Security industry gets some relief with $2 trillion stimulus package

Monday, March 30, 2020

YARMOUTH, Maine—President Trump enacted the $2 trillion stimulus package on March 27, which provides several provisions that impact and affect the security industry, including relief for small businesses, loan forgiveness and unemployment assistance.

The Security Industry Association (SIA), Electronic Security Association (ESA) and ASIS International have been tracking the key provisions that impact the industry, with the full SIA/ASIS breakdown here and ESA’s here.

Looking at relief for businesses, $349 billion is appropriated for the Paycheck Protection Program through the end of 2020, and provides loans for small businesses with fewer than 500 employees, including sole-proprietors, independent contractors and other self-employed individuals. ESA noted some of the key provisions:
•    Maximum loan amount is $10 million tied to a formula based on payroll costs.
•    Provides delegated authority for lenders to make determination on eligibility without going through Small Business Administration (SBA) channels.
•    Lowers the eligibility threshold during this crisis to require only that a business was operational on February 15, 2020 and had employees with paid salaries or paid independent contractors. It waives lender and borrower fees, credit test and collateral, and personal guarantee requirements.
•    It allows the Treasury Department to add additional lenders for the Paycheck Protection Program loans.
•    Requires borrowers to make good faith certification that the loan is necessary; will be used to retain workers and maintain payroll, lease and utility payments; and is not receiving duplicate funds from another SBA program for the same purpose.
•    Allows for a complete deferment of loan payments for at least six months but not more than a year.
In the area of loan forgiveness:
•    Borrowers will be eligible for loan forgiveness for two months from the beginning date of the loan for payroll costs and interest payments on any mortgage, rent payments and utilities. All mortgage, rent and utility payments must have originated before February 15, 2020.
•    The amount forgiven will be reduced proportionately by any reduction in employees retained compared to the previous year. But, to encourage employers to re-hire people who were laid off, employers will not be penalized for having a reduced payroll at the beginning of the period, if they re-hire employees laid off due to the crisis.
•    The portion of loans forgiven will not be considered taxable income.
•    Amount not forgiven will have a maturity of not more than 10 years and the maximum interest rate will be four percent (4%).

SIA and ASIS highlighted the “Tax Fix for Commercial Property Improvements” section, which enables businesses to write off immediately costs associated with interior improvements to a facility, instead of having to depreciate those improvements over the 39-year life of a building.

“The provision, which corrects an error in the Tax Cuts and Jobs Act, not only increases companies’ access to cash flow by allowing them to amend a prior year return, but also incentivizes them to continue to invest in improvements as the country recovers from the COVID-19 emergency,” the associations noted.
In the area of “installation and upgrades to security and life-safety systems,” the available “bonus depreciation” for Qualified Improvement Property (QIP) is 100 percent of costs for each tax year through 2022, which then phases out by 2027. Beyond the Section 179 expensing for these costs made available to small- and medium-sized businesses (SMBs) through the Tax Cuts and Jobs Act, this change means these improvements can now be written off regardless of business size, SIA and ASIS noted.

The stimulus package also includes grants, funding and programs for U.S. Department of Justice (DOJ)/Law Enforcement and the U.S. Department of Homeland Security (DHS), including directs funds for critical COVID-19 response missions, domestic and abroad.