In a continuous attempt to stabilize the effects of the Coronavirus on our country, the Coronavirus Aid, Relief, and Economic Security Act “CARES” Act became law yesterday afternoon.
One of the most important provisions of the Act is found at Sec 1102 which is the authorization of up to $349 Billion of federally-guaranteed loan funds to qualifying small businesses. This new loan program is called the Paycheck Protection Program (PPP) and is stated to be similar in framework to the SBA’s existing 7(a) loan program, which is funded by private lenders and backed by the Federal government.
This new program provides cash-flow assistance via federally guaranteed loans to employers who maintain payroll throughout the Coronavirus disaster. Most importantly, it will provide loan forgiveness to up to 8 weeks of payroll, including medical benefits and taxes, plus rent and utilities during the same 8 weeks.
This program is available to the types of businesses below that were affected by COVID-19 between February 15, 2020 and June 30, 2020:
Businesses with less than 500 employees;
501(c)(3) nonprofit organizations, with less than 500 employees;
501(c)(19) veteran’s organization, wit less than 500 employees;
Individuals who operate a sole proprietorship, independent contractor and eligible self-employed individuals; and
Franchisees assigned a franchise identifier code by the SBA.
Additional benefits include no SBA fees and at least six months of payment deferral and up to a one year maximum. Eligible entities (see above) may apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program is also retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back to work and on to the payroll. Loans are available through June 30, 2020.
The maximum loan size is $10 million, but will be calculated based on the age of the business as follows:
- February 15, 2019 – June 30, 2019: Maximum loan amount is 250% of monthly payroll costs during that time period.
- If not in business during the period above: Maximum loan amount is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
Please note that this new loan program is an alternative to the Economic Injury Disaster Loan (EIDL). However, you may apply now for the EIDL and subsequently apply for the PPP loan, which will require that the EIDL loan be paid off with PPP loan funds.
Additional Tax Relief
The ACT further provides tax relief to businesses by:
- Delaying due dates for employer payroll taxes - Estimated tax payments for individuals and corporations are now not due until October 15, 2020; and
- Employee Retention Credit – for employers subject to closure due to the Coronavirus (employer may receive a credit against employment taxes for each quarter equal to 50% of the wages paid to an employee not to exceed $10k).
Ser & Associates is committed to the small business community and is working with many small businesses trying to find their way through these very difficult times. If you believe your business has been affected by the Coronavirus and you would like to discuss the applicability of the new directives to your business, contact us at 305-222-7282 so that we may assist you.
At Ser & Associates, we provide a business approach to legal services. Our mission is to work with small businesses and their owners with a one-stop shop approach that includes business and contract law, residential & commercial real estate (buy/sell, leasing), Land Use & Zoning, government contracting, minority certification, litigation, estate planning, intellectual property (trademarks/copyrights) and wealth protection. We also offer the MyGC/My General Counsel® Program to those business owners requiring on-going legal services at an affordable monthly rate. Contact us at Info@Ser-Associates.com or 305-222-7282 for a free consultation.