Our thoughts are with you and your employees as we celebrate the Spring holidays in a new way. We hope you are all safe and healthy. Please let us know if we can help with COVID-19 resource information or other info you feel is valuable to your fellow business owners. Email Sheryl Heather sheather@springandsummeract.com.
6 ways the stimulus package may help you.
by Rocco A. Carriero

In response to the severe economic fallout stemming from the COVID-19 pandemic, a record $2 trillion fiscal stimulus package was enacted at the end of March. The wide-ranging CARES (Coronavirus Aid, Relief and Economic Security) Act is designed to help ease the financial hardships many Americans are facing. You may be wondering what, if any, economic relief is available to you. Here are some possible ways you may qualify for support.

#1 – Direct payments to many Americans
The CARES Act includes a provision to send most Americans direct payments of $1,200, or $2,400 for joint filers, plus $500 for each child. The amount of the payments will be reduced for those with higher incomes. For individuals filing taxes as singles, the reduced amount begins at an adjusted gross income (AGI) of $75,000 per year and is completely phased out at $99,000. For joint filers, the reduced amount begins at $150,000 and payment is eliminated at $198,000. Your AGI will be determined by your 2019 tax filing (or 2018, if 2019 is unavailable). These payments will primarily come via direct deposit within weeks, but when you actually receive the rebate may vary depending on your circumstances.

#2 – Enhanced unemployment compensation
For those collecting unemployment benefits, the federal government will bump up your weekly benefit by $600 for up to four months. Laid off workers who file for unemployment would usually need to wait a week to receive benefits. However, the act now allows for that week to be funded by the federal government. Benefits are also extended to self-employed individuals who often don’t qualify for coverage.

#3 – Penalty-free distributions from retirement accounts
If today’s circumstances require you to tap your workplace retirement plan or IRA to meet current financial needs, you may have more flexibility to do so. Affected, eligible participants in workplace retirement plans and IRA owners can take an aggregate distribution in 2020 of up to $100,000 from all retirement accounts without incurring the usual 10% early withdrawal penalty. The affected participant or IRA owner (including a spouse or dependent) would need to either be diagnosed with COVID-19 or experiencing adverse financial consequences that meet a broad-set of COVID-19-related criteria.

Income taxes will still apply to the distribution but can be spread out over three years. You also have the option to refund your retirement accounts any or all of the distribution within three years of the initial withdrawal and adjust your tax liability accordingly.

#4 – No required minimum distributions in 2020
Those who are required to take minimum distributions (RMDs), can ignore RMD rules this year. RMDs for 2020 are suspended for certain defined contribution plans and IRAs to help retirement accounts try to recover from stock market losses. Check with your tax advisor about other options you may have related to RMDs.

#5 – Tax-deductible charitable contributions
As a result of the 2017 tax reform, the vast majority of taxpayers lost their ability to choose itemized deductions due to a dramatic increase in standardized deductions. That eliminated the ability for many to write off charitable contributions on their taxes. The new CARES Act allows for a $300 above-the-line deduction for charitable contributions made to 501(c)(3) organizations for taxpayers who take the standard deduction or those who itemize. The deduction applies to cash contributions. The changes go into effect beginning in the 2020 tax year. The tax savings may be modest, but it helps.

#6 – A break for those with student loans
All federal student loan payments are deferred until September 30, 2020. However, you need to contact your loan provider and inform them that you plan to pause payments as allowed under the CARES Act. There are additional benefits for borrowers and grant recipients as well, so check with your loan provider or school administration for more information.

How To Approach Market Volatility If You Are In Retirement or Close To It
Retirement is an important milestone that often comes after years (or decades) of careful planning. But even the most seasoned planners couldn’t have foreseen the severe market selloff that happened in March in reaction to the COVID-19 pandemic. The abrupt end to the 10-year bull market surprised investors of all ages who are now wondering how long it will take for their portfolios to recover.

Unlike younger workers with many years ahead of earning and saving, investors who are retired or nearing retirement have less time to wait out their losses. But there are still actions they can take to help secure their finances, even during periods of uncertainty like we’re experiencing today.

