The past couple of months have brought an explosion of changes for businesses. Tax deadline extensions, paid leave requirements, and relief in the form of loans have all affected small businesses to varying degrees. Even if your cash flow is unaffected by the pandemic, there are still changes that will affect your company. Here’s a summary of what small businesses need to know today about COVID-19 relief, with links to further information and resources.
Loans and tax credits for small businesses
Both the federal and state governments have created loan programs and tax credits to help small businesses through the shutdown and beyond. Funds in these loan pools have been quickly claimed, but you still have the opportunity to put in an application for a Payroll Protection Program (PPP) loan, Economic Injury Disaster loan (EIDL), and various state and local programs. Businesses that do not receive a PPP loan can defer their payroll tax payments and receive payroll tax credits. There are also debt relief options for businesses with Small Business Administration (SBA) loans and additional tax provisions that allow losses to be carried back five years. Read more.
Paid leave has expanded for sick workers and those with affected family members
The first piece of legislation signed by President Trump, titled the Families First Coronavirus Response Act, greatly expanded paid sick leave and FMLA requirements. Employers with fewer than 500 employees can receive tax credits to help offset the costs of providing paid leave. Read more about who is eligible for leave and what actions employers are required to take.
With IRS Form 7202, self-employed individuals may also be able to claim tax credits for sick and family leave.
The Department of Labor has created a model notice for businesses to post in a conspicuous place that notifies workers of their rights related to paid leave. Download your copy.
How to gain PPP loan forgiveness
The high-profile PPP program offered something most business owners don’t regularly experience: the opportunity to have their loans forgiven. While the legislators who crafted the PPP had good intentions to support businesses through the pandemic, the details of how to receive loan forgiveness have been a bit foggy. Based on Treasury Secretary Steve Mnuchin’s comments, we believe that loan forgiveness will require careful documentation of how you spent the money, as well as payroll records showing that your payroll didn’t drop by more than 25%. We recommend approaching PPP forgiveness like an IRS audit: be prepared with all the documentation you have, and it should be a relatively smooth process. If you received PPP funds, read more about how to start keeping those records now.
Look at state and private opportunities for funding
Forbes has compiled a list of state funding opportunities; many private organizations are also offering grant programs and funding opportunities. Here are links to a few programs we’ve seen that you may wish to research further. If you’re in a specialized niche, we strongly recommend researching opportunities that may be unique to your business.
- Facebook has created a small business grants program; eligibility is limited by city. Learn more.
- Upwork is offering $1 million in grants to fund projects that help mitigate COVID-19’s impact on individuals, communities, and economies. Learn more.
- Google is distributing $340 million in ad credits to small and medium businesses. Learn more.
- Kabbage, in addition to being a PPP lender, enables small businesses to sell gift certificates online. Learn more.
Wherever possible, be proactive
It all boils down to making informed, proactive decisions. Resist the temptation to make reactive moves that will hurt your business in the long run. Lean on your trusted strategic advisor for guidance when navigating relief, requirements, and tax changes. Read more.
Working remotely and socially distanced, our team is supporting businesses through this crisis. Many businesses have needed to move their accounting to the cloud in order to enable their teams to work remotely and keep sensitive information secure. We also offer support for loan applications and cash flow planning. If you need a trusted strategic advisor to help you navigate through the crisis, please contact us to schedule a consultation.