Know that this situation changes daily, even hourly, so this article was up-to-date at the time it was written and is meant to serve as a catalyst for you to find out more from your own legal and financial team. While the author is an attorney licensed in Louisiana and Mississippi, please do not construe this article as legal advice.
 

Small Business Resources for Gyms

If your gym is formally organized through the Secretary of State in your state and has under 500 employees, then the United States government considers you a small business. The designation of a small business allows your organization to apply for numerous loans, grants, and programs.

SBA Disaster Loan

A small business like your gym operation has the opportunity to receive $2 million in assistance via a loan from the Small Business Administration (SBA) to provide economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. You must use the funds to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses and 2.75% for non-profits, which some weightlifting facilities operate under. Long term repayments are available in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay. The SBA has authorized lenders to defer pre-existing SBA loan payments for up to six months. However, this is at the discretion of the lender, so don't automatically assume it is going to happen.‍

Pre-COVID-19 SBA loans still available for small businesses include:

• The 7(a) program offers loan amounts up to $5,000,000 and is an all-inclusive loan program deployed by lending partners for eligible small businesses within the U.S. and its territories. The uses of proceeds include: working capital; expansion/renovation; new construction; purchase of land or buildings;  purchase of equipment, fixtures; lease-hold improvements; refinancing debt for compelling reasons; seasonal line of credit; inventory; or starting a business.
• The Express loan program provides loans up to $350,000 for no more than seven years with an option to revolve. There is a turnaround time of 36 hours for approval or denial of a completed application. The uses of proceeds are the same as  the standard 7(a) loan.
• The Community Advantage loan pilot program allows mission-based lenders to assist small businesses in underserved markets with a maximum loan size of $250,000. The uses of proceeds are the same as the standard 7(a) loan.
• The 504 loan program is designed to foster economic development and job creation and/or retention. The eligible use of proceeds is limited to the acquisition or eligible refinance of fixed assets.
• The Microloan program involves making loans through nonprofit lending organizations to  underserved markets. Authorized use of loan proceeds includes working capital, supplies, machinery & equipment, and fixtures (but does not include real estate). The maximum loan amount is $50,000, with the average loan size of $14,000.
• Women-owned Small Business via www.sba.gov/wosbready or write to wosb@sba.gov.

Economic Injury Disaster Loans (EIDL)

Under the CARES Act, the federal government, through the SBA, passed legislation to allow small businesses to receive an economic loan due to COVID-19. Qualified businesses include those with under 500 employees, sole proprietorships, independent contractors, 504(c)(6). EIDL offers a loan at a rate of 2.75% for nonprofits and 3.75% for other entities with a deferred repayment option. You must use a qualified SBA lender; most banks are partnering with approved lenders to help their customers navigate this situation.

Should you qualify for this loan and use the bridge loan of $10,000 to cover immediate costs such as rent, utilities (internet, phone, water, etc.), then that amount can be forgiven. You cannot use the funds to fund any expansions, lost revenue or lost profits. But you can use it to "keep your doors open" to help with working capital needs like recurring expenses (fixed debt, accounts payable). This resource requires a credit history check and they look at your ability to repay all loans. If you request over $25,000, then collateral is required. Real estate, your gym equipment, and anything asset in the gym’s name can be used as collateral. You must provide all documentation requested within seven days of that request (forms include SBA Form 5, IRS Form 4506T, Federal Tax Returns (if you don't have that, then look at using your year-end Profit And Loss Statement).

Two important things to note with regards to EIDL: (1) You cannot have both the SBA Disaster Loan and an EIDL, and (2), if there was a change in ownership of more than 50% after March 27,2020 without a contract showing the sale was negotiated and began prior to that date, then your organization is excluded from being eligible for an EIDL.

Payroll Protection Program

Payroll Protection Program is available for businesses with less than 500 employees, sole proprietors, the self-employed, and independent contractors. This plan allows any business that was operating on February 15, 2020 to apply for a loan to cover qualified expenses in order to maintain payroll. Independent contractor salaries or hourly rates can be included in this loan. It caps payroll per person at $100,000 and does not apply to employees with a principal residence outside of the United States. The end-goal here is to allow companies to pay their employees. If the business uses 75% of the funds for payroll, then the "loan" converts to a grant. This means you do not have pay back the government. However, keep meticulous records because if you do not use the funds appropriately then the loan must be paid back at .5%.

This program will take your payroll costs and multiply it by 2.5 in order to generate what amount your organization may be eligible to receive It differs from EIDL insofar as no personal guarantee is required, no collateral or credit check is required, and it can be FORGIVEN if used on appropriate expenses (payroll, health benefits, rent, utilities) within eight weeks of receipt. If you are a sole proprietor or self-employed, and you were on the payroll, then you can apply for PPP. The government is going to be looking to see if you have paid into social security. You can apply for PPP directly with your bank or here through the SBA.

