My name is Gary Levine and I’m a CPA living in the Fan West area. As a business advisor and tax-preparer, I know how all of the new federal programs can be confusing and perhaps even overwhelming. To help our community survive I am now posting clear, straightforward explanations that will help you understand what funds are available to you, and how to get it.
Every day I will post information that specifically addresses the challenges and opportunities that we face as small business owners. I encourage your questions and comments. Please know that I genuinely am not trying to be self-serving, I simply want to contribute to our community and this is the best way I know how.
If you are a small business owner, then you may be eligible for a new federal program called the “Paycheck Protection Program” (PPP). This new program expands benefits and eligibility for Small Business Administration (SBA) disaster loans, covers payments on existing SBA loans, and creates new tax credits to help cover the cost of paid leave and payroll.
The program provides small businesses with zero-fee loans of up to $10 million to cover payroll and other operating expenses. Up to 8 weeks of payroll, mortgage interest, rent, and utility costs can be forgiven and loan payments on principal and interest are deferred for one year.
SBA Economic Injury Disaster Loans
The new law creates an emergency grant of $10,000 for small businesses that apply for an SBA economic injury disaster loan (EIDL). EIDLs are loans up to $2 million with interest rates of 3.75% for businesses (2.75% for nonprofits), and principal and interest payments are deferred up to 4 years. The EIDL loans may be used to pay for expenses that could have been met had the disaster not happened, including payroll and other operating expenses. The $10,000 grant does not need to be repaid even if the applicant is denied the loan.
Your small business may apply for both the grant and the loan. The EIDL grant will be subtracted from the
amount of the Paycheck Protection loan that is forgivable. Debt Relief for New and Existing SBA Borrowers. For small businesses that already have an SBA loan or take one out by Sept. 27, the SBA will pay all loan costs for borrowers, including principal, interest, and fees, for six months. SBA borrowers may also seek an extension of the duration of their loan and delay certain reporting requirements.
Employee Retention Tax Credit
The law creates a refundable payroll tax credit for businesses that retain their employees during the pandemic crisis. Employers are eligible if they have been fully or partially suspended as a result of a government order, or they experience a 50% reduction in quarterly receipts as a result of the crisis. For employers with 100 or fewer full-time employees, they may claim a credit for wages paid to all of their employees, up to $10,000 a person.
Payroll Tax Delay
The CARES Act allows employers to delay paying the employer portion of payroll taxes through the end of 2020. The deferred amount is due in two installments — 50% is due before Dec. 31, 2021, and the other 50% is due before Dec. 31, 2022. Deferral is not available if the employer takes an SBA paycheck protection loan.
Advance Payment of Tax Credits for Paid Leave
The CARES Act allows the U.S. Treasury to send advance payments of tax credits available to employers that are required to provide up to 12 weeks of coronavirus-related paid leave to their employees.
Business Tax Relief
The CARES Act provides other forms of tax relief for businesses, including loosening requirements for net operating losses, and limitations on business interest deductions.