eNews December 23

 

In the News

December 23, 2020

 

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Congress Passes New COVID-19 Relief

 

—PACE LLP

On Monday, Dec. 21, Congress released the text of its year-end deal to provide COVID-19 relief and fund the government through Sept. 30, 2021. The draft text, at more than 5,500 pages, wraps up virtually every must-pass bill Congress usually considers at the end of the year in addition to several other bipartisan legislative packages that have been in discussion including:

  • Must-pass tax relief and health care extenders
  • The 2020 Water Resources Development Act
  • A bipartisan energy omnibus bill
  • A bipartisan deal to address surprise medical billing

The bill averts a shutdown and delivers COVID-19 economic relief to the country as it experiences its worst COVID-19 spike yet. This clears the deck for the first few months of President-elect Joe Biden’s term, setting up the timing on a possible next bill for March or April 2021.

Provisions of Concern to NACM Members

New Debt Collections Provisions:

After House Democrats released the text of their COVID-19 relief bill, the HEROES Act, which included new restrictions on debt collection practices, NACM made a concerted push to ensure no collections provisions were included in any final negotiated product. The final bill does not include any new debt collection provisions or restrictions.

Existing Bankruptcy Provisions:

The CARES Act passed in March 2020 included a temporary expansion of eligibility to qualify for Chapter 11 bankruptcy filing as a small business. Under the SBRA, the maximum debt under which a business may file as a small business filer is $2,725,625. The CARES Act temporarily increased this limit to $7.5 million for one year. Filing as a small business provides a number of special features that make it faster and less costly for small businesses to go through Chapter 11 bankruptcy, slightly weakening creditors in the process. This provision was not extended and is currently slated to expire on March 27, 2021.

New Paycheck Protection Program (PPP) Loan Eligibility:

The bill includes a second round of PPP loan funding available for small businesses that:

  • Have 300 or fewer employees
  • Have used or will use the full amount of their first PPP loan
  • Demonstrate a 25% reduction in gross receipts in the first, second or third quarter of 2020 relative to 2019

The new loans may be up to two and a half times the average monthly payroll and cannot exceed $2 million. Like the first round of PPP loans, the balance may be forgiven if employers retain their employees.

PACE LLP is NACM's Washington, D.C., lobbyist on federal issues that impact the business credit community.

 

 

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2020 Impacts the Credit Profession

 

—Michael Miller, NACM managing editor, and Andrew Michaels, NACM editorial associate

Remote Work—The “New Normal”: One of the first impacts of the pandemic was having to transition from working in the office to working remotely. This change in environment led to new ways of learning and holding meetings without being together in the same room. Credit professionals rose to the challenge to lead remotely.

A New Form of Fraud: Although fraud has been an ongoing issue for years, the pandemic took fraudsters back to the drawing board in attempts to find new ways to access finances and other confidential information. Between fake CDC informational emails and phishing scams offering economic stimulus relief, news agencies reported more than 184,000 fraud cases have occurred as of Sept. 1, with Americans losing over $124 million. Caution is key, however, there are ways to combat fraud within your company and it begins with increasing online meeting security and customer communication.

A Year for Credit Insurance: The pandemic reignited interest in trade credit insurance, a safety net several credit departments found helpful. Some credit departments and companies with insurance saw reduced coverage or policies not renewed, and insurers continue to weigh the risks of insuring credit portfolios.

Stepping into Leadership: Becoming a leader requires hard work and dedication. From the onset, credit leaders must think about what it means to be a leader in their field, harness education tools, and later put them to work to craft a new generation of leaders. As Regional Credit Manager Melinda Kilonsky once said, “You can’t move on until you have trained someone to take your place.”

A Time for Digital Payments: Cash is king and checks are handy, but digital payments are becoming increasingly popular in the business credit world. Many credit departments are embracing new technology, whether it’s electronic invoicing or automation processes to monitor debt and feed the credit model. Yet, despite the rising adoption of new technology, digital payments and checks are still finding a way to coexist.

Economic Uncertainty: The U.S. experienced an economic whirlwind this year as the pandemic closed businesses and modified the usual business operations. As the Biden administration enters the White House in January, NACM Economist Chris Kuehl, Ph.D., said credit professionals can expect changes in trade because “it now looks like President-elect Biden will tilt toward the Trump approach more than Obama’s.” Meanwhile, relationships with other countries may be mended, such as the EU, Canada and Mexico.

 

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Jan 12
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Jan 21
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Jan 26
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