Trump on March 27 earmarked $349 billion for loans to small businesses equaling 2.5 times their average monthly payroll costs during the prior year — up to $10 million — without collateral requirements, personal guarantees or SBA fees. All loan payments will be deferred for six months, and the SBA will forgive the portion of the loan used to cover the first eight weeks of payroll costs, rent, utilities and mortgage interest.
This is huge, as it will give them money to bridge the gap and get past this period of economic shutdown. It’s not like the government can flip a switch and bring the economy back in a day to where it was a few months ago, and this will help bridge the gap from the current crisis to a normal business environment.
Mayo is principal of Withum’s national Tax Service Group. Contact him at firstname.lastname@example.org.
Allen Wilen, EisnerAmper
The New Jersey law (S3170) requiring notice and severance due to mass layoffs attempts to pick up where the federal WARN Act leaves off. The WARN Act does include an exclusion for businesses due to unforeseen events. We postulate, however, that New Jersey and the federal government will waive the exclusion and implement a dual-tiered relief package, one for small business employers that have kept their employees and another for those that have not.
Wilen is EisnerAmper’s national director of financial advisory services. Contact him at Allen.email@example.com.