We have compiled several resources to help small business owners understand options available during the COVID-19 outbreak. Disclaimer: We have compiled this information from sources we believe to be reputable. Charts and data presented directly by governmental agencies are used as frequently as possible. We hope that you will use this information as a guide, but continue to consult with your tax, legal and other advisory professionals for how each of these opportunities apply to your situation.
SC Unemployment Insurance Information as of 3/27/2020 – Source: dew.sc.gov/covid-hub
** Reminder: Once individuals apply for unemployment benefits and are approved and eligible, they should log in and certify that they are still unemployed, each week by Saturday at midnight. **
SBA Paycheck Protection Loans – Source: USChamberFoundation.org
The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses and nonprofits keep workers employed amid the pandemic and economic downturn. The Paycheck Protection Program provides 100% federally guaranteed loans to eligible organizations.
Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
Here are the guidelines the Chamber of Commerce has released to help organizations understand what to expect and prepare to file for a loan.
You are eligible if you are:
In addition, some special rules may make you eligible:
REMEMBER: The 500-employee threshold includes all employees: full-time, part-time, and any other status.
What lenders will be looking for:
How much you can borrow:
Loans can be up to 2.5x the borrower’s average monthly payroll costs during the year prior to the loan, not to exceed $10 million. If you were not in business in 2019, this is calculated on the average monthly payroll costs in January and February 2020.
How loan forgiveness works:
SBA Economic Injury Disaster Loans
Retirement Plan Relief – Source: IRS Retirement Plans FAQs
Most retirement plans that provide a contribution match allow employers to wait until the business tax filing deadline to match contributions. In these cases, not providing the match each pay cycle could provide some temporarily relief.
Commercial Lender Questions
Many commercial lenders are willing to work with local businesses. Depending on the situation, we have seen that lenders are allowing businesses to switch their current payments to interest-only or even defer any payments for 90 days. Keep in mind that interest would accrue in that time.
IRS Extends Tax Filing Deadline to July 15th, 2020 – IRS News Release
The IRS announced that the April 15 tax filing and payment deadline will be extended to July 15th, 2020. The due date for estimated tax payments for the first quarter of 2020, normally due on April 15th, is also extended to July 15th, 2020.
Stimulus Plan Delays Payroll Tax Deadline – Source: Deloitte
The Coronavirus Stimulus Plan includes the postponement of payroll taxes for small businesses. This bill allows employers to delay the payment of their 2020 payroll taxes. 50% of the taxes must be paid by the end of 2021, and 100% by the end of 2022.
Families First Coronavirus Response Act
The act amends the Family and Medical Leave Act (FMLA) for employees who:
Under the bill, these employees (including those who work under a multiemployer collective agreement and whose employers pay into a multiemployer plan) will have the right to take up to 12 weeks of job-protected leave to:
Although the FMLA generally requires only job-protected leave — not paid leave — the bill mandates paid leave after 14 days at two-thirds of the employee’s usual rate. (The first 14 days are covered under the paid sick leave provisions discussed below).
Paid Sick Leave
The act requires employers with fewer than 500 employees to provide two weeks of paid sick leave, at the employee’s regular rate, to quarantine or seek a diagnosis or preventive care for COVID-19. If the employee must take leave to care for a family member for such purposes, or to care for a child whose school has closed or childcare provider isn’t available, these employees must provide leave paid at two-thirds of the employee’s regular rate. Full-time employees are entitled to 80 hours of paid sick leave, and part-time employees are entitled to the typical number of hours that they work in a typical two-week period.
As with expanded family leave, covered employers can claim an elective refundable 100% tax credit for qualified paid sick leave wages, also against Social Security taxes. But the bill makes a distinction between those wages paid for employee who must self-isolate or obtain a diagnosis and those paid for to employees caring for a family member or child. For the former, the amount of wages considered per employee is capped at $511 per day; for the latter, it’s capped at $200 per day. The total number of days taken into account per employee can’t exceed the excess of 10 over the total number of days taken into account for all preceding calendar quarters.
The self-employed are similarly eligible for the refundable credit at differing amounts — 100% for their personal needs and 67% to care for a family member or child. The amount of wages is capped at $511 per day or the average daily self-employment income for the taxable year per day.