If this situation applies to you, here are a few steps to consider in this new environment:
If you are approaching retirement:
  • Pick your retirement date.
If you haven’t already, take time now to decide the year and month when you (and potentially your spouse or partner) want to retire. Given the current environment, you may want to consider extending your time in the workforce – whether it’s continuing your current career or moving into a new full or part-time role. Either way, your answer can have a big impact on your investment decisions from this point forward.
Ensure your investments are diversified.
Not all sectors of the economy are alike, and they react to news and events differently. For those nearing retirement, the recent spike in volatility is a reminder of how having a broadly diversified portfolio can help reduce your investing risk.

Instead of simply selling your stocks in attempt to cut your losses, review your portfolio to see if it is properly balanced between stocks, bonds, and cash that align with your goals, time horizon and your ability to manage risk. While a diversified portfolio can’t guarantee profits or protect against all losses, it can greatly reduce the impact of volatility.

  • Balance your need for protection with growth.
Protecting your portfolio from market downturns becomes more important as you approach the day when you start living off your savings. During this time, you may want to consider investing the money you plan to use for income in the first few years of retirement more conservatively in liquid vehicles that are easy to access. This can help give you peace of mind that you are prepared to handle upcoming expenses no matter what’s happening in the markets.

If you are currently in retirement:
  • Review your withdrawal strategy.
If the recent decrease in the value of your portfolio makes you nervous, revisit the amount of money you withdraw monthly to meet your expenses. As you review, the goal is to be assured that the amount you withdraw to meet the next year or two of expenses does not put your long-term financial security in jeopardy. If your base of assets is reduced, you may have to trim your withdrawal amount to assure you have a sustainable long-term income strategy.

  • Don’t take unnecessary chances in your stock exposure.
For the long-term investor – which may include you as a retiree – volatility in equities can work in your favor. It’s possible that you will spend one to three decades in retirement, giving you time to withstand some market moves. At the same time, it’s important to preserve your base of savings and not be overexposed to stock risk. Now is a good time to review your exposure in the context of your full financial plan to evaluate if you are taking the right amount of risk. Additionally, focus your equity portfolio on higher quality stocks – primarily blue-chip companies that tend to demonstrate more stable performance. Stocks that pay competitive dividends may also be an effective choice to provide a source of reliable return on your investments.

Tips for Investing in a Bear Market
  In mid-March, a fear-induced global sell-off triggered by the COVID-19 pandemic ended the longest bull market in U.S. history – leading us into our first bear market in 11 years. Bear markets are commonly defined as a decline of at least 20% from the market's high point to the low during the selloff.
If you compare your investment portfolio today to what it looked like at the beginning of the year, you are likely to be unhappy with what you see. But there’s also a potential upside to bear markets, as you may be able to capitalize on the fact that stock prices have come down across the board. Investing in a bear market is possible, but it’s important to approach it with the right mindset. Here are a few tips to keep in mind:

During a bear market, your focus should generally be on preservation. Diversification can help you accomplish this. Essentially, diversification is just a fancy word that means “don’t put all your eggs in one basket.” While it’s true that the trend is downward during a bear market, not all stocks will go down at the same rate. It’s possible that some might even thrive.
Review your portfolio to see if it is properly balanced between stocks, bonds, and cash that align with your goals, time horizon and your ability to manage risk. By having a portfolio that covers various sectors, you can mix your winners and losers to help reduce overall losses.

Keep a level head
Bear markets are painful but temporary. The U.S. stock market has recovered from every previous bear market. Of course, the past is no guarantee of future results, but historically even the worst markets have been temporary dips in a general march higher for stocks.

If you are in a well-diversified portfolio, your bear market experience will be very different from that of the S&P 500. Sticking to your plan is key, so resist the urge to change the risk profile of your portfolio or make sizable shifts out of stocks or into cash.

Don't attempt to time the market
Rather than aim to buy stocks when they're at a so-called low during a bear market, employ a strategy called dollar-cost averaging. Dollar-cost averaging involves making regular investments of consistent dollar amounts over an extended period of time. This allows you to build a portfolio and help protect against wild fluctuations while continuing to accumulate assets. It's a smart strategy in general, but one that can really pay off during a bear market. After all, it’s not about timing the market, it’s about time in the market.  

Look to the future
It's hard to predict how long a bear market will last, and in some cases, they can be quite drawn out. As such, don't invest in a bear market with the hopes of buying low and getting rich within the year. That's unlikely to happen. Instead, take a long-term approach to investing, and assume that any stocks you buy now are stocks you'll continue holding for a number of years. 
Small Business Administration Loans
Under the CARES Act | UPDATED 4/3/20
Lisa D. Tymann, Partner

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law on March 27, 2020. Title I (“Keeping American Workers Paid & Employed Act”) addresses two types of loans available to small businesses, both of which greatly expand SBA loan eligibility.

