CAN THE CARES ACT HELP YOUR SMALL BUSINESS?
The Short Answer? ABSOLUTELY.
Earlier this month, the Families First Coronavirus Relief Act (FFCRA) was signed and its focus was on employees. Over the weekend, the CARES Act was signed - Coronavirus Aid, Relief and Economic Security Act. This stimulus bill focuses primarily on individual taxpayers and businesses - with some great benefits included for small businesses in particular. I've spent A LOT of time the last several days reviewing the small business portions that would be most beneficial for you and I want you to get in on these benefits as soon as you can. Let's dig in!
A majority of people will have stimulus checks coming their way at $1,200 per adult and an additional $500 for each child, with the checks phasing out for those at higher income levels. You can check out this calculator via the Washington Post to get an idea of how much you may receive via stimulus payments. The payments will be sent via direct deposit to the bank information you provided to the IRS with your 2019 tax return. If you haven't yet filed your 2019 taxes, they'll use the information included with your 2018 taxes. If you didn't have direct deposit set up or the account you used is now closed, then you can expect a check in the mail. Now, if you haven't filed your 2019 taxes yet and you happened to make less in 2019 than you did in 2018, it may be a good idea for you to get 2019 filed ASAP so you can get the maximum amount of stimulus.
There was a massive overhaul to Unemployment Benefits that now includes extended benefits and welcomes self-employed/"gig" workers/independent contractors. The language in the bill isn't exactly clear on what "self-employed" means, and as always each state will make that determination for their unemployment programs. However, if you're self-employed in CA and your income has taken a measurable hit due to this particular pandemic I'd definitely recommend applying for unemployment TODAY. It doesn't hurt to try - at best you'll receive some income and at worst you'll simply be told you don't qualify. You'll never know unless you give it a shot!
Don't scoff or shy away from this one just from seeing the word "Loan". I generally don't recommend borrowing money - debt is not your friend. HOWEVER - this is a wild circumstance and for the 1st time, the Small Business Association (SBA) is basically able to give many small businesses $10K in an advance a la a grant (NOT a Loan!) that doesn't need to be paid back. How is this possible? The bill states those who apply for an EIDL loan due to hardship caused by coronavirus may receive up to a $10K advance of their loan within 3 days of the application being submitted. Now get this - the $10K advance does not have to be repaid, even if your loan application is denied. Any amount borrowed OVER the $10k advance must be paid back. These types of loans have low interest rates (3.75% + usually), can be up to 30 years in length and payment may be deferred for up to 4 years. Needless to say, this is basically FREE MONEY for your small business. If your small business has been hurt significantly by the coronavirus, this could be an incredible way to get a quick infusion of cash back into your business. You don't need to have employees in order to qualify, and it applies to self-employed people without employees also. APPLY FOR THIS TODAY!
Paycheck Protection Program (PPP)
This is another loan program with possible loan forgiveness and could be a great option for employers. The maximum amount of this loan is 2.5 months' worth of payroll payments (calculated via the prior year's average payroll) and the maximum loan amount is $10M. This loan is FORGIVABLE for payments on payroll costs, mortgage interest, rent obligations and utility payments for 8 weeks from the start of the loan. You can also re-hire employees you previously laid off due to coronavirus and not be penalized on your loan forgiveness. Now, the forgiveness isn't an automatic given and it must be applied for with the necessary paperwork. Currently, there isn't yet a process in place to apply for this - however I'd recommend reaching out to your bank to find out if they participate in the PPP and to ask them for guidance on how to proceed for now. In the meantime, you can apply for an EIDL loan to receive the $10K advance. If you are granted the $10K EIDL advance AND receive a loan under the PPP, you can then roll your EIDL into your PPP loan, with the $10K advance being subtracted from the forgivable portion of your loan (basically no double-dipping on free $$).
This is all rather encouraging news, right?? Even if you aren't sure if any of the above may apply to you, please still take a few minutes to apply for these benefits anyway. Like I mentioned, you'll never know unless you try! It's also a great idea to connect with your CPA or financial advisor in order to determine the best course of action for your business.
empowerHR Consulting is here to help you and your teams as we navigate this together. We want you + your small business to not only survive but come out of this stronger than ever. If you find yourself with an influx of unemployment claims from former employees, need help navigating the new remote work landscape or understanding the barrage of new labor laws please reach out to empowerHR Consulting for guidance. We are here for you!