Small Business Resources

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Overview of the Coronavirus Aid, Relief, and Economic Security (CARES) Act

The CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Here are some useful links and a brief summary of some of the tax provisions passed in the act that may be beneficial to you.  If you have questions please contact us today!

The IRS has extended deadlines to FILE and PAY income taxes to July 15, 2020 as they continue to provide guidance on how to implement these changes.

The CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Here are some useful links and a brief summary of some of the tax provisions passed in the act that may be beneficial to you.  If you have questions please contact us today!

The IRS has extended deadlines to FILE and PAY income taxes to July 15, 2020 as they continue to provide guidance on how to implement these changes.

PROGRAM COMPARISON

We recommend you get started immediately and take advantage of assistance programs while funds are available. Banks are still looking for guidance on how to process the programs. While the banks are getting organized, reach out to your banker and let them know you will be applying for a program. Get financial information pulled together and meet with us to help you strategically look at your needs and choose the program(s) listed below best suited for your situation.

Overview Paycheck Protection Program (PPP) Economic Injury Disaster Loan (EIDL) EIDL Emergency Grants
Maximum Loan Amount 2.5x Avg monthly payroll including benefits capped at $100,000 per employee, max of $10,000,000 per borrower. Up to $2,000,000 Grant up to $10,000
Eligible Borrowers Business with less than 500 employees Businesses that meet SBA size standards Business with less than 500 employees
Use of Proceeds • Payroll Expenses including salaries and benefits
• Mortgage Interest Only
• Rent & Utilities
• Payroll Expenses
• Fixed Debt
• Rent & Utilities
• Working Capital
• Any purpose for loan made under Section 7(b)(2)
• Provide sick leave due to Covid-19
• Maintain employee payroll
• Rent or mortgage payments
• Repay obligations that cannot be made due to revenue loss
Collateral / Personal Guarantee Waived Personal Guarantee Required - may require collateral Waived
Affiliation Applicable Applicable Waived
Credit Elsewhere Waived Waived Waived
Forgiveness Up to 100% forgiven. The amount of loan forgiveness calculated above is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees over 8 weeks. No Yes
Interest Fixed. Cannot Exceed 4% Fixed. 3.75% N/A
Term Deferred for 6-12 months. Up to 10 year payback. Deferred for 12 months. Up to 30 year payback. N/A
Application Will begin processing on April 3rd. View application View application
We can assist you with this process and completing the Personal Financial Statement
View application

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    Economic Impact Payments

    • $1,200 individual ($2,400 for eligible individuals filing a joint return)
    • $500 for each child who hasn’t attained age 17.
    • Amount of credit is reduced by 5% of the taxpayer's adjusted gross income (AGI) in excess of: (1) $150,000 for a joint return, (2) $112,500 for a head of household, and (3) $75,000 for all other taxpayers.

    CARES Act - Individual

    • No 10% additional tax for coronavirus-related plan distributions up to $100,000
      • Diagnosed with SARS-CoV-2 or COVID-19, spouse or dependent.
      • Quarantined, furloughed, or work hours reduced. Lack of childcare.
      • Can be contributed back to retirement plan w/in 3 years. Much like 60 day rollover
      • Will be included in income over 3 years, can elect to include all in current year
    • RMD Requirement waived for 2020. The waiver is not applicable to defined benefit plans(i.e. pensions.)
    • $300 above-the-line charitable deduction – effective 2020 – The remainder of charitable donations are still deductible if you itemize.
    • 60% limit on charitable donations increased to 100% of AGI for 2020
    • Corporate charitable contributions limit increased from 10% of taxable income to 25% for 2020
    • Increase in limits of food inventory from 15% to 25% of taxable income
    • Tax-excluded education payments temporarily include student loan repayments
      • Employees can exclude up to $5,250 from income for student loan repayments made by an employer between March 27, 2020 and December 31, 2020.

