In order to combat the challenges businesses and workers are facing as a result of the COVID-19 outbreak, the president has signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. Stemming from this act, many new resources will become available to business owners through the Small Business Association (SBA) such as:
Paycheck Protection Program (PPP) Loans
|Update April 27: The SBA will resume accepting Paycheck Protection Program applications from participating lenders on Monday, April 27, 2020 at 10:30am EDT.|
The PPP program would provide cash-flow assistance to employers who maintain their payroll during the COVID-19 emergency through 100% federally guaranteed loans. Loans will be forgiven, as long as the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made. In addition, employee and compensation levels must be maintained.
Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for 6 months.
When Should Applications Be Sent?
- Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
- Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
- Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.
While the program is open until June 30, 2020 - We strongly encourage business owners to apply immediately. There is a funding cap and lenders need time to process your loan.
Who Is Eligible To Apply?
All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries (click HERE for additional detail).
For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the SBA’s Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.
How Can I Apply For My Business?Here are our recommended guidelines to applying for the PPP Loan. Be sure to have your 2019 tax returns ready to easily move through the application process. Do you still have to file? Please give our team a call at 469-865-1040.
- Complete the Payroll Protection Program (PPP) loan application HERE
- Gather the following information:
- Appropriate tax returns of the business
- Documents reflecting the number of employees
- Documents showing payroll costs for the next eight weeks
- Documents showing mortgage interest payments for the next eight weeks
- Documents showing rent payments for the next eight weeks
- Documents showing utilities for the next eight weeks
- Call your bank directly (do not go to a new institution at this time) - Note: smaller banks have seen a higher success rate with loan approvals.
- Once approved and received, contact our team to ensure that funds are allocated and managed properly.
For further information on the details of the PPP, consult this document from the United States treasury:
Small Business Debt Relief Program
This program will provide immediate relief to small businesses with non-disaster SBA loans, particularly the 7(a), 504, and micro-loans. Under it, SBA will cover all loan payments on these SBA loans—including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
Economic Injury Disaster Loans & Emergency Economic Injury Grants
These grants provide an emergency advance of up to $10,000 for small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations—including debts, rent, and mortgage payments.
|Update April 23: Funds for the Economic Injury Disaster Loans are currently exhausted|
To get started applying, click the button below:
Counseling & Training
If you are a business owner that will require a business counselor for guidance during these uncertain times, you are able to rely on your local Small Business Development Center (SBDC), Women's Business Center (WBC), or SCORE mentorship chapter. These resource partners, and the associations that represent them, will receive additional funds to expand their reach and better support small business owners with counseling and up-to-date information regarding COVID-19. The Minority Business Development Agency's Business Centers (MBDCs), which cater to minority business enterprises of all sizes, will also receive funding to hire staff and provide programming to help their clients respond to COVID-19.
If you are a government contractor, there are a number of ways that Congress has provided relief and protection for your business. Agencies will be able to modify terms and conditions of a contract and to reimburse contractors at a billing rate of up to 40 hours per week of any paid leave—including sick leave. The eligible contractors are those whose employees or subcontractors cannot perform work on site and cannot telework due to federal facilities closing because of COVID-19.
Small Business Tax Provisions
Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship
This provision would provide refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel, or group meetings. The credit is also provided to employers who have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis.
Delay of Payment of Employer Payroll Taxes
This provision would allow tax payers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, and the other at the end of 2022. Payroll taxes that can be deferred include
- the employer portion of FICA taxes
- the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate)
- half of SECA tax liability
Reinstatement of Net Operating Losses Carrybacks
Under the CARES Act, net operating loss provisions are being temporarily amended in order to increase cash flow and liquidity for businesses and their owners. For the 2019 and 2020 tax years, businesses will be able to use net operating losses which were generated in previous years to offset 100% of taxable income. For those businesses who have incurred net operating losses in the 2018, 2019, and 2020 tax years, they now have the ability to carryback losses for up to 5 years.
For More Information from The Small Business Association concerning these provisions, as well as frequently asked questions, download the following document:
This has been a confusing and stressful time for business owners everywhere, but our team is here to help guide you through it all. For guidance and assistance on the provisions of the CARES Act, reach out to The MB Group team today.