Weekly Digest – 30 September 2020

With our normal routines turned upside down, people have found as many ways to cope with the pandemic as there are neighborhoods. This piece in the New York Times has a series of postcard vignettes of neighbors coming together to connect and help each other. In Los Angeles, a family picks citrus fruit from trees in their neighborhood, sharing the bounty with the owners of the trees and food pantries. In Wichita, the drag down Douglas has been revived with a parade of drivers in muscle cars, minivans and SUVs. A neighborhood in Carrboro, NC put together an impromptu block party to celebrate a cluster of birthdays.

With compassion and respect for each other, we will all get through these difficult times together!

CARES ACT UPDATES

Another stimulus bill?

Treasury Secretary Mnuchin and Federal Reserve Chair Jerome Powell recommend that Congress re-allocate $380 billion from the original stimulus bill to immediately provide help to households and small businesses. These are funds earmarked for other programs in the CARES Act but which have not been spent. About $130 billion of the total is unused funds from the Paycheck Protection Program.

While the Fed and Treasury have been under pressure to expand the scope of the Fed’s Main Street Lending Program, both Powell and Mnuchin note that because this program was built for larger businesses, it is not well suited for small businesses. Loans to smaller businesses frequently rely on personal loan guarantees, which the Fed’s loan facility does not allow. Direct financial support, such as that provided by the Economic Impact Payments and the Paycheck Protection Program, are more suitable for small businesses. However, another round of direct financial support requires new legislation, which is doubtful to pass before the election.

Meanwhile, Speaker of the House, Nancy Pelosi, announced that she and Secretary Mnuchin are working on a COVID-19 relief plan. If no agreement can be reached, the House may vote on a new stimulus program, which would include funds for airlines and restaurants plus additional funds for the PPP.

Economic Impact Payments (aka Stimulus Checks)

September 30 is the deadline for non-filers to enter information about dependents on the IRS non-filers tool to receive the additional $500 per child they are entitled to this year. In August, the IRS opened the window for beneficiaries of certain federal benefits, including Social Security, railroad retirement and VA benefits who do not normally file taxes to enter information about their children. Otherwise, these individuals will have to wait until they file their 2020 tax returns in 2021.

Other non-filers have until October 15 to update their information using the IRS non-filers tool to receive a payment in 2020. After this date, individuals who do not receive federal benefits but who are eligible for an EIP and have not filed a tax return due to low income will have to wait until 2021 when they file a 2020 tax return.

Paycheck Protection Program (PPP)

Even though 96,000 PPP forgiveness applications have been submitted to the SBA by participating banks since August 10, none have been so far forgiven. Banks do not yet have clear guidance from the SBA on the process for converting the loans to grants. Many bank leaders were blindsided by the announcement that businesses that received both a PPP loan and an emergency grant from the EIDL will have to subtract the EIDL grant from the amount of the PPP loan eligible for forgiveness. Many small businesses are waiting for additional clarification on the forgiveness process, which even with a simplified form, is still daunting.

Standalone bills are making their way through Congress to further simplify the forgiveness process, which could save recipients an estimated $7 billion in accounting fees. Under one proposal, businesses that received less than $150,000 would file a simple one-page form that attests that the funds were used appropriately. About 86% of the loans given out were under this threshold and account for about 23% of the total funds disbursed.

HELP FOR SMALL BUSINESS

Political deadlock means that governmental assistance for small businesses is limited to SBA loans through the Economic Injury Disaster Loans or local and state programs. Other options include requesting leniency from credit card companies and other lenders or setting up a crowdfunding drive. Unlike government programs which stipulate what the funds may be used for, funds from crowdfunding may be used to cover any needed expenses.

Shark Tank investor Barbara Corcoran has these five tips for surviving the pandemic:

  • Throw out your business plan and think creatively of other ways to bring money in.
  • Call your landlord as soon as you think you might have trouble paying rent.
  • Learn to sell on camera.
  • Develop and plan for both a best-case scenario and a worst-case scenario.
  • Focus on simply staying in business.

Remaining flexible and focused on what seems to be working during a particular week will ultimately be more successful than trying to control what cannot be controlled.

WORKING FROM HOME

Not everyone working remotely wants to work from home. To compensate for lost tourism revenue, some companies and countries are catering to the “half-tourist” market of digital nomads who combine work with a stay in a vacation spot. Barbados, Estonia, and Croatia are among countries that have created a digital nomad visa, which allows remote workers to live in that country with proof of income from a remote job.

If you’re nearing retirement, the options for remote work may make it possible to relocate to your retirement home before you retire. Scoping out the area with an extended visit beforehand can help you determine if this is a city you want to live in. Making a budget with an estimate of your post-retirement income will help ensure your new home is affordable. Be aware that you may pay income taxes in two states as long as you continue to work.

In contrast to many other advanced countries, the U.S. provides only limited daycare support for working parents. During the COVID-19 pandemic, this has left parents and workplaces to figure out a solution, which varies considerably across employers. Some companies have hired teachers to assist with remote schooling for their employees’ children in their empty offices, which allows employees to continue working from home. Others offer flexible schedules, but there is a limit to how much work an employee can manage while caring for children and overseeing remote schooling. Money and options for childcare can be more valuable than a flexible work schedule.

LIVING WITH AND AFTER THE PANDEMIC

Health updates

How will the pandemic end? According to a panel of 11 virus and public health experts, COVID-19 will continue to be a problem until 60 to 70 percent of the population have developed immunity, whether via vaccine or infection. A safe and effective vaccine may not be available until December, and the logistics of getting two doses, four weeks apart, to enough people may mean that most people won’t receive their first doses until the middle of next year. The first-generation vaccines may not be effective enough to do the trick, so we may be relying on masks, social distancing, and continued testing until November 2021 or later. Eventually, through vaccines, natural immunity, better treatments, and continuing precautions such as masks in cold weather, COVID-19 may simply become part of the normal seasonal illnesses that circulate.

Work in the post-pandemic world

With remote work continuing through the foreseeable future, managers need to develop different strategies to help employees who aren’t performing. Having a concrete, written set of expectations is the first step. Evaluating actual performance rather than physical presence or participation in zoom meetings provides insight into who the top performers in a company are.

Back to school

Adults aren’t the only ones experiencing stress from the pandemic and general unrest of 2020. This article from Good Housekeeping has practical age-specific suggestions for helping kids deal with uncertain times. For example, all ages will benefit from a consistent daily or weekly schedule. Include blocks of one-on-one time with your kids on that schedule for activities of their choice.

Fraud warnings

The Federal Trade Commission has received more than 200,000 complaints alleging fraud since the pandemic began. Median losses are $300, and have occurred in nearly every sector of the economy, from fraudulent tests and fake remedies to shopping and even romance. The length and widespread nature of the pandemic has made people more vulnerable to fraud than other natural disasters, which tend to be fairly localized and of shorter duration.

GENERAL RESOURCES

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!

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