The Latest from Washington
CARES Act and the Paycheck Protection Program (PPP):
In response to the CARES Act and PPP, the U.S. Treasury in May issued guidance that gives VADA concern. We sent letters to U.S. Senators for Virginia Mark R. Warner and Timothy M. Kaine, expressing our views and asking they take action. Our concerns are two-fold:
- First, SBA issued FAQs Questions 31 and 37, which address whether businesses owned by large companies—e.g., public companies or those owned by private equity—with adequate sources of liquidity to continue operations qualify for a PPP loan. It is our view this frustrates the purpose of the CARES Act and leaves some auto dealers wondering if they are going to be audited or penalized for loan applications made in good faith.
- Second, the Internal Revenue Service (IRS) issued Notice 2020-32, which prevents dealers from deducting forgiven PPP expenses for federal income tax purposes, thus drastically modifying the risk/reward analysis dealerships must undergo when considering use of a PPP loan.
We ask Treasury to:
a.) revise its guidance to contemplate that PPP loan decisions were made with employee retention and payment in mind, regardless of whether a dealership was adequately capitalized or could have weathered the COVID-19 storm without the funds, and
b.) withdraw Notice 2020-32.
- PPP Loans: Use of Proceeds and Forgiveness (NADA Preliminary Guidance, updated May 20, 2020)
- The CARES Act and Dealerships FAQs (updated May 14, 2020)
- PPP Loan Certification of Need: NADA Analysis of Clarifying Guidance from SBA and Treasury (Question 46) (updated May 15, 2020)
- SBA releases PPP Loan Forgiveness Application, corresponding instructions (released May 15, 2020) - Read more here.
Ready to apply for PPP? Get the application for the Paycheck Protection Program. After you fill it out, the next step is to find a U.S. Small Business Administration-approved lender in Virginia. Talk to your own banker or search here for a current list of Virginia's SBA approved banks.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is the third major legislation passed by Congress and enacted by the President. Small and midsized businesses may apply for U.S. Small Business Administration (SBA) loans pursuant to the new Paycheck Protection Program created by the law.
- For more on PPP, see the SBA’s PPP webpage
- Get the SBA's Interim Final Rule
- The IRS has issued guidance for claiming Employee Retention Credit under the CARES Act and credits for emergency paid sick leave and emergency paid family leave under the Families First Coronavirus Response Act (FFCRA). Apply for the credits using this combined form.
Main Street Lending Program
The Federal Reserve and U.S. Treasury's Main Street Lending Program is designed to provide further payroll assistance for small and midsized businesses affected by the coronavirus. See NADA's guidance on the Program. If you’ve obtained a PPP loan, you are not prevented from obtaining financial assistance under the Main Street Lending Program. However, certain restrictions of Main Street loan recipients may keep dealers from wanting to pursue such a loan. NADA’s Paul Metrey wrote the Federal Reserve, thanking the Fed and asking that it remove these unnecessary limitations. See the letter.
Quick Links to Recent FAQs:
The Families First Coronavirus Response Act enacted by the President on April 1, 2020, includes several provisions to protect American workers and assist employers in providing emergency paid sick leave, as well as paid family leave in the case of school closures, for working families impacted by COVID-19. View the NADA FAQs here and DOL FAQs here.
The U.S. Department of Labor plays a major role in implementing the Families First Coronavirus Response Act (FFCRA) and has provided updated information about the new law on its website:
- VADA Adaptation of DOL Q&As (updated March 30)
- Fact sheets about (1) employee paid leave rights and (2) employer paid leave requirements
- The poster of notice dealers must display in accordance with the FFCRA. There is also a link to FAQs about that notice requirement.
- DHS Guidance Includes Auto Repair as Essential Critical Infrastructure
- Understanding Government Responses to COVID-19: The House Ways and Means Committee has assembled a comprehensive FAQ to help explain how the federal government is responding to the coronavirus pandemic. It covers what small businesses, seniors, and workers need to know and is broken into sections about what Congress has passed, what Congress is going to do next, and what the Administration has done to help Americans fight this global pandemic.
The content on this webpage is not intended as legal advice. If you require legal advice, please contact your attorney. The content on this webpage reflects information at the time the content was created and, given the changing circumstances surrounding COVID-19, is subject to change at any time.