This is the second installment in our series directed to our clients who are financially affected by the 2020 Coronavirus pandemic.
This post focuses on information specific to small business financial assistance and compliance matters.
Due dates
Federal and State filings and payments
Please see the first article in this series and refer to the commentary there regarding filing due dates, as these apply to business filing deadlines, as well.
Reconciliation of Federal and State filing dates
Where applicable and as possible, we will be filing State extensions so as to take full advantage of the Federal postponement to July 15. This would pertain to those clients who have filings due to states which have not moved their due dates to at least July 15.
Note that some tax filings have no availability of extension (Sales and Use Tax is a good example). Please refer to the state information link in the first article in this series for additional information and a good reference for state information.
Paycheck Protection Program
Note that this Program was re-funded by Congress and the SBA resumed accepting applications from participating lenders on Monday, April 27, 2020 at 10:30am EDT.
The Paycheck Protection Program is in reality an SBA loan. As such, businesses must apply through a local bank or SBA lending institution for these funds. Specifically, any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Not all lenders are participating, so you should check with yours as to its status.
The Program provides for loan forgiveness if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. Note that of the foregoing categories, at least 75% of loan proceeds must be used for payroll in order to qualify for forgiveness. Also, current IRS guidelines preclude the deductibility of any expenses which have been offset with forgiven loan money.
COVID-19-affected eligible businesses include:
- Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard) – typically, this will cover more than just what most of us consider “a small business”;
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
- Sole proprietors, independent contractors, and self-employed persons (but note that these entities must have one or more employees; this is not for independents without payroll expense – and payroll means payroll, not subcontractors)
When not forgiven, these loans have a 2 year term at 1% interest.
The loan application itself may be downloaded here, though you should request your lender’s form for filing.
Lenders participating in the Paycheck Protection Program by state as of May 1, 2020 are listed here.
Further information
Here are some helpful links for more information, which should be updated on a regular basis:
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/
https://www.irs.gov/coronavirus
https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
https://www.drakesoftware.com/archive/economic-impact-payments-the-facts/