🔒Aerospace sector will see CARES-Act relief

Connecticut has long been a national leader in aerospace manufacturing, with some of the most prestigious names in the industry employing thousands of people within our borders, along with hundreds of vital members of the supply chain.

While the industry continues to adjust to the unprecedented disruption caused by COVID-19, the recently approved $2.2-trillion stimulus package — known as the CARES Act — will bring the industry some relief.

The impact felt on aerospace and aviation in the recent weeks since the COVID-19 crisis began to intensify cannot be denied, nor can its impact on Connecticut.

Air travel has dramatically declined over these past few weeks, and for Connecticut, that causes concern for not only local manufacturers that design and build engines and operating systems, but also for suppliers that support them.

This is why the CARES Act will prove so important in helping those companies endure and, ultimately, continue to grow once the issue is finally behind us.

First and foremost, according to published reports, the CARES Act provides nearly $80 billion in loans and grants to the aviation industry, as well as $10 billion in airport grants and another $100 million set aside for “general aviation facilities.”

Additionally, the aerospace industry in Connecticut will benefit from the loan pool established in the CARES Act of $454 billion for states, municipalities and businesses in general.

On top of that, the CARES Act established the $349-billion Paycheck Protection Program (PPP), which is designed to provide a direct incentive for small businesses (companies with fewer than 500 employees) to keep their workers on the payroll by providing each small business a loan up to $10 million for payroll and certain other expenses. 

Under the PPP, if employees are kept on the payroll for eight weeks, the U.S. Small Business Administration will forgive the portion of the loans used for payroll, rent, mortgage interest or utilities. Up to 100 percent of the loan is forgivable, and business owners can apply through their lender.

Also available for small businesses under the CARES Act, which could directly benefit many Connecticut aerospace suppliers:

• Refundable tax credits for private-sector employers that are required to offer COVID-19-related paid leave to employees.

• The employer side of certain payroll taxes are deferred through the end of 2020 and not due until the end of 2021 and end of 2022, with 50% of the liability being paid at each date.

• An employee retention tax credit is available for struggling businesses that are not eligible, or choose not to participate in the PPP; these are businesses that have been forced to fully or partially suspend operations, or that have seen a significant drop in revenues, which may be eligible for a 50-percent credit for wages paid to furloughed or reduced-hour employees.

• A new SBA emergency grant program that provides an advance of up to $10,000 to small businesses harmed by COVID-19 within three days of applying for an Economic Injury Disaster Loan (EIDL).

In the immediate aftermath of the CARES Act’s passage, the aerospace industry has expressed optimism in its positive impact.

This should be seen by Connecticut manufacturers rooted in aerospace and aviation as a sign that there are indeed better days ahead.

Janet Prisloe is a partner at accounting firm blumshapiro.