On April 2, 2020, the SBA issued an Interim Final Rule, effective immediately (though comments will be considered for a period of 30 days and revisions may be made as a result thereof) in connection with the Paycheck Protection Loan Program described below. A brief summary of each of the two types of loans is provided below.

PPP: Paycheck Protection Program
Paycheck Protection Program under Section 7(a) of the Small Business Act- to help employers maintain payroll to prevent job loss & small business failure; 100% federally guaranteed; $349 billion available for loans
      Eligibility: in addition to small business concerns, any business concern, nonprofit organization, veterans organization, or Tribal business concern with not more than 500 employees, including sole proprietors, non-profits, and eligible self-employed individuals; eligible companies must have been in operation on February 15, 2020 and have had employees for whom it paid salaries & payroll taxes or paid independent contractors as of such date
      Application: small businesses and sole proprietorships may apply beginning Friday, April 3; independent contractors and self-employed individuals may apply beginning Friday, April 10; apply directly with SBA-approved lender by June 30, 2020 (funding is capped, so applications should be submitted as soon as possible); the Department of Treasury has authorized FDIC-insured banks and credit unions, certain Farm Credit System institutions, and certain other depository or non-depository financing providers to provide loans in addition to already approved SBA lenders; applicants are advised to contact all lending institutions with whom they do business to gauge such institution’s readiness to provide application and process the loan; applicant may apply with only one bank, however; all lender & borrower fees are waived
      Coverage Period: February 15, 2020 to June 30, 2020
      Loan Amount: Maximum amount of loan is the lesser of $10 million or 2.5 times the average monthly payroll costs based upon the prior year’s payroll
      Interest Rate: 1.0% fixed

Permitted Uses for Loan:
- Payroll Costs (including costs related to healthcare benefits and premiums, payments for vacations and sick, family and medical leave (to the extent a credit is not allowed under the Families First Coronavirus Response Act), salaries (salaries of over $100,000/year are capped at $100,000), wages, commissions, tips and similar compensations, state and local taxes on compensation (NOT available for federal employment taxes imposed or withheld from 2/15/2020-6/30/2020, including FICA,
Railroad Retirement Act taxes and income taxes required to be withheld from employees);
-interest payments on mortgage obligations;
-rent (lease must have been in force as of February 15, 2020);
-utilities for which service began prior to February 15, 2020

Forgiveness: amounts spent during the 8-week period beginning with the origination date on rent, payroll costs, mortgage interest & utilities may be forgiven; 75% of the qualified spending must consist of Payroll Costs (no more than 25% of amount forgiven may be for non-payroll costs); amount forgiven may be reduced if the borrower reduces the number of full-time employees or salaries and wages (pay cut in excess of 25% of prior year’s compensation) during such 8 week period; amount forgiven reduced in proportion to reduction in number of employees & reduction in total salary or wages of employee in excess of 25% (excluding employees with salaries greater than $100,000); reduction penalty does not apply to the extent the borrower restores their workforce count and salaries/wages by June 30, 2020; must apply to lender for forgiveness and include documents verifying the number of full-time equivalent employees and pay rates, along with payments on eligible mortgage, lease and utility obligations; lender must make decision on loan forgiveness within 60 days; amount forgiven may not exceed the principal of the loan; amount forgiven is not included in gross income; SBA will be issuing further guidance on loan forgiveness
      Term: to the extent not forgiven, 2 years
      Deferral: 6 month deferment on payment of principal & interest (interest still accrues during that period)
      Guarantees/Collateral: no personal guarantee or collateral required

