Support for CA Businesses During COVID-19: Updated Guidance + Financial Resources

All of us are weathering a rapidly changing storm as we band together to flatten the curve on the spread of coronavirus and minimize the health impact to our country and around the globe. Every family and business is adjusting to a new world and feeling an impact, and we hope you and your loved ones all are safe and healthy. Apart from the very real life-and-death situation we are all now confronted with, some Newfront clients, particularly our local business community and non-profits, are quickly facing a more difficult financial burden by the day. Our teams at Newfront are partnering closely with experts across multiple industries to mobilize resources and support in this time of need. I shared the following information with our clients last night in an email and wanted to make this broadly available to the business community: 

1. Arguably the biggest question being debated is whether there will be coverage under property insurance and business interruption policies for projected losses arising from COVID-19. Many policies require a connection between the business losses and some “physical loss or damage” to property. Following the President declaring a state of national emergency on March 17, 2020, state and local jurisdictions began instituting orders and directives designed to address the spread of the outbreak motivated by the physical presence of the virus. The public is being told that everyone should assume that they are infected, and act accordingly. There may be credible legal arguments to make that the presence of coronavirus in a building renders that building unsafe, and it could be presumed that all buildings where people congregate have been contaminated. Where a property is rendered unsafe for use, there is some authority that this constitutes “physical loss or damage.” There can be no guarantees how an insurer might react to a claim, but we believe it is in many of our clients’ best interests to file for claims and track ongoing losses. We anticipate that these issues will be litigated in court, and we are aware of at least one lawsuit that has been filed and expect that there will be more. What is 100% certain is that if you don’t file a claim with your insurer, you will not get any coverage for your losses. As your broker, we can assist you in submitting claims to the carrier if you like, and we can also discuss how a claim might impact your coverage going forward, particularly if you are close to a policy renewal. Of course, any thoughts we may provide regarding potential claims do not constitute legal advice or a legal opinion. Please connect with us at [email protected] for more information. 
2. For businesses considering staff reductions related to COVID-19: the Emergency Paid Sick Leave Act was signed into law on March 18, 2020, providing for expanded FMLA provisions and paid sick leave financial relief for businesses with up to 500 employees. The program provides for financial assistance for employers to provide paid leave to qualifying employees for up to 3 months, with a tax credit equal to 100% of the benefits used through December 31, 2020. 
3. The US Small Business Administration has announced it is now offering low-interest working capital fixed-rate loans to help small businesses, agricultural cooperatives and non-profit organizations to meet payroll and other financial obligations that are being disrupted due to coronavirus. Our clients in California may be eligible for up to $2MM to help alleviate economic injury caused by the pandemic. The SBA may consider waiving this $2MM limit for businesses who are major sources of employment. Applications are now available through December 16, 2020 but we encourage you to apply as soon as possible. 
4. The IBank Small Business Finance Center Disaster Relief loan guarantee program is now available to businesses in California with up to 750 employees who are experiencing financial distress as a result of coronavirus. The program includes Financial Development Corporation (FDC) partners to assist businesses in securing up to a 95% guarantee on loans of up to $20M. Contact a local Financial Development Corporate for support. 
5. Your Newfront broker may have additional options for helping you apply for reduced insurance premiums based on reduced operations or revenue forecasts. Where possible, we recommend reaching out to your business partners (landlords, suppliers, wholesalers) and asking whether they’d be willing to assist you for a grace period on your existing liabilities, temporarily reduced payments with reinstatement schedules (with or without interest), or relaxed debt to income covenants on your existing contracts. 
6. California Insurance Commissioner Ricardo Lara has issued a statement asking insurance carriers to provide a 60-day grace period on premium payments during this challenging time if nonpayment is due to circumstances beyond the control of the insured, including life, health, auto, property, casualty, and other types of insurance. Several carriers are in process of updating their policies as a result. We are closely following this and will provide additional information as it evolves. 
7. For restaurants and bars directly impacted by shelter-in-place directives, this article on LinkedIn included excellent advice for how to transition to delivery and take-out if you aren’t already set up that way. If you decide to make a change like this, your insurance policy may require coverage adjustments so please reach out to your Newfront broker for support.  

If you’re in a position to do more for your community and are looking for other ways you can personally support local businesses during this time of need, this article from Inc has some awesome practical ideas. 

We’re working on an official resource center to publish on newfront.com in the coming days and will be in touch as this evolves. Please also join us for real talk and Q&A on coronavirus topics on Thursday next week. 

Be well, 

Spike