A: There are several options for assistance from Federal Government, we are highlighting a few below. We do not have the expertise to advise you on these specific programs or determine which option may be best for you. We encourage you to contact your bank or other lending institution and/or your tax advisor for specific direction.
- An Employer’s share of Social Security (6.2%) for all employers and self-employed individuals can be deferred without penalty from March 27, 2020 to December 31, 2020. Fifty percent of the taxes are due December 31, 2021 and the remainder is due December 31 2022. Details of the payroll tax deferral can be found on the IRS website or link to I.R.S. Notice 2020-22 .
The act provides Employers with two incentives to retain employees on payroll. Employers can choose between:
Employee Retention Credit:
- Employers with more than 100 employees may receive tax credit equal to 50 percent of qualified wages (including allowable qualified health plan expenses) that Eligible Employers pay an employee who is not currently working due to COVID-19. An employer is eligible for this credit if they experience (1) a full or partial suspension of operations by order of a governmental authority due to COVID-19, or (2) have a “significant decline in gross receipts” as defined on the I.R.S. website. This credit applies to qualified wages paid after March 12, 2020, and before January 1, 2021. Details of the Employer Retention Credit can be found on the IRS website under FAQ’S: Employee Retention Credit under the Cares Act.
- If the Eligible Employer averaged 100 or fewer full-time employees in 2019, qualified wages are the wages paid to any employee during any period of economic hardship described in (1) and (2) above.
The Payroll Protection Program:
- The PPP provides business and 501(c )(3) organizations with fewer than 500 employees to obtain a loan in the amount of 2.5 times the borrowers monthly payroll costs, not to exceed $10 million dollars. The loans are to be used for specific cost including salary, wage, health care benefits and more for employees, including those not working. A borrower is eligible for loan forgiveness equal to the amount spent during the eight- week period on specific expenses. For more detail information, contact your banking institution or visit Small Business Association-Payroll Protection Program.
Business are eligible for only one of the above options. You will want to contact your tax professional and/or financial institution to determine which option may be better for your situation.
- The Act expanded the SBA’s Economic Injury Disaster Loan Program for employers with fewer than 500 employees and provides long-term loans with favorable terms. For more detail information, contact your banking institution or visit Small Business Association – Disaster Assistance Loan.
- SBA Debt Relief program is providing financial reprieves to small businesses during the pandemic. The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months and any new loans issued prior to September 27,2020. Additional information can be found on the SBA Debt Relief Program website.
- Employers with fewer than 500 employees, may want to visit the SBA’s Coronavirus(COVID-19): Small Business Guidance & Loan Resources website.
If you have any questions or would like additional information, please contact your Liberty Advisor.