🇺🇸 COVID-19 | Guide for your US entity

Last update: 10/04–10:00AM

If you’re a French startup based in the US or with offices in that geography, here are some actionable measures you can take as of now:

If you have suggestions for what to add here (please note, the list is not crowdsourced but carefully curated), please email us at paul@serena.vc & sebastien@serena.vc

[GENERAL RECOMMENDATIONS]

• Employee safety. Take proactive measures rather than reactive measures and keep everyone safe at home to limit the spread
• Headcount. Keep it low, even if you have the budget — only hire the people you absolutely need
• Compensation. Make some compensation adjustments
• Marketing expenses. Re-evaluate your marketing plan — cut on short term paid marketing and focus on long term organic marketing (SEO)
• Office-related expenses and capital expenses. Do not cash in non-essential expenses
• Cash flow management. Front-load cash flow — be prepared not to be able to raise external financing for the next 12 months
• Internal communication plan. Send a daily update note that is personal, authentic and informative
• External communication plan. Send regular updates to your customers to reassure them

[NOTABLE NEWS]

• 🆕 You can find here a summary of all the measures put in place by the government and Payroll Protection Program estimator.

[FINANCIAL SUPPORT]

Federal Government

• 🆕 The Stimulus Program (part of the CARES Act). The Payroll Protection loan program is the most material for VC-backed tech companies and is what the federal government is focused on deploying quickly. In general, the SBA will be loaning companies up to 2 months of their US payroll costs (+ other qualified expenses like Rent and 1099 independent contractor compensation) for costs being incurred as of June 2020. A significant portion (first $100k of payroll / employee) of this loan is then eligible for forgiveness. What is not forgiven will be treated as a long term 10y+ loan at a very favorable interest rates (0.5%). The NVCA has a good summary that is being regularly updated here.
  > You are encouraged to get their applications in early as soon as possible. You should be working with and applying for these loans through your primary banking relationship. E.g. SVB and Wells Fargo have established programs to be channels for these SBA loans. Loan applications will be accepted starting Friday, April 3, 2020.
  > The current program has Affiliate rules that may problematic for VC-backed companies. There are customary Protective Provisions in standard investor rights agreements that could disqualify VC-backed companies, but it is expected that all of this will get clarified and resolved. The NVCA is working on it.
  > The current SBA loan application requires a “certification” by 20%+ owners of the Company. VC funds should not be certifying these applications, as it creates undue liability and it is expected that the loan application will be revised to remove this in the next week. For these situations, it is advised companies have everything ready to apply and are coordinating with your bank, but and wait until application is updated (expected next week).
• U.S. Small Business Administration. Offers all states and territories (previously limited to designated territories) low-interest federal disaster loans (up to $2m at a 3.75% interest rate) for working capital (to pay fixed debts, payrolls, accounts payables to overcome the loss of revenue) to small businesses suffering a substantial economic injury. Find all information here and apply for such loan directly through this link. For questions, please contact 1–800–659–2955 (TTY: 1–800–877–8339) or e-mail disastercustomerservice@sba.gov.
• The Treasury Department and IRS. Announced a 3-month delay for any tax payments owed up to $1 million. You’ll still need to file your returns by April 15, 2020, but will have until July 15 to pay. This will apply to individual tax returns but should also cover many pass-through entities and small businesses. Find all the information and how to proceed here.

California

• Employment Development Department (EDD). Employers experiencing hardship as a result of COVID-19 may request up to a 60-day extension of time from the state to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. All info here.
• 🆕 Other help you should know about: > Business Taxes & Licensing Fees ━ DEFERRED The City is deferring business taxes due April 30 for businesses with up to $10M in gross receipts for nine months with no interest or penalties. The City is also deferring collection of annual small business license and permit fees for at least three months. For more information, visit this SF Treasurer & Tax Collector webpage.
• > State Payroll Taxes & Reports ━ EXTENDED The California Employment Development Division (EDD) is granting a 60-day extension to file state payroll reports and/or deposit state payroll taxes without penalty or interest for employers experiencing hardship from COVID-19. A written request for extension is required. For the most up-to-date information, visit CA EDD’s COVID-19 resource page.
• > State Income Taxes ━ EXTENDED California business and individual tax filers affected by COVID-19 now have an extra 60–90 days to file and pay state income taxes. For more information, visit the State’s Franchise Tax Board page
• > Commercial & Residential Evictions ━ PROHIBITED UNTIL 04/15 The City has ordered a moratorium prohibiting commercial and residential evictions due to nonpayment until at least April 15th. The temporary prohibition is aimed at stabilizing small- to medium-sized businesses (those with less than $25m in gross receipts) and residents impacted by COVID-19. For more information, visit the Mayor’s Press Releases here and here.
• > Commercial Lease Assistance ━ AVAILABLE The City partners with the Lawyer’s Committee for Civil Rights to help SF small businesses (“mom and pop shops”) at risk of displacement with lease review and negotiation and related services. Apply here.
• > Water Shutoffs & Late Fees ━ SUSPENDED The City has suspended water shutoffs and late fees for at least 60 days during the local COVID-19 Emergency. For information, read the Mayor’s Press Release here.
• > PG&E Electricity Shutoffs ━ SUSPENDED PG&E will not disconnect power due to non-payment until further notice and will offer flexible payment plans for those impacted by COVID-19. For more information, visit PG&E’s COVID-19 webpage.

