It has been more than four months since President Trump signed the CARES Act into law to offset the devastating effects of the Coronavirus on the U.S. economy. The $2.2 trillion stimulus package has offered struggling business owners some reprieve with $669 billion set aside for small business loans while a further $500 billion was reserved as aid for large corporations.
For business owners still struggling to make ends meet, the following federal programs are still in place to provide financial relief.
- Coronavirus scams to watch out for.
Economic Injury Disaster Loans:
On June 15th, 2020, the U.S. Small Business Administration resumed accepting new Economic Injury Disaster Loan applications from all qualified small businesses. This includes small businesses and non-profit organizations in all U.S. States Washington D.C., and territories.
Businesses are only eligible if they do not have existing credit elsewhere. Loans may be paid back at an interest rate of 3.75% for small businesses and 2.75% for non-profit organizations. In order to keep payments affordable, long-term repayment options are available up to a period of 30-years.
These funds may be used to pay fixed debts, accounts payable, payroll and other bills that cannot be paid due to the impact of the Coronavirus. If your business would benefit from a low-interest federal disaster loan, you can apply online here.
Businesses in need of working capital while their EIDL loan application is being processed can apply for an SBA Express Bridge loan if they already have a working relationship with an approved SBA lender. Express Bridge loans are capped at $25,000 and will be paid in full, or in part by proceeds from the EIDL loan.
Economic Injury Disaster Loans Quick Facts:
- Applies to small businesses and non-profit organizations.
- Loans have been made available in designated states and territories.
- Loans are not available to businesses that have existing loan credit elsewhere.
- Loans may be used for payment of fixed debts, accounts, payroll, and other bills.
- Interest rates for small businesses are 3.75% and 2.75% for private, non-profit organizations.
- Long-term repayment plans are available up to 30-years.
Paycheck Protection Program:
Update - The Paycheck Protection Program has been extended and resumed accepting applications from the 6th of July 2020. The new deadline for loan applications is August 8, 2020.
The Paycheck Protection Program is administered by the SBA and is designed to provide small businesses with 8 weeks of cash-flow assistance to offset the effects of the Coronavirus Pandemic. This is provided through 100% federally guaranteed loans. Businesses with fewer than 500 employees can apply for loans to cover operating expenses. This includes sole proprietorships, independent contractors, and self-employed individuals.
Paycheck Protection Program Quick Facts:
- The program has been extended. The new deadline for loan applications is August 8, 2020.
- The program is designed to provide small businesses with cash flow for payroll, utilities, insurance, benefits, and mortgage payments.
- Available for businesses with fewer than 500 employees, sole proprietorships, independent contractors, and self-employed individuals.
- Loan amount capped at 2.5 times your monthly expenses or $10 million.
- Certain loan expenses can be forgiven including salaries, rent, mortgage, and utilities.
Sick and Family Leave Tax Credits:
The Families First Coronavirus Response Act mandates that employers provide eligible and impacted employees with up to 80 hours of paid medical and family leave at their regular rate of pay.
To offset the costs of paid time off, new legislation provides businesses with a tax credit equal to 100% of the employee benefits given between April 1 and December 31. These business tax credits translate dollar-for-dollar to lower business tax liabilities.
Sick and Family Leave Tax Credits Quick Facts:
- A small business employer may collect a tax credit equal to 100% of the qualified sick and family leave payments made pursuant to the FFCRA.
- The credit only covers leave payments made between April 1st and December 31st.
- The tax credit is increased to cover the portion of the employer's health plan expenses allocated to sick and family leave.
- The tax credit is not available to employers who are already receiving existing credit for paid family or medical leave.
Employee Retention Tax Credits:
In addition to the sick and family leave credits, eligible employers can claim employee retention tax credits for wages paid after March 12, 2020, and before January 1, 2021.
Employers are eligible if their business operations have been partially or fully suspended due to governmental orders due to COVID-19, or if their business has seen a significant decline in gross receipts compared to 2019. The refundable tax credit is equal to 50% of qualified wages (including health plan expenses) of up to $10,000 per employee.
Employee Retention Tax Credits Quick Facts:
- Applies to wages paid after March 12, 2020, and before January 1, 2021.
- Employers are eligible if their business operations have been partially or fully suspended due to governmental orders.
- Employers are eligible if their business has seen a significant decline in gross receipts compared to 2019 (due to COVID-19.)
- Refundable tax credits are equal to 50% of qualified wages up to $10,000 per employee.
- Tax credits are capped at $5,000 per employee.
Resources for Business Owners:
- Centers for Disease Control and Prevention.
- OHSH guidance on preparing workplaces for COVID-19.
- U.S. Department of Labour Coronavirus resources.
- Coronavirus small business guide.
- Treasury and IRS guidance on deferring tax payments.
- Familes First Coronavirus Response Act information.
- SBA Small Business guidance & loan resources.
- State, local, and corporate relief programs.
What is the government still doing to assist businesses affected by the Coronavirus?
What is the Families First Coronavirus Response Act?
The Families First Coronavirus Response Act is a federal law requiring certain employers to provide employees with up to 80 hours of paid sick or family leave for reasons relating to the Coronavirus.
Where can I apply for an economic injury disaster loan?
You can apply for disaster loan assistance online through the U.S. Small Business Administration website.
Is the Paycheck Protection Program still running?
The Paycheck Protection Program has been extended. The new deadline for loan applications is August 8, 2020.