The COVID-19 pandemic came along to change every aspect of our lives, throwing the world into chaos as it was unprepared to deal with the unprecedented challenges of facing such a contagious disease.
Governments worldwide took action and introduced new rules and regulations to cope with the changing global dynamics during the health crisis. The COVID-19 laws introduced by the government to help its citizens have had an impact on everything to ensure better conditions for everybody during these challenging times.
It is a good idea to know and understand federal COVID-19 laws that directly affect Homeowners Associations (HOAs), boards, and the residents living in the areas.
The government signed the COVID-19 national emergency proclamation on March 13, 2020. Since then, the Congress has passed several laws that offer tax credits, incentives, and specialized temporary loan programs to stimulate the economy and support small businesses and individuals.
The government has also introduced legislation to protect employees by incentivizing and mandating businesses to keep their employees on payroll and offer expanded paid leaves, medical insurance benefits, and unemployment insurance.
Does your HOA have full- or part-time employees and is under stress to fulfill its commitments and cover expenses due to the pandemic-induced restrictions? Understanding the federal COVID-19 laws impacting HOAs can be crucial in helping you navigate the challenges you are facing.
The Families First Coronavirus Response Act
The Families First Coronavirus Response Act (FFCRA) was the first federal COVID-19 law that passed on March 18 last year. The legislation was introduced with the goal of providing relief to employees who were forced to stay at home from their jobs due to necessary social distancing measures. The law is also aimed to assist employers who would otherwise be forced to bear the financial burden of this challenging situation.
The law applies to employers who have fewer than 500 employees on the payroll. It provides a boost to paid and unpaid leave protections in the Family and Medical Leave Act (FMLA). The law also incentivizes employers by offering them tax credits that can offset the expenses they will have to bear.
The FFCRA also temporarily mandated sick leave for employers who had fewer than 500 employees and called for group health insurers, health plans, and government programs to offer free-of-cost testing for COVID-19.
Coronavirus Aid, Relief, and Economic Security Act
The government signed the Coronavirus Aid, Relief, and Economic Security Act (CARES) into law on March 27 last year, and it is considered to be the most expansive federal COVID-19 law. The CARES Act allocated over $2 trillion in funds to stimulate the economy and offer relief to businesses and individuals impacted by the global health crisis.
The CARES Act is 800 pages long, and it has several provisions that could have an impact on HOAs that you should be aware of, including:
- Emergency Small Business Loan program: CARES is offering expanded funding and revised criteria to qualify for the Small Business Administration (SBA) loans. We will cover this in more detail below.
- Credit reporting: If your HOA offered a homeowner accommodation for an account that fell behind on payments after January 1, 2020, you cannot report it as delinquency to credit bureaus under the CARES Act. Payment plans, deferrals, delinquency forgiveness for HOA fees and assessments, and partial payments are some of the relevant accommodations you should know about.
- Eviction and foreclosure protection: Your HOA may not be directly involved with evictions and foreclosures. However, these are real-estate-related events that could directly impact residents in your area. It would be advisable to increase awareness of how CARES can help residents avoid evictions and foreclosure if they have been impacted by COVID-19.
- Employee Retention Tax Credit: Businesses may qualify for a tax credit if they can keep employees on payroll during the pandemic despite the economic challenges.
Revised Small Business Administration Funding Programs
The SBA revised its existing loan programs and established several new short-term emergency programs for businesses under the CARES Act. The government introduced these measures to tackle the problem of COVID-19-induced closures and other challenges faced by businesses with fewer than 500 employees on the payroll, including not-for-profit organizations like HOAs.
Paycheck Protection Program
The Paycheck Protection Program (PPP) is an expansion for the traditional SBA loan program that offers up to $10 million to qualifying applicants to help the businesses stay afloat while retaining their employees.
Under this loan, small businesses do not need to make loan payments for six to 12 months after receiving the funds. Businesses can use the funds to pay employee salaries and benefits, including insurance premiums, retirement, salaries, and paid leaves. There are additional incentives for businesses that will retain employees throughout the pandemic.
SBA Economic Injury Disaster Loan Program
The Economic Injury Disaster Loan (EIDL) program is currently focusing on accepting new applications from agricultural businesses. However, the SBA is processing applications for other entities, like HOAs, if they submitted their applications before the restriction was imposed.
The SBA EIDL is effectively a long-term and low-interest loan that could provide up to $10,000 to non-profits and small businesses affected by COVID-19. Your HOA can use EIDL money to cater to essential operating expenses. You cannot use the funds for additional expenses like bonuses, relocation, or business expansion.
Bridge and Debt Relief Loans
Homeowners Associations, association management companies, and other businesses that have established ties with the SBA also have access to two more federal economic programs under the CARES Act, including:
- Express Bridge Loan Pilot Program: This program offers up to $25,000 to businesses that are already working with an SBA Express Ledger to offer them support while they apply for other SBA loans.
- SBA Debt Relief Program: This program will pay six months of the principal amount, interest, and fees for current SBA loans for businesses that cannot qualify for PPP.
Using federal COVID-19 laws to your advantage is a sensible way for your HOA to remain solvent during these challenging times. Despite the vaccine rollout being underway, it is still challenging for businesses of all types to cope with the challenges presented by COVID-19. Contact us at PMG Service to understand how we can help your HOA through this time.