Amended: Paycheck Protection Program Not Yet Available in SBA Loan Assistance
Please note: The Paycheck Protection Program in the CARES Act has not yet been released. AIADA will provide application information on the program when it is available. Please read more about the SBA’s Coronavirus resources here.
The CARES bill provides $350 billion for 100 percent federally-guaranteed loans for eight weeks. Dealers may borrow up to 250 percent of their average monthly payroll cost and may be forgiven equal to the amount spent over an eight week period following the origination date of the loan. Eligible businesses must have paid salaries and payroll taxes prior to February 15, 2020 and have fewer than 500 employees. For those auto groups with more than 500 employees, eligibility affiliation rules may be waived under certain criteria. Loans can be used for “payroll costs” up to an annual rate of $100,000 per employee. This also includes interest on mortgage obligations, rent, and utilities. SBA-certified lenders and non-SBA lenders will be authorized to make Payment Protection loans through delegated authority for quicker processing. Loans will not require an application fee, personal guarantees, collateral, or closing costs.
Please visit the SBA Coronavirus Small Business Guidance & Loan Resources page by clicking here.
After Shuttering Showrooms, Dealers Lay Off Employees – And It May Be Just the Start
With vehicle sales plummeting and thousands of dealership showrooms coast to coast ordered to shutter in the wake of the coronavirus outbreak, dealers are desperately slashing costs — including laying off employees en masse, reports Automotive News. Stay-at-home mandates by governors and local leaders to curb the outbreak accelerated last week. The resulting restrictions on vehicle sales in those locations added to the rapid falloff in sales and showroom traffic across the U.S. and left one dealership hiring expert predicting that retailers will have to cut a third of their work forces by May. While it's unclear just how many employees have been affected thus far, many dealerships have started cutting staff. In some cases, dealers have opted to pay employees while showrooms are temporarily closed. But others just can't afford to. Read more here.
2020 Detroit Auto Show Canceled After Venue Chosen for Coronavirus Field Hospital
The 2020 Detroit auto show has been canceled as its venue will be used as a field hospital for the Federal Emergency Management Administration, according to two sources familiar with the plans. CNBC reports that the event is the third large-scale auto show to be canceled or postponed due to COVID-19. The Geneva auto show was canceled last month, followed by a postponement of the New York International Auto Show, which was scheduled to begin next month, to late-August. The next Detroit show, officially known as the North American International Auto Show, will take place at the TCF Center in June 2021. The show typically takes months to set up due to large, multimillion dollar displays and massive video screens from dozens of auto brands. “Although we are disappointed, there is nothing more important to us than the health, safety and well-being of the citizens of Detroit and Michigan, and we will do what we can to support our community’s fight against the coronavirus outbreak,” said Rod Alberts, executive director of the show, in a release. Read more here.
Many Sales Only Deferred Amid Outbreak
The novel coronavirus is expected to deal a heavy blow to the auto industry's U.S. sales numbers for March, but there is reason for optimism amid the uncertainty: Most of the lost customers will eventually come back, reports Automotive News. Analysts say demand will be bottled up for now. The key question is how long it will take for life to get back to normal as restrictions in various markets keep consumers away from dealerships. J.D. Power said 25 states had enacted stay-at-home or essential-business mandates as of March 25 that affected 199 million people, or 60 percent of the U.S. population. The industry is "far better prepared" to weather this crisis, and "is in a healthier position, after experiencing the 2008-2009 Great Recession," LMC Automotive said. "There are some people that are going to defer their purchase," Eric Lyman, chief industry analyst for ALG, told Automotive News. "We see there's so much data present that tells us that the majority of these sales aren't going to be lost. They're simply going to be deferred to a period of more stability and economic confidence." Read more here.
Trump Orders GM to Make Ventilators for the Government
The Detroit News reports that President Donald Trump on Friday signed a presidential memorandum to require General Motors Co. to make ventilators for the federal government despite the Detroit automaker saying it already was moving closer to producing thousands of the devices in Kokomo, Indiana. "Today, I signed a Presidential Memorandum directing the Secretary of Health and Human Services to use any and all authority available under the Defense Production Act to require General Motors to accept, perform and prioritize federal contracts for ventilators," the president said in a statement, referring to the Korean War-era statute he invoked last week allowing the government to call upon private business for the sake of national defense. "Our negotiations with GM regarding its ability to supply ventilators have been productive, but our fight against the virus is too urgent to allow the give-and-take of the contracting process to continue to run its normal course. GM was wasting time. Today’s action will help ensure the quick production of ventilators that will save American lives." Read more here.
Webinar TODAY: Federal Stimulus Information – How the Program Can Benefit You and Your Employees
Join AIADA's AutoTalk TODAY, March 30th at 2:00 p.m. EDT to hear Part Two of our COVID-19 series as experts from Moss Adams Automotive and Dealer Services Group talk to the Federal Stimulus package and explain how the program can benefit you and your employees.
Topics covered include:
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Latest information on Federal stimulus package and key tax provisions
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Small Business Administration Loan Programs
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Federal tax filing and payment deadline relief
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Tax Update on The Families First Coronavirus Response Act
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