    CARES Act - Business

    • Monthly Profit & Loss for trailing 12 months.
    • Documentation for the average monthly payroll and average monthly full-time equivalents, based on the trailing 12 months, currently from April, 2019 through March, 2020. (There are payroll limitations that need to be considered.)
    • The average payroll by category: salary, hourly, commissions, vacation, sick leave, group health care (both union and non-union) and retirement contributions (both union and non-union).
    • The monthly rent (or mortgage interest) over the last 12 months.
    • The amount spent on utilities over the last 12 months.
    • The interest on mortgage and any other debt obligations that were incurred before 2/15/2020.
    • The tax ID# and full legal name of each entity.
    • Ownership information to assist in evaluation of the impact of affiliate entities. For any owners who have more than a 50% ownership interest, obtain a complete listing of other entities in which they also hold more than a 50% ownership interest.
    • Refundable payroll tax credit for 50% of wages including health benefits – limited to first $10,000 paid to a particular worker. Effective for wages paid after March 12, 2020 until December 31, 2020.
    • Eligible employers- A) operations fully or partially suspended as a result of government order limiting commerce, travel, or group meetings. B) Employers who have experienced a greater than 50% reduction in quarterly receipts measured on a year over year basis.
    • If your business has more than 100 employees, the credit is available only for compensation paid to employees who are not working as a result of one of the two situations listed above. If your business has 100 or fewer employees, any compensation paid during the period when the operations were impacted by one of the two scenarios is eligible for the credit, even if it’s paid to an employee who is still working.
    • Credit is not available to wages on payroll paid by Paycheck Protection Program or EIDL Grants.
    • https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act Basic FAQs
    • You can generally delay the payment of employer share of 6.2% Social Security tax on wages paid between March 13, 2020 and December 31, 2020. 50% of the delayed payment will be due December 31, 2021 and the remaining 50% will be due December 31, 2022.
    • Deferral of tax is not available on payroll paid by Paycheck Protection Program.
    • NOLs generated 2018 through 2020 will deduct up to 100% of income.
    • for 2019 and 2020 NOLs can be carried back to each of the 5 years preceding the tax year of loss.
    • Was aggregate trade/business gross income and gain plus $250,000($500,000 MFJ).
    • If you had losses limited in 2018 or 2019, you may be able to obtain a refund by filing an amended return.
    • Can make an election to take entire refundable credit in 2018.
    • Partnerships have special rule. Increase is effective in 2020. Couple of elections specific to partnerships to look at if you have a partner with limited interest deduction.
    • The Act retroactively corrects the drafting error for QI property acquired and placed in service on or after January 1, 2018. QI now has a 15 year cost recovery and is eligible for bonus depreciation.
    • QI property includes most improvements to commercial or industrial buildings after the building was first placed in service, such as most tenant improvements.

    Resources

    https://floridadisasterloan.org/eligibility-and-loan-process/

    This is a loan from the State of Florida that must be repaid.  There is no forgiveness provision.

    Families First Coronavirus Act

    Families First Coronavirus Response Act is legislation created in response to the coronavirus outbreak, which provides free coronavirus screening, limited paid leave time, expanded Family and Medical Leave Act (FMLA), and greater unemployment benefits for individuals impacted by the coronavirus.

    See the FAQs here at Department of Labor.  Employers with less than 50 employees are eligible for exemption to act if they meet certain conditions.  See FAQ 58 and 59.
    https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.

    At Hamic, Previte and Sturwold we are your trusted small business advisors and we are here to assist you during these unprecedented times. Contact us today!

    Families First Coronavirus Act

    Families First Coronavirus Response Act is legislation created in response to the coronavirus outbreak, which provides free coronavirus screening, limited paid leave time, expanded Family and Medical Leave Act (FMLA), and greater unemployment benefits for individuals impacted by the coronavirus.

    See the FAQs here at Department of Labor.  Employers with less than 50 employees are eligible for exemption to act if they meet certain conditions.  See FAQ 58 and 59.
    https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.

    At Hamic, Previte and Sturwold we are your trusted small business advisors and we are here to assist you during these unprecedented times. Contact us today!

    For more information about our Services

    For more information about our Services