COVID-19 Update

 Posted on December 00,0000 in Uncategorized

Below is a brief summary of the various COVID-19 programs available to individuals and businesses during this difficult time.  This is simply to assist you in determining which program might apply to you.  All of the information was gathered from other second-hand sources, so I did the best that I could to make it easier to wade through the vast amount of information out there.  I hope this is some help to you.

Sincerely,

Colleen G. Thomas

U.S. Small Business Administration Economic Injury Disaster Loan

• Up to $2 million loan amount
• Only when determined by SBA that cannot qualify for a private loan
• Up to 4% annual interest rate (3.75% small businesses)
• Up to 30-year loan term

CARES Act Paycheck Protection Program

• Loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program
• Keep on the payroll for 8 weeks
• Money used for payroll (75% of the loan amount), rent, mortgage interest, or utilities
• Apply through existing SBA lender or FDIC lender
• Loans may begin processing April 3
• Program available through June 30
• Available for all SBA qualified employers, sole proprietors, independent contractors, and self-employed persons
• No loan fees
• Can maintain or quickly re-hire employees
• Forgiveness reduced if employees reduce or wages decrease
• Loan maturity, if not forgiven, is 2 years at 1% interest
• Can borrow up to 2.5 times the average monthly payroll costs
• Cannot be used for employees with over $100,000 salary
• https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp
• Above link gives application form and what information is required when going to your bank to apply

U.S. Small Business Administration Economic Injury Disaster Advance Loan

• Loan advance of up to $10,000.00
• Businesses currently experiencing temporary loss of revenue
• Funds available within 3 days of successful application
• Loan advance will NOT need to be repaid

U.S. Small Business Administration Debt Relief

• SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of 6 months
• SBA will automatically pay the principal, interest, and fees of NEW 7(a), 504, and microloans issued prior to 9-27-20

SBA Loans

• 7(a): Loans up to $5 million for working capital, expansion/renovation, new construction, purchase of land/buildings, purchase of equipment/fixtures, leasehold improvements, refinancing debt, seasonal line of credit, inventory, starting a business
• Express: Loans up to $350,000 for a maximum of 7 years.  36 hour approval time.  Same uses as above
• 504: Designed to foster economic development and job creation/retention.  Use for acquisition or refinance of fixed assets
• Microloan: Non-profit lenders to underserved markets

Families First Coronavirus Response Act

1. Paid Sick Leave

• Full-time employees receive 80 hours of paid sick leave at the regular rate of pay if the government or Dr. advised quarantine (or caring for one), experience COVID symptoms and getting a diagnosis, or caring for a child whose school has closed
• Employers with 500 or fewer employees
• Maximum pay is $511 per day
• Dept of Labor has the authority to exempt small businesses with less than 50 employees if jeopardize the viability of the business.

2. Paid Family Leave

• A parent needs to care for a child whose school/daycare is closed
• First 10 days may be unpaid or use other accrued paid leave available
• Remaining leave time above 10 days at rate of 2/3 of employee’s regular rate of pay
• Maximum $200 per day/$10,000 total paid leave
• Employers with 500 or fewer employees
• Employees must have been employed for at least 30 days before the leave began
• Begins April 2, 2020

Unemployment Benefits

• Available to employees who are unable to work due to COVID closure at work
• Available to employees who qualify for paid sick leave or paid family leave if not collecting the same or it has expired
• No one week waiting period
• Receive up to 39 weeks of benefits
• Receive an additional $600 per week for up to 4 months
• Online filing schedule according to last name: A-M, must file on Sunday, Tuesday, or Thursday; N-Z must file on Monday, Wednesday, or Friday
• No filing between 8 pm and 10 pm
• Claims are back-dated to the date of termination of employment
• Available to self-employed or independent contractors

IRS Employee Retention Credit

• Employer less than 100 employees, then all employee wages qualify for the credit, regardless of whether the employees worked
• Credit capped at first $10,000 of compensation, including health benefits
• For wages paid or incurred from March 12, 2020, to January 1, 2021
• Receive a refund of the payroll tax credit for 50% of up to $10,000 in qualified wages
• Employer whose operations were fully or partially suspended due to government shut-down order
• OR employer whose gross receipts declined by more than 50% compared to the same quarter in prior year
• IF take a Paycheck Protection Program Loan, then NOT eligible

IRS Payroll Taxes Deferred Payment

• All employers and self-employed persons may defer the 6.2% employer share of Social Security Tax for two years: 50% due December 31, 2021, and 50% due December 31, 2022.
• Not available if took a Paycheck Protection Program Loan

IRS Additional Tax Changes:

• Business Expense Deduction limits increased from 30% to 50% for 2019 and 2020 tax years
• Retail Tax immediately deductible and can amend prior year filings
• Carry net operating losses from 2018, 2019, and 2020 tax years back 5 years. Taxable income limit removed
• Alternative Minimum Tax can be accelerated to recover credits from prior years and claim resulting refund

Individual Benefits

1. Rebate to every individual of $1,200 plus $500 per qualified child

• Must meet qualified child definition
• Must meet the adjusted gross income limit

2. Waive 10% early retirement withdrawal penalty

• Withdrawal from January 1, 2020, to December 31, 2020
• The regular income tax that remains due can be spread over three years
• Permitted to replace the withdrawn funds over three years to avoid income tax