Childcare centers are an integral part of our country’s economy. With them, parents are able to go to work or attend school classes. In fact, childcare centers provide an important service for essential workers to be able to help others during this time. Whether it’s those who work in the health field or those who work with food, gasoline, or other necessities – childcare is needed.
During this difficult time, many places of business have had to close. Whether it is due to statewide closures, being quarantined, or being furloughed, some childcare centers have felt the financial pressure too. This is may be from a drastic drop in enrollment due to the reasons stated. There are, however, avenues you can take to help you remain open if your enrollment has suffered.
Here is some helpful information on the CARES Act and how it helps childcare centers remain open.
What Is the CARES Act?
The U.S. Department of the Treasury states in simple terms what the CARES Act it:
The CARES Act provides fast and direct economic assistance for American workers, families, and small businesses, and preserve jobs for our American industries.
As part of the CARES Act, there is specific help for small businesses. One such program is The Paycheck Protection Program.
The Paycheck Protection Program is providing small businesses with the resources they need to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead.
This is what is considered phase 3.5 in the parts of the program and is specifically part of the CARES Act.
What Are the Phases?
Each phase of this program offers help for struggling businesses – including daycare centers and childcare centers.
Phase I is the Coronavirus Preparedness and Response Supplemental Appropriations Act. This is $20 million in aid from the Small Business Administration.
Phase II is called the Families First Coronavirus Response Act and gives employers get a tax credit. The reason for the tax credit is that the employer must provide paid family leave and paid sick leave – even those with under 500 employees.
Phase III is what we are focusing on which is the CARES Act. In Washington State, the CARES Act is helpful for childcare centers through the following:
Washington received $58.6 million in supplemental CCDBG funding through the CARES Act and plans to fully obligate this funding by the end of June. In Washington, child care businesses and workers are deemed essential and exempt from the “Stay Home, Stay Healthy” order and therefore not required to close.
It also allocates money for grants for childcare providers. These are one-time funds and all depend on the amount of children at the center. For example, larger provider receive the most at $14K. For those with under 50 children get $6500. There are two more amounts in-between that are $6500 and $11500. These are also based on size. The grants are to be used on things like
- Purchasing food
- Mortgage payments
- Employee salaries
- Cleaning and safety supplies
Those who remain open can apply for this grant.
For those receiving subsidy payments, there are three months where the family co payments are waived – April, May, and June. For a short time, childcare centers are allowed to claim subsidy payments based on enrollment instead of the usual attendance. This one runs from March 16 until June 30. While these dates have passed, there may be a possibility of retroactive payments but that is something to research. Yet even if you do not qualify for these, the other help still applies. The state also granted waivers for mixed-age groups as well as the prior benefits.
Another avenue to use is the Economic Injury Disaster Loans process. In this program, business owners can get up to $10K depending on the size of their business. This is though the SBA (Small Business Administration). The good news is that if you successfully qualify for this “loan” it’s not really a loan at all. It does not have to be repaid and is there to help businesses stay afloat with temporary economic relief. There is also no long waits. If you qualify, you see a deposit within a few days.
This program is for any small business with fewer than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by COVID-19.
Many states use funds from the CCDF (Childcare and Development Fund) to not only continue to pay those childcare centers who accept subsidies, but there are a couple of other helpful areas including using additional funding and temporary regulatory changes to provide emergency care for those who care for children of essential workers. Also, those childcare centers may take advantage of one area that covers a portion of or waives childcare tuition for some families who might not otherwise be able to pay.
Here are a couple of examples:
Vermont allows up to $325 per week and per child for childcare centers to take care of children from parents or guardians who are essential workers.
In Connecticut, there are supplemental funding for those who work as childcare centers in their home, as well as those who own a brick and mortar daycare center. This is based on provider numbers, children numbers, and is up to $825 per week.
States may also use the funding for other means such as:
- Ease employment requirements for accessing subsidies as millions of unemployed families find it difficult to locate work.
- Offer financial support to providers who may need to comply with extra health and safety guidelines as they resume operations, as described in the CARES Act.
- Provide professional development and support for programming that cover topics of relevance to the crisis, including family engagement, grief, and trauma.trauma,
- Track child care supply and enrollment data to ensure that the most needful and vulnerable children receive care.
In Washington State, there is a page dedicated to employers and COVID-19 related questions. For example, it showcases things like reimbursable employers, unemployment benefits, and a variety of helpful information during this difficult time.
Here is a couple of examples of what you can find on this government page to help you with your childcare business during the pandemic.
The CARES Act provides payment to states to relieve reimbursable employers of 50 percent of the costs they incur through December 31, 2020 to pay unemployment benefits.
The HEROES Act provides flexibility to States so that reimbursable employers do not have to pay the full cost of benefits upfront to then receive relief. The Act also extends the temporary federal relief for 50 percent of the unemployment costs for reimbursing employers to January 31, 2021.
The Help You Need Is Available
While some of this may sound confusing, the important takeaway is that there is help available for people and businesses just like you and yours. We realize that the pandemic has hit the nation hard, and especially those with childcare centers. But having the best knowledge possible and doing a little research can mean the difference in your childcare center weathering the storm or having to close down – either temporarily or in some cases, for good.
All of this accounting work can be a headache as well. That is why we are here for you during this difficult time. Our accounting services take the headache away from you so that you can focus on other important things.
COVID-19 is an unprecedented event for every type of business, including childcare centers.We may not know the long-term effects from this virus but the important thing is to know that you do have options and there is help for businesses during this time. Do your research and don’t be afraid to take advantage of all of the program help you can find. If it applies to your situation then you have more help to sustain remaining open.
Looking to speak with an expert who can help guide your financials? Book an appointment here to speak with the Honest Buck team.