What You Can Ask Employees

According to the US Equal Employment Opportunity Commission (EEOC), as of 04/12/2020, employers can ask or do the following in compliance with their interpretation with the Americans With Disability Act (ADA) and Rehabilitation Act:

• Are you experiencing symptoms  of coronavirus, including fever, chills, cough, shortness of breath, or sore throat?
• You can take their temperature
• Request that the employee not come back to the workplace unless you are symptom-free for at least 24 consecutive hours
• Once a symptom employee returns, you can ask for (and receive) a doctor’s note certifying they are fit to return to work and for their duties. The EEOC recommends reliance on local clinics to provide a form, a stamp, or an email to certify that an individual does not have coronavirus, while the CDC adds that employers “should not require a  healthcare provider’s note for employees who are sick … to validate their illness or to return to work.” So, you can ask for it, but know you may not get it.
• If you made an offer of employment and the person has symptoms of COVID-19 or tested for it, you can (again, this is the EEOC interpretation) RESCIND that job offer if they cannot enter the workplace safely. Or, in the alternative, you can push back the date they were to start working at your facility.

Please note that while the EEOC has listed this information, it does not mean a court in the future will find it valid. However, it is a national guideline and at this time, you would have an argument down the road if someone were to sue you because you asked these questions or took these actions.    

Business Interruption Policy Claims

An interesting turn of events lately has been insurance companies denying Business Interruption policy claims pursuant to COVID-19. Their argument is typically that the situation needs to affect the physical property of the organization; other arguments note that the policies exclude viruses altogether. Some lawyers are filing lawsuits in Louisiana to combat the denial of the claims, noting that the virus is on the actual, physical property and as such, the claims should not be denied. In the meantime, a National Claims fund is in the works similar to the 9/11 Claim Fund in 2001. If you have been denied coverage on a Business Interruption Policy Claim, then hang tight. You likely have a year at a minimum to file suit against your insurance company (but review your state statute & insurance policy for any additional time delays). In the meantime, apply for the loans and PPP to help your business stay afloat.

Other Things To Consider

If you are loaning out equipment to your members, please do not do so without an up-to-date liability waiver on file. You should also have them sign an agreement that should they damage, destroy, or lose the equipment while under their control, then they must reimburse the gym the value of the equipment. Families First Act has widely expanded FMLA as it pertains to COVID-19, so please make sure your policies, procedures, and employee manuals are up-to-date with these new laws. As a practical concern, think about offering your members virtual classes or training sessions (with appropriate release waivers specific to the activities, if they have changed from what was offered before) if you are continuing to auto-draft their accounts per a previous and existing contract. You want to be adding value to their membership, not just taking a check just because you can. Trust me: people will remember that and you saying “This gym is a small business, too,” while true, makes you look like Scrooge McDuck. If you were offering something of value, they probably wouldn’t mind that auto-draft.
 

Self-Employed and Independent Contractor Additional Resources

Self-employed individuals have the ability to apply for SBA loans, whether it is the Disaster Loan, EIDL, or PPP. Self-employed and independent contractors can both now apply for Unemployment.

The CARES Act via the Pandemic Unemployment Compensation (FPUC) provision has completely changed who is able to receive unemployment. Previously only those on payroll could apply for it. Not anymore. If you qualify for unemployment in the traditional sense, and would receive at least $1, then you qualify for the additional $600 being distributed by the federal government under the CARES Act to States for additional unemployment payouts.

Now, 1099 workers (independent contractors) and self-employed individuals can apply for unemployment during this crisis, thanks to Pandemic Unemployment Assistance (PUA) . Each state’s work force commission reviews each case separately. The maximum number of weeks that unemployment benefits can be paid per claim is 26 weeks in a 12-month period. Wages and vacation pay that are accrued during that week’s time MUST be reported when you file your unemployment claim. Sick leave and PTO do not need to be reported.

At this time, "fear of contracting COVID-19" does appear to be a valid reason to receive unemployment, but that could change. This section is still undergoing analysis and changes. If you have questions, please schedule a time to talk with an Employment lawyer and your CPA.

Conclusion

The issues and resources surrounding small business help during COVID-19 are rapidly changing. Please remember to keep your health and safety, along with that of family and community, your top priority. Wash your hands, don't go around touching people acting a fool, and try not to panic. We are all in this boat together and we will weather this storm.

Additional Resources
 

·      US Equal Employment Opportunity Commission directive on what employers can or can’t ask employees: https://www.eeoc.gov/eeoc/newsroom/wysk/wysk_ada_rehabilitaion_act_coronavirus.cfm

·      US Small Business Administration COVID 19 Guidelines and Guidance: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

·      Small Business Administration Disaster Relief Loan and Other Types of Loans: https://disasterloan.sba.gov/ela/

·      For up to the minute Bill and Government News on COVID-19, follow Ohio Employer Law Blog run by Jon Hyman.

·      Full language of the Coronavirus Preparedness and Response Supplemental Appropriations Act  : https://www.congress.gov/116/bills/hr6074/BILLS-116hr6074enr.pdf

·      CDC Guidelines for Businesses: https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fcoronavirus%2F2019-ncov%2Fspecific-groups%2Fguidance-business-response.html

·      Local SBA Assistance: https://www.sba.gov/local-assistance

·      SBA Lender Match: https://www.sba.gov/funding-programs/loans/lender-match

·      i  CARES ACT information:  https://www.americanactionforum.org/insight/tax-provisions-in-the-coronavirus-aid-relief-and-economic-security-cares-act/

·      Louisiana Department Of Insurance: https://www.ldi.la.gov/consumers/insurance-type/healthinsurance/covid-19-emergency-rules/

·      US Committee on Small Business and Entrepreneurship : https://www.sbc.senate.gov/public/

·      SBDC: https://americassbdc.org/