With all the information out right now regarding relief for small businesses, it can be a bit overwhelming. I consolidated that information and tried to make it as simple as possible. I'll be updating this list as new information comes out.
Relief Available (keep reading for more details)
•April 15th tax deadline extended to July 15th along with all tax liability
•Families First Coronavirus Response Act
•Employee Retention Credit
•Payroll Tax Delay
•SBA Loan relief (for current SBA loan holders)
EIDL (Economic Injury Disaster Loans) originally designed for disaster relief
•Eligibility: Businesses, Sole-Proprietors
•Loans made by SBA directly. Can apply at https://covid19relief.sba.gov/#/
•Emergency grant of $10k with a max loan amount of $2million
•Terms: up to 30 years
•Interest rate: 3.75% for businesses, 2.75% for non-profits
•Use of loan: working capital for any expenses that could have been met if not for the disaster
•Principle & Interest Deferment: Up to 12 months
•Personal Guarantees: Yes if over $200k
•Forgiveness: Only the $10k advance as a grant. Remainder is not eligible for forgiveness
How It Works
•If accepted you will receive the $10k grant in your account within 3 business days (we’re still waiting to see if this is actually the case). The remainder of the loan will be funded over the next few months. Unsure what that time frame looks like right now.
•You can apply for both the EIDL and PPP loan BUT if you receive the $10k grant, that amount will be subtracted from the forgiveness amount allowed by the PPP Loan.
PPP (Paycheck Protection Loan) was created under the CARES Act
•Eligibility: in business by February 15th and paying employees or contractors, no active loans duplicative of the amounts applied for here
•Loans made by SBA approved banks (try your local bank or credit union)
•Max loan amount: 2.5 times your average monthly payroll costs (250%) based on 12 months prior to 2/15/2020 (up to $10million)
•Terms: 2 years
•Interest rate: 1%
•Use of loan: payroll, rent, utilities and mortgage interest (can only be used for these things)
•Principle & Interest Deferment: At least 6 months and up to 12 months, all fees waived
•Personal Guarantees: No
•Forgiveness: Eligible if borrower maintains payroll during the crisis
How It Works
•Banks will be able to start processing loans as early as April 3rd. The SBA approved application is now out. Processing time depends on the lender. Forgiveness will be assessed by the lender 8 weeks after the funding date of the loan.
•Forgiveness is available for business owners who use the loan for payroll to maintain employee headcount & payroll dollars. You must maintain at least 75% of your average in order to be eligible for forgiveness.
Calculating Payroll Costs for the PPP Loan
•Eligible Payroll Expenses (Based on your average payroll for 2019)
•Salary, wage, commission, bonus, contractor payments or similar compensation
•Payment of cash tips or equivalent
•Payment for vacation, parental, family, medical or sick leave
•Allowance for dismissal or separation
•Payment required for the provisions of group health care benefits, including insurance premiums
•Payment of any retirement benefits
•Payment of state or local tax assessed on the compensation of the employee (state payroll taxes, not federal payroll taxes)
Excluded Payroll Costs (not eligible)
•Compensation of an individual in excess of an annual salary of $100,000, as prorated for the period of 2/15 – 6/30/2020.
•Payroll taxes (federal), railroad retirement taxes, and income taxes
•Any compensation of an employee whose principal place of residence is outside of the United States
•Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act; or qualified family leave wages for which a credit is allowed under section 7003.
•Seasonal Employees - 2.5 times the average monthly payroll costs for the period of 2/15/2019 to 6/30/2019. (12 week period this time last year)
CARES (The Coronavirus Aid, Relief, and Economic Security Act)
•Allocated $350 billion to help small businesses keep workers employed
•Adjusted eligibility requirements for workers and un unemployment supplement of $600 (includes self-employed, gig workers, and independent contractors) as well as an additional 13 weeks of benefits.
Families First Coronavirus Response Act
•Employers must provide paid sick time to employees who are unable to work due to the effects of COVID-19. Employers with fewer than 500 employees must pay based on :
•$511 per day and $5,110 in aggregate for paid sick used for those with COVID-19 symptoms or are required to self-isolate
•$100 per day and $2,000 in aggregate for paid sick time used by en employee to care for an impacted family member
•This goes into effect on April 1 and expires December 31, 2020.
ERC (Employee Retention Tax Credit)
•Not available if the employer takes the PPP Loan
•Wages paid between March 14th, 2020 – December 31st, 2020.
•Eligible for employers who carried on a trade through 2020 and whose operations were fully or partially suspended due to a COVID-19 related shut down or gross receipts declined by more than 50% compared to same quarter in prior year.
•The amount of the tax credit is equal to 50% of the first $10,000 in qualified wages (including health benefits) paid to each employee, up to a maximum tax credit of $5,000 per employee
•For eligible employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services.
•For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit
•Qualified wages do not include sick leave wages or family leave wages paid pursuant to the Families First Coronavirus Response Act (H.R. 6201)
Payroll Tax Delay
•Not available if the employer takes the PPP Loan
•Employers can delay paying the employer-portion of the social security taxes (not Medicare) through the end of 2020.
•The deferred amount is due in two installments – 50% is due before December 31, 2021, and the other 50% is due before December 31, 2022.
•All taxpayers who filed a return in 2018 or 2019 are eligible for the $1,200/$2,400 for single/married plus $500 per child. There will be a phase out program depending on your level of income.
•Filed Single: AGI under $75,000 will receive the full $1,200 – over $75,000 use the calculator
•Filed Married & Jointly: AGI under $150,000 will receive the full $2,400 – over $150,000 use the calculator
•Filed Head of Household: AGI under $112,500 will receive the full $2,400 – over $112,500 use the calculator
•Filed Married & Separate or Qualifying Widow(er): IRS is still deciding what this looks like
If you setup direct deposit for your tax return, you’ll receive the stimulus check via direct deposit. If not, it will come in the mail sometime in April, date TBD.
If you have moved since you last filed your return, you’ll want to update your address with the IRS ASAP. The IRS is working on a portal you can access incase you do not have direct deposit setup and you do not want your check mailed to your address on file.
Stimulus Calculator: https://www.cnn.com/2020/03/27/politics/stimulus-check-calculator/index.html
•SBA.gov is constantly updating information regarding options for small businesses
•Federal Student Aid is deferring payments. Check here for details: https://studentaid.gov/announcements-events/coronavirus
•SBA Debt Relief Program: If you currently have an SBA loan or are in the process of applying for one, SBA will cover all loan payments for 6 months. No questions asked. Includes principle, interest and fees. This debt relief is automatic but be sure to check with your lender to make sure.
•SBA Express Bridge Loans: up to $25k to be used in the gap between getting other funding. Max term of the loan is 7 years and can be made through March 13th, 2021 through an SBA approved lender.
•Most banks, credit card companies and other financial institutions are offering payment deferments, waived fees & interest deferments if you have been affected by COVID19. Call your bank (make sure you mention that you have been affected by COVID19) and ask what your options are.
If you have questions or need additional information, email firstname.lastname@example.org.