SBA – Small Business Administration CARES Act

Changes tax day from April 15 to July 15, 2020

April 15, 2020 – July 15, 2020

All US Taxpayers

Delay of filing requirements for tax returns and estimated payments

No terms

No application necessary.

www.IRS.gov

States suspend waiting period for unemployed applicants

April 1, 2020 – December 31, 2020

All eligible laid-off or terminated employees

States suspend traditional waiting period of 1-2 weeks and begin immediate payments on application

Standard Unemployment periods are extended for additional 13 weeks of coverage up to 12/31/2020

Via individual State Unemployment portals

Visit your State Unemployment Services website

An alternate to layoffs for Employers, Work Share programs administered by the State (28 states currently active) where Employer can keep people employed and working less than regular hours while simultaneously drawing unemployment insurance

April 1, 2020 – December 31, 2020

All employers

The amount of Unemployment Compensation paid to individuals filing for STC is a pro-rated portion of the Unemployment Compensation payment they would have received if they were totally unemployed.

Employer must apply to the program for each State in which they have employees. Once an employer is registered, employees may begin to apply for and receive benefits.

Employer must apply to the program for each State in which they have employees.

Check with each State’s Department of Labor, Unemployment Compensation website.

Payment of additional $600 per week of State administered unemployment insurance to eligible individuals. In addition, a new classification of unemployment for Independent Contractors, Sole Proprietors and 1099 workers which allow them to be eligible for special unemployment weekly payments

Eligibility begins March 28, 2020 – July 31, 2020

Individuals collecting regular Unemployment Compensation (UCFE, UCX), as well as the following: Pandemic Emergency Unemployment Compensation (PEUC); Pandemic Unemployment Assistance (PUA); Extended Benefits (EB); Short­Time Compensation (STC); Trade Readjustment Allowances (TRA); Disaster Unemployment Assistance (DUA); and payments under the Self-Employment Assistance (SEA) program.

$600 per week compensation in addition to any other State benefits that the applicant is eligible to receive.

Suspends State’s 1 week waiting period to begin receiving benefits. Benefits will end after payments for the last week of unemployment before July 31, 2020

Apply via your individual State Unemployment Compensation website

Check with each State’s Department of Labor, Unemployment Compensation website.

The Employee Retention Credit is designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID19.

Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit.

All employers regardless of size, including tax-exempt organizations. (State & Local government not included). Employers that receive a PPP loan are NOT ELIGIBLE for tax credit.

The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.

Qualifying wages are based on the average number of a business’s employees in 2019. If employer had 100 or less on average in 2019, credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit. If the employer had > 100 employees on average in 2019, credit is allowed only for wages paid to employees who did not work during the calendar quarter.

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.

www.IRS.gov

Federal Law that requires Employers to provide paid time off for all employees that are out of work for sickness or emergency – COVID-19 related reasons.

March 18, 2020 – December 31, 2020

All businesses that have employees

Immediate and 100% reimbursement to employers who provide paid sick / emergency leave to affected employees.

Relief to employers is via refundable payroll tax credits. When an employer files a 941, they can immediately apply the credit on all employer portion of federal taxes. If the credit is larger than the applicable tax, the employer can file for a refund of the overage.

No application necessary. Calculate credit per guidelines and submit with 941 filings to offset payment of applicable federal income taxes.

www.IRS.gov

Fast-turn around loan of $25,000 that allows authorized SBA Lenders to provide immediate Working Capital loans to their existing customers.

Applications can be made from March – December 2020

Small Businesses who have a relationship with a SBA Express Lender

$25,000 immediate bridge loan which can be used while business is awaiting EIDL.

Fast turnaround, 36hr SBA approval, immediate disbursement which is repaid in full or in part by proceeds from EIDL loan. There are fees and interest applicable.

Direct with a Lender that the Borrower has a relationship with. Lender must also be SBA approved Express Lender.

Contact your Banker

SBA DIRECT LOAN which provides Working Capital loans to any small business affected by COVID-19 health emergency

Applications can be made from March – December 2020

For businesses that have sustained “economic injury” as a result of the COVID-19 health emergency

Direct SBA loans, up to $2million, per individual borrower.

Up to $2 million loan amount, 3.75% fixed rate, up to 30 years term, payments can be deferred up to 6 months.

Direct with SBA at www.SBA.gov

www.SBA.gov

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. Short-term Lender provided loan to any small business and independent contractor which provides funds to continue to pay employees over an estimated 8 week period.

Lenders may begin processing loan applications 4/3/2020 for Business / Sole Proprietor and 4/10/2020 for Independent Contractors and those Self-Employed. Last day to apply is June 30, 2020

Small Business with <500 employees, tax exempt nonprofits, those self employed or sole proprietors. Must be in operation on 2/15/2020 and had employees or paid independent contractors.

Up to 2.5 times the average monthly payroll expense of the business borrower.

Maximum loan amount is $10million. Loan is 100% forgivable if used as designed, has an interest rate of 1%, no fees and is for a 2 year term. SBA guarantees these loans 100% with no recourse, no collateral, no personal guarantee required. Payments deferred for 1st six months.

Direct with any SBA Lender or federally insured depository institution, credit union or Farm Credit System institution.

www.SBA.gov

6 months of payment relief for existing borrowers of SBA 7(a), 504 or Micro loans and future borrowers who take out a loan on or before 9/27/2020

Current borrowers PLUS all future borrowers who have loans issued prior to 9/27/20

All borrowers who have existing loans as of March 1, 2020

6 months whereby the SBA makes all required principal, interest and fee payments for the borrower.

Must apply for “Debt Relief”

Contact existing Lender that is servicing your loans and request “Debt Relief for COVID-19”

www.SBA.gov

CARES Act suspends 10% penalty for withdrawal up to $100k for those younger than 59.5 yrs old.
Withdrawals can be re-contributed within 3 years without penalty.
Minimum distributions (RMDs) are waived in 2020
Plan sponsors may postpone minimum funding contributions until 1/1/2021.

CARES Act amends 2017 Tax Cuts and Jobs Act to accelerate depreciation on QIP
Changes depreciation from 39 years down to 15 with 100% bonus depreciation available for all assets with 20 years or less useful life.

Businesses with tax losses during 2018, 2019, 2020 permitted to carry the loss back for up to 5 years.
Losses carried forward to 2019 and 2020 will be permitted to offset 100% of taxable income.