Articles Tagged with COVID-19

Paycheck-Protection-Program-300x156The U.S. Business Administration (“SBA”) has implemented the Paycheck Protection Program, which provides $349 billion in administered loan and loan forgiveness relief to small businesses in financial need.  Small businesses with less than 500 employees are eligible to participate in the program, in addition to sole proprietors, independent contractors and self-employed individuals.  The Paycheck Protection Program offers loans up to $10 million for business expenses including payroll, rent, mortgage interest, utilities, and certain group health plan fees.  Business that elect to participate in the program are not required to provide collateral or show that their financial hardship is related to the COVID-19 crisis.  The Paycheck Protection Program offers a 6-month grace period in which lenders are obligated to defer loan payments.  Further, business that use their loan on payroll, rent, mortgage interest, or utilities in the 8-week span after the loan is funded can be forgiven up to the full amount of the loan.  This forgiven amount is considered taxable income.  The Paycheck Protection Program will expire on June 30, 2020.

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AdobeStock_330935716-300x169Due to the COVID-19 pandemic, many non-essential businesses have been shut down, resulting in an unprecedented economic downfall for many employers.  In efforts to provide relief for employers, the government has passed the CARES Act, which will allow employers to save costs by deferring their Social Security payroll tax (6.2%) payments.  This deferral period applies to employee wages accrued between March 27, 2020 and December 31, 2020.  Once the deferral period has passed, the employer will be obligated to pay the “deferred amounts” to the U.S. Treasury in two installments.  The first half of the deferred amount of payroll taxes will be due on December 31, 2021, while the remaining half will be due on December 31, 2022.  The CARES Act also applies to all employers regardless of their sizes, including individuals who are self-employed.  The only exception is employers who have already received Small Business Act loans that are forgiven under the Cares Act.  These employers do not qualify for the payroll tax deferral.

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AdobeStock_332772649-300x200In response to the COVID-19 pandemic, the U.S. Small Business Administration (“SBA”) has agreed to disburse Emergency Economic Injury Grants of up to $10,000 to companies experiencing financial struggles.  Small business owners that apply for an Economic Injury Disaster Loan are eligible to receive the grants, which do not need to be repaid.

The SBA’s Economic Injury Disaster Loan provides small businesses with working capital loans of up to $2 million that provide crucial economic support to businesses dealing with loss of revenue due to COVID-19.

Companies that apply for an Economic Injury Disaster Loan will be provided immediate economic relief by the $10,000 economic injury grant.  Sole proprietors, landlords, vendors and self-employed contractors are all considered small businesses eligible to apply for the disaster loan.

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