To our clients who are small business owners,
As a sole proprietor or small business owner there are some pieces of the legislation that may apply to your business. We encourage you to talk to your CPA or tax adviser to understand if these programs apply to your specific situation and how to proceed.
CARES Act Small Business Relief
- Unemployment expansion: The CARES Act extends unemployment benefits to self-employed workers and independent contractors as long as the unemployment is related to COVID-19. The benefit is federally funded but must be applied for through your state office. The benefit is half of your state’s average weekly unemployment benefit plus $600 per week. (This means Ohioans receive $750 total.) Importantly, the provision excludes those employees who are able to telework with pay or receive some form of sick leave or other paid-leave benefits.
- Paycheck Protection Program: Federally-guaranteed loans to eligible businesses to encourage the business to retain employees through the COVID-19 crisis. These loans may be forgivable if certain conditions are met, effectively making them a grant. This is a first-come...first-served program and is administered through your local bank. Applications may open as early as today, April 3, for small businesses and April 10 for sole-proprietor and independent contractors. You you may want to contact your local bank for direction and be prepared for a possible delay of a few days due to last minute revisions to the regulations and application. The following is a link to a fact sheet put together by the Treasury: https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf
- Emergency Economic Injury Loans and Grants: The grants can be applied for online through the Small Business Administration (SBA). They provide an emergency advance of up to $10,000 to small businesses harmed by COVID-19 and who are applying for an Economic Injury Loan (EEIL). The money does not have to re repaid even if the business is denied for the EEIL. The loans are offered through the SBA and a high volume of applications is expected. More details on this program are is expected to be provided soon.
- Small Business Debt Relief Program: There is funding in the law to provide immediate relief to small businesses with existing non-disaster SBA loans, in particular microloans. The SBA will cover all loan payments on the loans, including principal, interest and fees for six months.
- Small Business Tax Provisions: This is a refundable tax credit for up to 50% of the first $10,000 of annual wages for all employees. Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that are withheld from employee's wages by the amount of the credit. Eligibility is forfeited if you participate in the Paycheck Protection Program.
We sincerely hope that your businesses have not been severely impacted by the COVID-19 crisis, but encourage you to talk with your CPA if you believe that you qualify and can benefit from any of these programs.
Tim, Carol and your CP Team