New York

• NYC Small Business Services. Offering grants and zero-interest loans to businesses in specific categories of size and revenue impact. Businesses with fewer than 100 employees who have seen sales decrease by 25% or more will be eligible for zero-interest loans of up to $75,000 to help mitigate losses. The city is also offering small businesses with fewer than 5 employees a grant to cover 40% of payroll costs for two months to help retain employees. All info here.
• 🆕 NYC Department of Taxation and Finance. If you are a quarterly or annual sales tax vendor, and you were unable to file or pay your March 20, 2020, sales tax return due to COVID-19, you may be eligible to apply to have penalty and interest waived. To determine whether you are eligible, see N-20–1. Announcement Regarding the Abatement of Penalties and Interest for Sales and Use Tax due to the Novel Coronavirus, COVID-19. You can request such relief directly from here.

[LABOR LAWS]

Below are clarifications on the laws enforced in the context of the Covid-19 outbreak as well as actionable instructions on how to react in different situations:

• Federal. Everything you need to know — both as an employer and an employee — is in this aggregation of info by The Labor and Workforce Development Agency. In addition, is this fundamental Q&A by US law firm Akin Gump
  - 🆕 Paid sick leave. employers with <500 employees are required to provide two weeks (or 80 hours) of paid sick leave for employees who can’t work because of quarantine, have symptoms of COVID-19, are caring for someone in quarantine and/or have children in schools that have closed. (more details here)
  - 🆕 Paid family and medical leave. employers with <500 employees are required to provide up to 12 weeks of job-protected public health emergency leave, including 10 weeks of paid leave to employees who can’t work (or telework) because they are caring for their minor child. (more details here)
  - 🆕 Tax write-offs. employers who are required to provide paid leave under this Act will receive a 100% credit on their quarterly payroll taxes.
• New York. Here is a live labor law and employment update in the State of NY by law firm Manatt
• California. Here is a key resource on labor law that has been shared by the State.
  - 🆕 Work Sharing Program — alternative to layoffs that allows employers to retain their trained employees by reducing hours and wages and offsetting with up to 60% of weekly UI (unemployment insurance) benefits amount
  - 🆕 Rapid Response Program — for employers planning a closure or major layoffs, get help averting potential layoffs and immediate on-site services to assist workers facing job losses
  - California suspends 60-day WARN Act — allowing employers to perform mass layoffs, relocations or closures without 60-day prior notice

→ A number of practical webinars by leading US labor and employment lawyers have materialized in the past days (e.g. video here — 17/03) and others are coming as well (register here — 20/03)

[COMPANY POLICY]

If you have not done so yet, it is a good idea to issue a company policy on Covid-19. If you need help issuing a company policy, please take a look at sample policies by tech companies:

• Coinbase
• Workable
• Stripe
• Twitter
• Google

→ Here is an aggregation of highly actionable tips for HRs as well as several internal communication templates by SaaS company Launchmetrics.

[EXTERNAL COMMUNICATION]

It may be that you need at some point to communicate to your customers about the situation and/or manage cancellation requests from them, here are some useful templates in doing so:

• Reassurance email template to customers for SaaS companies by Launchmetrics
• Here are SaaS email templates to manage cancellation requests from customers

[REMOTE WORK]

You will likely need to come up to speed in best remote work practices. Here are some useful links:

• Guide to Remote Work from GitLab, an all-remote company with 1,200 employees across 65 countries
• Zapier has a pretty comprehensive guide to remote work
• Some official resources: The CDC has put out Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease. The World Health Organization has detailed information on its website
• 🆕 Bonus: a Home fitness list — you will find there a crowdsourced list of free workouts

Jenny, Paul & Seb

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