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Financial Planning Insights

What Your Business Needs To Know About The CARES Act

By The Chandler & Knowles Team | | 0

Last week, the President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. This relief package's purpose is to aid struggling businesses' and workers during the COVID-19 pandemic. Soon there will be many new resources 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. If the employers maintain their payroll, the loans would be forgiven—helping workers remain employed in addition to helping affected small businesses. The Paycheck Protection Program also provides such features such as 

  • Forgiveness of up to 8 weeks of payroll based on employee retention & salary levels
  • No SBA fees
  • At least 6 months of deferral with maximum deferrals of up to a year

Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. The program acts retroactively to February in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020. 

You can find the PPP Loan Application HERE 

Some documents you'll need to collect are: 

  • 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.

Starting April 3, 2020, you can submit your application until June 30, 2020, however it is strongly recommended that you submit as early as possible. 

For further details and answers concerning the PPP Loans, please consult the following document:

LEARN MORE

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 repair 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 businesses obligations—including debts, rent, and mortgage payments. 

Update April 23: The EIDL is currently out of funds and at this time not accepting new applications. 

 

You can find applications for Disaster Loan Applications on the SBA's website here: 

LEARN MORE

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. 

Contracting

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

For More Information from The Small Business Association concerning these provisions, as well as frequently asked questions, download our resource below.

LEARN MORE

 


If you're unsure about how best to proceed with your business in these stressful and confusing times, we encourage you to reach out to our team for assistance. The Chandler & Knowles Team is here if you need us. 

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