The CARES Act provides $10 billion for Emergency Economic Injury Grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs.
The Bill is complex and can be intimidating for small business owners, so we outlined the following programs that may help your business during the tough economic times. ( See part 1 for more information on the Paycheck Protection Program and Economic Injury Disaster Loans Program)
Here is what your small business needs to know:
Debt Relief for New and Existing SBA Borrowers
For small businesses that already have an SBA loan (such as a 7(a), 504, or microloan) or take one out within 6 months after the CARES Act is enacted, 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.
Your Business May Be Eligible If:
• You have an SBA 7(a), 504, or microloan loan
Employee Retention Tax Credit
The CARES Act creates a refundable payroll tax credit for businesses, large and small, that retain their employees during the COVID-19 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.
Your Business May Be Eligible If:
you have been fully or partially suspended as a result of a government order
experience a 50% reduction in quarterly receipts
What you need to know: The tax credit is not available if the employer takes an SBA paycheck protection loan. It is essential to talk consult with your business advisor to understand which CARES Act program your business should take advantage of. There are only finite resources available to small businesses under this Bill, so it is crucial your business makes the best decision promptly.
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 December 31, 2021, and the other 50% is due before December 31, 2022. Deferral is not available if the employer takes an SBA paycheck protection loan.
You May be Eligible If:
• You did not receive a loan under the SBA Paycheck Protection Program
Advanced Payment of Tax Credits for Paid Leave
The CARES Act allows the 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
You May be Eligible If:
- You are an employer with less than 500 employees
- Employees who have been employed for at least 30 calendar days
What you Need to Know: There are certain business circumstances, such as having fewer than 50 employees, where your business may be exempt from granting emergency paid family and medical leave. For more information regarding exemption, please contact a Limitless Investment and Capital business resource advisor in Gilbert, Arizona.
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. The CARES Act also permanently fixes the qualified improvement property (QIP) error in the 2017 tax law, so that QIP investments are entitled to 100% recovery over 15 years. Distillers are exempt from excise taxes on undenatured alcohol for the purpose of producing hand sanitizer.
Delay for Single-Employer Pension Plans
Single employer pension plans are allowed to delay quarterly contributions for 2020 until the end of the year. Employers may also use 2019 funded status for the purposes of determining funding-based limits on plan benefits for the plan years that include 2020.
The Bottom Line: Your Business Will Benefit From Talking to an Expert
It is critical your business has access to the resources it needs to survive the COVID-19 Crisis. The comprehensive government program can be confusing and requires a thorough understanding of each detail provided throughout the bill.
Talking with a small business advisor, such as the experts at Limitless Investment & Capital, can help ensure your business is not taking out a loan you cannot afford to repay in the future. Acting fast is essential so all government resources are not depleted. Our team is dedicated to servicing your business’s questions and needs remotely and promptly. Schedule a Consultation TODAY!
* The CARES Act is subject to change over time. For the latest information, please reach out to a Limitless small business loan expert*