Leading ESOP organizations are providing resources, including free webinars and web pages, to keep the ESOP community updated on the impact of the current and evolving impact of COVID19. Some areas of focus include administration, distributions, valuation, and employee communications, as well as issues relating to the Payroll Protection Program Loans offered under the SBA (CARES Act).
Below are recommended resources.
National Center for Employee Ownership
The ESOP Association
The Beyster Institute
Key information from a recent webinar on the topics of COVID19 on the ESOP Community, presentation by Jim Bonham, President of The ESOP Association (TEA) on March 31st, are outlined below.
TEA has worked on behalf of ESOP companies to inform legislators of key concerns including:
- ESOP community needs during preparation of economic support bills.
- A need to focus on “hotspot” issues such as streamlining SBA loan approvals and private guarantees.
- Engaging regulators and Congressional committees for relief from new and existing DOL investigations and guidelines for routine reporting.
Recent Legislative Impact on ESOP Companies
- FMLA offset by payroll and short term sick leave. ESOPs may fair better than “normal” companies in that offset of payroll tax is not deductible
- Economic Injury Disaster Loans (EIDL) – ESOPs are specifically eligible. Immediate cash grants up to $10K and loans up the $2M.
- Paycheck Protection Programs – ESOPs eligible as small business loans up to $10M for period 2/15 to 6/30. If payroll is maintained, loans will be forgiven and end of term. Goal is to preserve employment to facilitate more rapid recovery when COVID crisis ends.
- DOL granted authority to delay reporting deadlines, like 5500 forms.
Several other economic support bills are being prepared as of the writing of this summary. The ESOP Association’s Response and Action Center provides up to date summary of passed and upcoming legislative efforts https://esopassociation.org/covid-19-response-action-center.