Keeping your business going, here is what we know so far…
As we are sure you know, the CARES Act was passed on Friday. What we all need to keep in mind, is even though there are loans, grants, and various options which will be available, most of them are not ready for the application process. As of today the SBA and the banks need time to set up their application processes, and make them available to the public.
Today Sherry had a conversation with Banner Bank and our source indicated it could be up to two weeks before companies would be able to apply for the SBA Paycheck Protection Loan.
With the borrowing options constantly changing, following is the information available now, as things change, we will keep you up to date.
The new loans are:
EIDL (Economic Injury Disaster Loan) you can apply for this now at https://disasterloan.sba.gov
This particular program offered by the SBA is allowing businesses to apply now (APPLY NOW) for a $10,000 Loan Advance. If approved, the loan advance will be made available within three days of a successful application. The advance will not have to be repaid and you will not owe taxes on this money. There may be an option for small businesses to qualify for loans up to $2,000,000 to help overcome the current loss of revenue, however, there is a possibility that not all of this will be forgiven.
Paycheck Protection Loan (PPL) https://www.uschamber.com/co/start/strategy/cares-act-small-business-guide. You cannot apply for this loan yet. The good news about this loan is that it can be forgiven. Please review the above link for more details on the loan.
The US Chamber of Commerce has given a good Small business guide and checklist https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf. This link is a great resource as to eligibility, and what lenders maybe looking for with regards to documents required.
Other Options for Businesses
1. You may be able to take the Employee retention tax credit if:
Your business operations were fully or partially suspended due to a COVID-19 shut-down order; or
Gross receipts declined by more than 50% compared to the same quarter in the prior year. Eligible businesses can get a refundable 50% tax credit on wages up to $10,000 per employee. The credit can be obtained on wages paid or incurred from March 13, 2020, through December 31, 2020.2. Businesses and self-employed individuals can delay the employer’s share of Social Security tax payments owed for 2020. For those to take advantage of this, the taxes must be paid over the next two years. Fifty percent must be paid by the end of 2021 and 50% must be paid by the end of 2022. This does not apply to employers who get the Payroll Protection Loan.
3. Net Operating Loss (NOL) have been relaxed. If your business had an NOL in the tax years beginning 2018, 2019, or 2020 this NOL can now be carried back for five years. Pass-through entities such as LLC’s and S-Corps as well as sole proprietors can also take advantage of the NOL rules.4. Businesses, especially those in the hospitality industry, will be able to immediately write off costs associated with improving facilities, increasing cash flow.
If you need assistance applying for the loans are want to discuss if the credits are better for you than the loans please schedule a time to talk to Sherry. https://app.acuityscheduling.com/schedule.php?owner=12992241