EIDL: Economic Injury Disaster Loan
Economic Injury Disaster Loan Program under Section 7(b) of the Small Business Act (“EIDL” Program)- existing program but expanded by CARES Act with $10 billion of additional funding for emergency grants, expansion of entities eligible for such loans and waivers of certain requirements
      Eligibility: in addition to already eligible small business concerns, private nonprofit organizations, and small agricultural cooperatives, sole proprietors, independent contractors, and any cooperative, ESOP or tribal small business with 500 or fewer employees; must have suffered “substantial economic injury” from COVID-19; usual EIDL requirement that borrower must demonstrate it is unable to obtain credit elsewhere is waived
      Application: through the SBA website at:  https://covid19relief.sba.gov/#/
      Coverage Period: January 31, 2020 to December 31, 2020
      Loan Amount: based upon company’s actual economic injury as determined by the SBA up to $2 million
      Interest Rate: 3.75% fixed rate for small businesses; 2.75% for nonprofits
      Permitted Uses for Loan: payroll, to cover increased costs due to supply chain interruption, rent and mortgage payments, obligations that cannot be met due to revenue loss
      Term: up to 30 years
      Grants: any entity applying for such a loan may request an advance of up to $10,000 to pay allowable working capital needs; the advance is to be paid by the SBA within 3 days of administrator’s receipt of application, subject to verification that entity is eligible under program; is not required to be repaid, even if the application for the loan is denied (but amount of advance must be deducted from any loan forgiveness amounts under a Paycheck Protection Program Loan)
      Guarantees: no personal guarantees required for loans up to $200,000; SBA must make determination that applicant has ability to repay the loan; can be based solely upon applicant’s credit score (submission of tax returns not required)

Companies may obtain loans under both programs but cannot cover the same costs with both loans; may also apply for other SBA financial assistance as long as there is no duplication in the uses of funds.

In addition to availability of the loans discussed above, the CARES Act allocates an additional $17 billion to subsidize certain existing loans guaranteed by the Small Business Administration under Section 7(a) of the Small Business Act; the Administration will pay principal, interest and fees on such loans for a period of six months and is encouraging lenders to provide payment deferments and extend maturity dates.

For more information on how to apply for assistance, visit the U.S. Chamber of Commerce website at https://www.uschamber.com/co/small-business-coronavirus
Counseling available for small businesses
If you're in need of advice, please contact the Stony Brook Small Business Development Center. The SBDC at Stony Brook maintains services both at the Stony Brook University Main Campus and at the Southampton Campus (part-time). The SBDC at Stony Brook can be reached at (631) 632-9837 or by e-mail at: SBDC@Stonybrook.edu  

Suffolk County has a Business Recovery Unit dedicated to COVID-19 issues
Please take the County's Business Impact Survey to get on list for updated information.
Resources for your small business:
Federal Actions & Resources :
Families First Coronavirus Response Act- provides paid leave for employees absent from work for reasons related to COVID-19  See website here
The act provides for tax credits and tax exemption for businesses as follows:
  • Payroll tax credit for required paid sick leave 
  • Income tax sick leave credit for the self-employed
  • Payroll tax credit for required paid family leave (Emergency Family and Medical Leave Expansion Act)- this leave is available when an employee must take off to care for their children under age 18 because of  a COVID-19 emergency declared by a government authority that either closes a school or place of childcare or makes a childcare provider unavailable   
  • Income tax family leave credit for the self-employed  

The IRS has issued an extension of deadline to file and pay 2019 federal income taxes- any returns or payments due by April 15, 2020 are now due by July 15, 2020 (no forms need to be filed to obtain the extension and no interest   or penalties will accrue until July 16, 2020)   https://www.irs.gov/newsroom/tax-day-now-july-15-treasury-irs-extend-filing-deadline-and-federal-tax-payments-regardless-of-amount-owed

U.S. Small Business Administration  https://www.sba.gov/
Small business owners in all 50 states are eligible to apply for disaster loans due to the Coronavirus (COVID-19) https://www.sba.gov/disaster-assistance/coronavirus-covid-19

Additional Federal Resources:

New York State Actions & Resources :
Local Resources:
Thank you to our corporate sponsors:

Southampton Business Alliance Executive Committee:
President:  Larry Hoffman , Dockers Waterside Restaurant & Marine
Vice President:  John LaMura , Esq
Secretary:  Bob Strebel, Jr. , Sabel & Oplinger
Treasurer:  Joe Mammina , Markowitz, Fenelon & Bank
Immediate Past President:  Ann LaWall,  Ann LaWall & Company

Directors: Ellen Cea , Rechler Equity Partners 
Sheryl Heather   (Executive Director),  Spring & Summer Activities
Tony Panza , Turtle Pond Builders | Mollie Scruggs , Southampton Limousine
Aram Terchunian , First Coastal Corp.

Do you have good news to share about you or your business?
E-mail us at  info@southamptonalliance.org  to be included in the next newsletter!

... and if you know someone who shares our interest in protecting the business community, please pass along a membership application!  Download membership application here