Hundreds of small businesses that received Payroll Protection Program loans relied on a St. Petersburg-based professional employer organization to help them with the process.
Securing the federal loans, made available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, were among several issues DecisionHR has worked with its small business clients on through the Covid-19 pandemic.
“Our folks were working 24/7 trying to keep our clients from panicking,” said Peter Newman, president of DecisionHR, an affiliate of Bankers Insurance Group in St. Petersburg.
DecisionHR has about 1,200 clients across the country, primarily in Florida, California and the northeast United States, providing payroll processing, workers compensation and other back office services. The company sprang into action as Congress debated the CARES Act.
“Everything in the CARES Act is centered around payroll taxes and wages in order to get credits and put people back to work. We were in a unique position to be able to help our clients by becoming experts in a very newly created law,” Newman said. “We had to reprogram our system in a very short period of time to be able to pull exactly the information that the banks are requiring in order to get the PPP loans. Payroll calculation is not a simple calculation. It’s not just wages. There’s a lot more to it. We reprogrammed our system to produce a PPP report … They could have walked into the bank with everything we gave them and handed it to their lender and would have had everything they needed to be approved.”
DecisionHR provided internal training so its workers could quickly become experts, while continuously putting out blasts and hosting live webinars for clients.
Initially, the main question from clients was how to get a PPP loan. Now, clients are asking how they can get the maximum amount of forgiveness of the loan.
“They put out a lot of ideas in this law without a mechanism to implement it. So we’re doing a lot of interpretation and so are the clients. There’s no defined guidance as far as how the forgiveness will be measured. There are overarching themes but no specific guidance,” Newman said. “At this point, all the questions are around what do I need to do to bring people back to work and what do I need to do to keep wages up, because those are the two main components to achieve full forgiveness of the PPP loans.”
Newman said he’s hearing from a lot of clients that they might need more stimulus funding in order to survive. He’s also hearing frustration from many small businesses that larger companies got PPP funding. Some of those larger companies have decided not to accept the loans or returned the funding they received because they are afraid of being audited.
“One of the things you have to attest to is that you truly need it in order to maintain your operation,” Newman said. “It’s a double-edged sword, because you have some businesses out there that truly do need it but now they’re worried about the enforcement. No one knows what the judging standard for really needing the loan is, and the last thing they want to do is be penalized for doing what they thought was the right thing but be judged differently.”
It takes more than a loan for payroll, rent and utilities to keep a business afloat, Newman said. Clients also want information on safe ways to reopen their businesses.
“We’re providing resources about social distancing and washing hands. We’re giving them all of the best practices for the worksite,” he said. “Most of them are asking if they can take temperatures … Most people are combining that with legal precautions they can take, because they are worried about invasion of privacy and getting sued. They are taking actions necessary for their business and not doing it maliciously, but litigation risk is also a concern.”
DecisionHR opened its telemedicine service — typically sold as an ancillary benefit — for free to all its clients.
“By doing that we felt we were not just helping clients and their employees and families, but socially we’re keeping people out of the doctors’ offices and helping the medical establishment deal with an already burdened system,” Newman said.
Newman is getting feedback from DecisionHR clients on gradual reopenings in Florida and other states.
“Their general feeling is that partial isn’t going to get it done, especially when talking about food service and hospitality,” Newman said. “When we first started partially shutting down, restaurants did the 50 percent rule [restaurants could operate at 50 percent of seating capacity]. As soon as that was in place, their revenue dropped 90 percent … They are fearful that a full declaration to open is still far away and that a partial is as good as total closures. A lot will wait until there’s a total open economy. It’s too much operating expense to undertake with a partial reopening and not enough revenue coming in under a partial scenario.”
Clients also are talking about the $600 in unemployment benefits available under the CARES Act, in addition to state benefits.
“Clients are saying they are ready to try to open up but they called their workers who said they wouldn’t come back until after June, because that extra $600 a week is equal to $31,000 a year. And that’s on top of the normal benefit. So a restaurant or minimum wage worker is getting paid more to be on unemployment than they would be coming back. So actually getting the workforce back, even when the employer is ready, is a concern,” Newman said.
The other main concern is a potential second wave of Covid-19 and further shutdowns.
“Hopefully testing has progressed far enough and if you can test more people, we might not take as aggressive steps as far as shutting down the whole economy,” Newman said.