Hartford Business Journal

www.HartfordBusiness.com • April 20, 2020 • Hartford Business Journal 23 EDITOR'S TAKE Stimulus' $350B PPP program good policy I n America, and especially Connecticut, criticizing government is a national pastime. Political leaders spend too much, or are out of touch with what businesses want or need; bureaucracy creates less efficient and effective programs at higher costs; and partisanship derails important things from getting done. Those are all legitimate criticisms of our state and federal governments, but it's also important to give policymakers credit when they do something right. The federal government's $350-billion Paycheck Protection Program — part of the larger $2-trillion CARES Act stimulus package — has created all sorts of confusion and consternation among the hundreds of thousands of small busi- nesses that applied for it, but it is in fact good and smart policy — at least on paper (we still need to see who ends up actually receiving the money). When I think back to the federal government's financial sector rescue during the Great Recession a decade ago, I can't help but remember all the fuss (and rightfully so) over Wall Street banks getting bailouts while Main Street small businesses were left to fend for themselves. The PPP is trying to make sure that doesn't happen again during the coronavirus pandemic, which has shut- down significant parts of the U.S. economy. Yes, large corporations, including the airlines in- dustry, will once again get bailouts, but PPP is trying to mitigate the damage to Main Street by providing low-interest and potentially forgivable loans of up to $10 million to businesses with fewer than 500 employees. However, the funding has run dry and Congress must allocate more money because countless small businesses are depending on it. And to be clear, the program isn't a panacea. Unfortunately, many small employers will close their doors in the weeks and months ahead. In Connecticut, entire industries are seeking PPP funds to stay afloat. In this week's issue, Hartford Business Journal highlights a number of news media companies, auto dealers, restaurants and events venues vying for funding to prevent mass layoffs and other spending cuts. The U.S. Small Business Administration and the banks overseeing PPP have taken flak for the faulty launch of the program, which included technical snafus and confusion over half-baked rules. Some small businesses that don't have traditional banking relationships have also been left out in the cold, but when you think about a $350-billion program getting off the ground in a week or so, the hiccups will be well worth the wait for companies that get funding. Businesses that didn't get a piece of the action this time, must be ready to act if and when more funding becomes available. Some hope in times of despair Amid the economic downturn in recent weeks, there have been some positive signs. One is the ingenuity of American, and more specifically, Connecticut busi- nesses. Few, if any industries, have been spared from COVID-19's impact, forcing companies of all stripes to reinvent themselves in a matter of days and weeks. We've highlighted some of that innovation in this week's issue. Whether it's auto dealers turning to online sales, startup accelerators moving to remote learning and collaboration, restaurants quickly adopting takeout services, manufacturers retooling their assembly lines to create in-demand healthcare products, news organizations launching webinars or new products on the fly, or event venues using Zoom and other digital tools to provide virtual tours to ensure they can book events later in the year, Connecticut companies are moving at rapid speed to innovate and stay afloat during these turbulent times. That type of ingenuity should serve companies that survive the downturn well, after this storm passes. OPINION & COMMENTARY Greg Bordonaro, Editor EXPERTS CORNER Aerospace sector will see CARES-Act relief By Janet Prisloe C onnecticut has long been a national leader in aerospace manufacturing, with some of the most prestigious names in the industry employing thousands of people within our borders, along with hundreds of vital members of the supply chain. While the industry continues to ad- just to the unprecedented disruption caused by COVID-19, the recently ap- proved $2.2-trillion stimulus package — known as the CARES Act — will bring the industry some relief. The impact felt on aerospace and aviation in the recent weeks since the COVID-19 crisis began to intensify cannot be denied, nor can its impact on Connecticut. Air travel has dramatically declined over these past few weeks, and for Connecticut, that causes concern for not only local manufacturers that design and build engines and operating systems, but also for suppliers that support them. This is why the CARES Act will prove so important in helping those companies endure and, ulti- mately, continue to grow once the issue is finally behind us. First and foremost, according to published reports, the CARES Act provides nearly $80 billion in loans and grants to the aviation indus- try, as well as $10 billion in airport grants and another $100 million set aside for "general aviation facilities." Additionally, the aerospace in- dustry in Connecticut will benefit from the loan pool established in the CARES Act of $454 billion for states, municipalities and busi- nesses in general. On top of that, the CARES Act established the $349-billion Pay- check Protection Program (PPP), which is designed to provide a di- rect incentive for small businesses (companies with fewer than 500 employees) to keep their workers on the payroll by providing each small business a loan up to $10 million for payroll and certain other expenses. Under the PPP, if employees are kept on the payroll for eight weeks, the U.S. Small Business Admin- istration will forgive the portion of the loans used for payroll, rent, mortgage interest or utilities. Up to 100 percent of the loan is forgiv- able, and business owners can apply through their lender. Also available for small business- es under the CARES Act, which could directly benefit many Con- necticut aerospace suppliers: • Refundable tax credits for pri- vate-sector employers that are required to offer COVID-19-relat- ed paid leave to employees. • The employer side of certain payroll taxes are deferred through the end of 2020 and not due until the end of 2021 and end of 2022, with 50% of the liability being paid at each date. • An employee retention tax credit is available for struggling businesses that are not eligible, or choose not to participate in the PPP; these are businesses that have been forced to fully or partially suspend operations, or that have seen a significant drop in revenues, which may be eligible for a 50-percent credit for wages paid to furloughed or reduced-hour employees. • A new SBA emergency grant pro- gram that provides an advance of up to $10,000 to small businesses harmed by COVID-19 within three days of applying for an Economic Injury Disaster Loan (EIDL). In the immediate aftermath of the CARES Act's passage, the aerospace industry has expressed optimism in its positive impact. This should be seen by Con- necticut manufacturers rooted in aerospace and aviation as a sign that there are indeed better days ahead. Janet Prisloe is a partner at accounting firm blumshapiro. Janet Prisloe

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