Small Business Guide
The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed by Congress in March 2020, along with subsequent end-of-year COVID-19 relief legislation passed in December 2020, are intended to assist small business owners and non-profits with whatever needs they have right now.
To better understand the new programs that are now available to small business owners and entrepreneurs, download my updated comprehensive guide on small business provisions in the new package. This guide provides information about the major programs and initiatives that are either already or will soon be available from the Small Business Administration (SBA) to address these needs, as well as some additional tax provisions that are outside the scope of SBA.
To keep up to date on when these programs become available, please stay in contact with your local SBA District Office, which you can locate here.
Federal Loans and Grants
The following questions can help point you towards resources to help your small business. Do you need:
- A quick infusion of a smaller amount of cash to cover you right now? You might want to look into an Economic Injury Disaster Loan (EIDL) or Emergency Economic Injury Grant. These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. Due to high demand and limited funding after the passage of the CARES Act, the SBA placed limitations on the grant amounts determined by the number of employees indicated on the EIDL application: $1,000/employee, up to the maximum of $10,000. On July 11th, 2020, funding for the EIDL Advance program lapsed and Advances were no longer available.
NEW: The end-of-year COVID-19 relief package replenishes the EIDL Advance program, targets the $10,000 advances to eligible entities in low-income communities, and extends the covered period through December 31, 2021. Click here to learn more and to apply.
- Capital to cover the cost of retaining employees? Then the Paycheck Protection Program might be right for you. The stimulus includes nearly $350 billion in funding for a provision to create a Paycheck Protection Program (PPP) that will provide small businesses and other entities with zero-fee loans of up to $10 million. Under this program, up to 8 weeks of average payroll and other costs will be forgiven if the business retains its employees and their salary levels.
NEW: Eligible entities may now take out a second PPP loan of up to $2 million so long as they meet all eligibility criteria.
- To ease your fears about keeping up with payments on your current or potential SBA loan?
Established by the CARES Act, this program provides immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, the SBA pays 6 months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020.
NEW: Borrowers who received relief for six months under the CARES Act will have SBA resume payments of payment and interest (P&I) for an additional three months beginning in February 2021. Going forward, those payments will be capped at $9,000 per borrower per month. After that three-month period, the hardest-hit and smallest borrowers will be eligible to receive an additional five months of relief, also capped at $9,000 per borrower per month. SBA payments of P&I on the first 6 months of newly approved loans will resume for all loans approved between February 1 and September 30, 2021, capped at $9,000 per month.
Where to find more information and apply for financial assistance:
- You can learn if your business meets the SBA’s small business size standards here.
- Small businesses and private non-profit organizations can apply directly to the SBA for financial assistance here.
- You can find an SBA-approved lender here.
- To keep up to date on when programs become available, please stay in contact with your local Small Business Administration (SBA) District Office, which you can locate here.
- To be connected with a business counselor who can help you manage through this challenging time, you can turn to your local Small Business Development Center (SBDC), Women’s Business Center (WBC), or SCORE mentorship chapter. To find a local resource partner, click here.
The Employee Retention Credit for Employers will provide a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis.
- Starting January 1, 2021, this legislation increases the credit rate from 50 percent to 70 percent of qualified wages paid by eligible employers to certain employees during the COVID-19 crisis.
- It also expands the eligibility of the credit by reducing the required year-over-year quarterly gross receipts decline from 50 percent to 20 percent.
- Starting in January 2021, the bill increases the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees.
- Additionally, the bill increases the limit on per-employee creditable wages from $10,000 annually to $10,000 for each quarter, starting January 2021. This will allow employers to claim up to a total maximum credit amount per eligible employee of $14,000 for the first two quarters in 2021. The credit is provided through July 1, 2021.
Paid Sick and Family Leave Tax Credits: This legislation extends the refundable payroll tax credits for paid sick and family leave, enacted in the Families First Coronavirus Response Act, through March 31, 2021. Employers that elect to provide this paid leave to employees as though the corresponding employer mandates in FFCRA were extended through the end of March 2021 may receive payroll tax credit for such leave.
Delay of Payment of Employer Payroll Taxes: The CARES Act allows taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability. No changes were made to the employer payroll tax deferral in this new relief legislation.
For more information about filing taxes as a small business, visit the IRS Small Business and Self-Employed Tax Center, available here.
If you are a government contractor, there are a number of ways that Congress has provided relief and protection for your business.
The current 9-year limit on a small business’s participation in the Small Business Administration’s (SBA’s) 8(a) Business Development Program is extended to 10 years. Small businesses are eligible for the extension if they were 8(a) certified on or before September 9, 2020—180 days after the Trump administration declared the COVID-19 pandemic a national emergency.
Agencies are able to modify terms and conditions of a contract and to reimburse contractors at a billing rate of up to 40 hours per week of any paid leave, including sick leave until March 31, 2021. The contractors eligible are those whose employees or subcontractors cannot perform work on site and cannot telework due to federal facilities closing because of COVID-19.
If you need additional assistance, please reach out to your local Small Business Development Center, Women’s Business Center, SCORE chapter, or SBA District Office. You should also work with your agency’s contracting officer, as well as the agency’s Office of Small and Disadvantaged Business Utilization (OSDBU).
To stay up to date on the implementation of these programs, please visit the following websites:
- SBA – here you will find information on all COVID-19 related programs that SBA is providing, including the Paycheck Protection Program, Economic Injury Disaster Loans and Emergency Grants, and Small Business Debt Relief.
- Department of Treasury – here you will find information on the Paycheck Protection Program, as well as other tax provisions meant to help employers, including non-profits.
- June 25, 2020
- June 12, 2020
- June 10, 2020
- May 10, 2020
- May 09, 2020
- May 05, 2020
- April 30, 2020