Financial Relief for Business Owners

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1. Grants: Look for local and state grants (free money) to see if you qualify.  Time is usually of the essence since a limited amount of funding is usually available.  Check with your local Chamber of Commerce, Small Business Development Center and this listing (be sure to look at the tabs).
2. EIDL Loan and Emergency Grant: Apply for EIDL Loan through the SBA as soon as the new process becomes available and request a $10,000 Advance. This advance does not have to be paid back if your loan is denied.  EIDL = Economic Impact Disaster Loan, 7(a) program administered by the SBA
3. PPP Loan with Forgiveness: Talk with your bank or an SBA lender to apply for a PPP Loan. There is no formal underwriting process and banks are going to be able to expedite these loans without risk (100% guaranteed by the SBA).    Forgiveness will be available later if you maintain payroll.  See full details about the program here.  PPP = Paycheck Protection Program or Small Business Interruption Loan, administered through banks and SBA lenders
4. Retirement Distributions up to $100,000: The usual 10% penalty is waived and you can put the money back within the next three years.  If you do not put the funds back, the distribution will be allocated over three years for tax purposes.
5. Retirement Loans up to $100,000: If your plan allows for loans, the loan can be up to 100% of the balance of your account or $100,000, whichever is less.  All payments are delayed for one year and then amortized over 5 years.  The advantage is that you can pay back the distribution and accrued interest in an attempt to replace the earnings.

CARE Coronavirus Aid, Relief, and Economic Security Act

The CARE Act was signed by President Trump on Friday, March 27, 2020 and is now law.  The bill is hundreds of pages so this is not a comprehensive list but contains a list of the most popular provisions.

• Paycheck Protection Program Loans (PPP): The bill provides federally guaranteed loans available at community banks to small businesses that pledge not to lay off their workers. The loans would be available from community banks during an emergency period ending June 30.  Funds can be used for payroll-related expenses and debt obligations incurred before March 1, 2020.  The loan can be forgiven if the employer continued to pay workers for the duration of the crisis.  The forgiven amount will not be taxable.  Amounts for payroll costs, rent, interest on mortgage obligations, and utilities will be able to be forgiven if you have maintained your full-time equivalents on payroll.  *Update 4/16/2020: The original appropriation of $349B has been utilized so no more funding is available at this time.  The Senate will reconvene on Monday, April 20 to discuss additional funding.
• SBA Economic Injury Disaster Loans (EIDL):  Upon application for the SBA loan, applicants can ask for a $10,000 emergency advance to be disbursed by the SBA within 3 days.  This advance does not need to be paid back if the loan is denied.  The bill says “up to $10,000” but it is not known what criteria could be used to determine the amount of the emergency advance or what would cause it to be less than $10,000.  The total amount of these loans is limited to $10 billion dollars so it will run out so applying early will be a factor.  Payments began being issued at $1,000 per employee on April 13.  The application is available at: https://covid19relief.sba.gov/#/. *Update 4/16/2020:  The SBA funding has lapsed and no further applications are being accepted.
• Immediate tax rebate credit of a minimum of $600 up to $1,200 per taxpayer plus $500 per child. These amounts (except the per-child payment) are doubled for joint returns. Taxpayers with no tax liability would receive $600 and the amount increases dollar for dollar for those with a tax liability up to $1,200. For those with annual incomes over $75,000 per individual taxpayer, the rebate would phase out by 5% of any income over $75,000, gradually dropping to zero for incomes above $99,000 per year.  Here is a link to a free calculator to estimate your rebate amount.  The IRS will use the 2018 returns if the 2019 returns have not been filed yet to determine the amount of the stimulus.  This payment is an advance on a credit that will be included on the 2020 tax return so if additional funds are due, you will able to receive them with the 2020 tax returns are filed.  Direct deposits have started on April 13 and checks will be mailed if no direct deposit information is available.  You can attempt to check the status of your refund at https://www.irs.gov/coronavirus/economic-impact-payments but this site has not always been accurate.
• An extended unemployment insurance program for laid-off workers that will allow for four months of “full pay” rather than the usual three months for most. It will also raise the maximum unemployment benefit by $600 per week. It will apply to traditional workers for small and large businesses as well as those who are self-employed and workers in the gig economy.  Details of the Pandemic Unemployment Assistance were provided to the states during the week of April 3.
• Taxpayers would also be allowed to take tax-favored disbursements or loans from their retirement accounts up to $100,000 to pay for expenses or make up lost income related to the epidemic. These can then be repaid with additional contributions beyond the normal contribution limits during the next three years.  The 10% penalty for early distributions would not apply to these distributions and tax would be paid over three years if funds were not replaced.
• The act creates a new above-the-line deduction of up to $300 for charitable donations for those who are not able to itemize deductions.
• All RMD (Required Minimum Distributions) from retirement plans are suspended for 2020.
• Net Operating Losses for 2018, 2019 and 2020 will be able to be carried back five years.
• Student loans administered through the Federal government will be suspended for 3 (or possibly 6) months with no interest accruing during that time.
• SBA loan payments for existing loans will not require payments for 6 months.  The SBA should automatically begin making these payments for loan holders.
• The employer portion of payroll taxes (6.2% share) from now until December 31, 2020 will be deferred until December 31, 2021 and 2022, with half being due on each date.  This credit can not be utilized if you have a PPP loan.

Here is a link to the complete bill details.

Tax Return Due Dates and Payment Dates

The IRS has extended the payment date and the due date for corporate and individual taxes to July 15, 2020 with no interest or penalty instead of April 15. Federal estimated payments  (1040-ES) that are due April 15, 2020 and June 15, 2020 have also extended to July 15, 2020.

Existing Installment Agreement payments due between April 1 and July 15, 2020 are suspended. The IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.

All Corporate estimated payments are delayed until October 15, 2020

Many states have changed their due dates so please verify all state due dates over the next few weeks.  Here is a link to the most up to date due dates for states: State Tax Deadline Changes

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