COVID-19 Legislative Updates

June 26, 2020

FEDA Joins Letter Supporting Small Business Expense Protection Act

FEDA has added the association’s name to a letter addressed to Congressional leaders supporting the Small Business Expense Protection Act, which seeks to ensure small businesses may deduct from their taxes eligible expenses paid for by a forgiven Paycheck Protection Program loan. Without this relief, millions of small business may face significant tax liabilities while they are still trying to stabilize and recover from the COVID-19 pandemic.

The bill would reinforce Congress’ intention when it passed the CARES Act in March, which was designed to shield businesses from major liquidity shortfalls, retain employees, and withstand the economic disruption caused by COVID-19. However, the IRS issued a rule that normally deductible business expenses would not be deductible if the business paid for it using a PPP loan that was later forgiven.

“The Small Business Expense Protection Act will fix this misinterpretation and reestablish the ability of small businesses that have received PPP loans to deduct business expenses as the CARES Act intend,” the letter says. “We thank Congressional leaders for their ongoing efforts and urge swift passage of this bipartisan legislation.”

The full letter may be read here.

June 26, 2020

FEDA Joins Letter Urging Protection of Net Operating Losses Rules

FEDA has signed on to a letter urging Senate Finance Committee leaders to preserve tax rules regarding net operating losses (NOLs) that were established by the CARES Act.

The CARES Act provided a five-year carryback for NOLs generated in 2018, 2019, or 2020 and also suspended otherwise applicable limitations on excess business losses for non-corporate taxpayers in the same years.

“The ability to carryback NOLs is a critical component of a well-operating income tax system,” the letter states. “Indeed, NOL carryback provisions have long been bipartisan tools utilized by lawmakers to provide liquidity and are routinely expanded during times of economic dislocation.”

“The tax and liquidity provisions in the CARES Act are helping to ensure that the severe economic situation created by COVID-19 do not become even worse,” the letter continues. “We urge Congress to protect American jobs by preserving the NOL carryback and suspension of limitation of excess business loss provisions contained in the CARES Act.”

The full letter to Senate Finance Committee can be read here.

June 26, 2020

Some Data on Large PPP Borrowers Will be Made Public

Summarized from Jade West, National Association of Wholesaler-Distributors

The Small Business Administration and the Treasury Department announced they would reveal the recipients of loans of $150,000 or more issued through the Paycheck Protection Program (PPP).

The decision was made following growing congressional pressure. The SBA will disclose the names, addresses, classification codes, zip codes, business type, demographic data, non-profit information, jobs supports, and loan amount of any firm to receive a coronavirus emergency relief loan of at least $150,000. The amount of the loan will be disclosed in a range, rather than a specific amount.

Additionally, U.S. Treasury Secretary Steven Mnuchin agreed to provide key congressional committees with full access to loan data from the PPP – a key demand from Democrats. In a letter to the House Ways and Means Committee, Mnuchin said that would include data with borrower names and loan amounts “with the understanding that nonpublic personally identifiable and commercially sensitive business information will be treated as confidential.”

Read the full story at The Hill.

The NAW has joined other groups in expressing concern about the release of this information.

June 26, 2020

House Committee Approves Highway Bill

From Jade West, National Association of Wholesaler-Distributors

The House Committee on Transportation and Infrastructure passed its $494 billion surface transportation re-authorization, more commonly known as “The Highway Bill,” by a party-line vote. The two-day long markup was heated at times and was interrupted at one point for a press conference where House Democratic leadership introduced a $1.5 trillion infrastructure package, which includes the aforementioned highway bill. 

 The broader infrastructure package being introduced includes provisions for schools, housing, and broadband access. It is anticipated that the House will vote on the infrastructure package before July 4, however, to date there are no details on how the House plans to pay for the $1.5 trillion package.

 You can view a section by section outline of the House Infrastructure Package here.

 Additionally, you can view a fact sheet on the infrastructure package here.

June 15, 2020

FEDA Signs Letter Supporting DRIVE-Safe Act Provision

Summarized from Jonathan Eisen, International Foodservice Distributors Association

The International Foodservice Distributors Association recently wrote a letter to the House and the Committee on Transportation and Infrastructure.

