The Department of Labor and the Small Business Administration have each issued new guidance on issues of importance to franchised dealerships.
Coinciding with the start of the 2020-2021 school year, DOL issued advice for businesses reviewing employee requests for emergency paid sick and/or childcare leave pursuant to the Families First Coronavirus Response Act (FFCRA). DOL has clarified the extent to which parents of children facing a variety of school opening scenarios—including all in-person attendance, a mix of in-person and remote attendance and all-remote attendance—may be eligible for paid leave. This advice has been incorporated into NADA’s FFCRA FAQs. Additional information is available on DOL’s FFCRA webpage.
PPP loan proceeds spent on rent and mortgage interest to third parties generally are expenses eligible for forgiveness. SBA’s new forgiveness guidance clarifies that rent paid to a real estate entity owned by a borrower is forgivable only to the extent that the real estate entity makes mortgage interest or lease payments to a third party. Of course, for franchised dealership PPP borrowers most, if not all, of their forgivable expenses will consist of payroll and payroll-related items versus nonpayroll expenses such as rent or mortgage interest. SBA’s new guidance has been incorporated into NADA’s documents PPP Loans: Use of Proceeds and Forgiveness and CARES Act FAQs. Contact your CPA and lender before filing a forgiveness application that relies on rent payments paid to a related real estate entity.
Questions on these issues can be directed to [email protected].