As the House Transportation and Infrastructure Committee begins it woks on the Invest in America Act, undersigned organizations expressed strong support for including provisions of the DRIVE-Safe Act (HR 1374) in the legislation. The bipartisan bill would allow young Americans to become truck drivers and provide access to jobs in the industry while ensuring and promoting safety.

Currently 48 states allow individuals to obtain a commercial driver’s license at 18, though they are prohibited from driving in interstate commerce and crossing state lines until 21.

“The DRIVE-Safe Act would change this through a two-step apprenticeship program that creates a path for these drivers to enter the industry.  As the name implies, however, the legislation’s first priority is safety.  In order to qualify, candidates must complete at least 400 hours of additional training, more than what is required for any other CDL holder in the nation.”

Read the full summary here.

June 12, 2020

Officials Provide PPP Program Update at Senate Hearing

Summarized from Jade West, National Association of Wholesaler-Distributors

The Senate Small Business and Entrepreneurship Committee held a hearing on the implementation of the CARES Act on Wednesday, June 10. The hearing included testimony from U.S. Treasury Secretary Steven Mnuchin and Small Business Administration (SBA) Administrator Jovita Carranza.

During the testimony, it was revealed there have been 4.5 million PPP loans issued to date, totaling $511 billion. That amount is less than the nearly $530 billion that was previously reported as $17 billion in loans have since been returned. Additionally, Mnuchin shared that information on individual PPP borrowers and loan amounts was proprietary and would not be publicly disclosed.

Committee members were critical of the SBA’s Economic Injury Disaster Loan (EIDL) program, expressing concern over how the agency handled the program and its decision to cap loans at $150,000 despite the CARES Act’s cap of $2 million per loan.

Finally, officials also clarified that the PPP Flexibility Act’s extension of the loan period from eight to 24 weeks is only meant to be an option and does not mandate that borrowers wait the full 24 weeks before applying for loan forgiveness.

A recording of the hearing is available here.

June 10, 2020

FEDA Joins Letter Urging Expansion of Employee Retention Tax Credit

The new programs and initiatives created by the CARES Act to provide relief to businesses in the wake of the COVID-19 crisis included the Employee Retention Tax Credit (ERTC), which provides aid to employers attempting to retain their workforce or hoping to rehire furloughed employees. However, the ERTC was limited in the amount of credit provided, employer eligibility for the credit, and the ability for companies to use the ERTC if they also obtained a Paycheck Protection Program (PPP) loan.

Seeking to fix these issues, Reps. Stephanie Murphy (D-FL) and John Katko (R-NY) have introduced the Jumpstarting Our Businesses’ Success Credit (JOBS Credit) Act of 2020 (H.R. 6776). The bill would expand the number of businesses eligible for the ERTC, increase the benefit, and help more employers retain or rehire workers.

Policy changes in the bill include:

  • An expansion of the credit percentage from 50 percent to 80 percent of qualified wages
  • An increase of the per-employee limitation from $10,000 for all calendar quarters to $15,000 per calendar quarter (and an aggregate of $45,000 for all calendar quarters)
  • A phased-in credit, which will allow employers with more than a 20 percent decline in gross receipts to be eligible for a portion of the credit
  • Improved coordination between the ERTC and the PPP
FEDA has signed on to a letter from the International Franchise Association supporting the JOBS Credit. Additionally, FEDA encourages members to contact their congressional reps to support this bill as it moves forward. 

June 10, 2020

Federal Reserve Announces Changes to Main Street Lending Program

Summarized from Jade West, National Association of Wholesaler-Distributors
 
The Federal Reserve has expanded the upcoming Main Street Lending Program (MSLP) to allow more small and medium-sized businesses to receive support.
 
“Supporting small and mid-sized businesses so they are ready to reopen and rehire workers will help foster a broad-based economic recovery,” Federal Reserve Chair Jerome Powell said. “I am confident the changes we are making will improve the ability of the Main Street Lending Program to support employment during this difficult period.”
 
The changes include:

  • Lowering the minimum loan size for certain loans from $500,000 to $250,000
  • Increasing the maximum loan size for all facilities
  • Increasing the term of each loan option from four year to five years
  • Extending the repayment period for all loans by delaying principal payments for two years, rather than one
  • Raising the Reserve Bank’s participation to 95 percent on all loans

The Fed expects the MSLP to open for lender registration soon and the buying of loans will begin shortly after. Once lenders have successfully registered for the program, lenders are encouraged to begin making MSLP loans immediately.