COVID-19 has brought a lot of uncertainty to Small Businesses across the United States. Many business owners are feeling the financial pressures brought on by mandatory closures, or decreased traffic as a result of shutdowns. Things are changing daily as well, so it can make even the most veteran businessperson’s head spin.
Below is a brief high-level summary of what every Small Business Owner needs to know as they navigate these uncharted waters:
Make sure your employees know about the resources available to them:
- Federal tax filing and payment deadline postponed until July 15, 2020. Many states have extended their filing deadlines as well.
- Student Loans are not accruing interest and some loans may be put in Forbearance if the borrower has an inability to pay due to COVID-19.
- Federal Stimulus checks will be direct deposited if the IRS has your banking information ($1200 per individual, $2400 if married, plus an additional $500 per child, limitations do apply).
If you have no choice but to layoff employees, it may bring you peace of mind to know the Federal Unemployment Benefits have been increased.
- All unemployed workers will be paid an additional $600/week in addition to what they would normally receive. This increase is approved through July 31, 2020.
- For some employees, the increased Unemployment Benefit Payments may be higher than their regular pay.
The CARES Act – Payroll Protection Program (PPP)
- Loans are available for eligible Small Businesses, without having to provide a personal guarantee or collateral
- Loans are for the amount of 2.5 X your average monthly payroll costs for the last 12 months. This includes:
- Salary, Wage, & Commission
- Payment of cash tips
- Vacation, Sick, Parental, or any other Medical Leave
- Allowance for dismissal or separation
- Payment for group health insurance
- Payments for retirement benefits
- State & Local taxes assessed on the compensation of the employee
- If you maintain your employees throughout the crisis, these loans will be forgiven up to the amount of 8 weeks of expenses in the following categories:
- Total payroll costs as determined above
- Interest on mortgages held by the business
- Rent on a leasing agreement
- Payments on all utilities
- Applications are to be submitted to your bank
Emergency Injury Disaster Loan (EIDL)
- Loans up to $2M are available to small business that have been impacted by COVID-19
- These loans have an APR of 3.75% with terms up to 30 years
- These working capital loans may be used to pay fixed debts, payroll, accounts payable and other bills that could have been paid had the disaster not occurred
- These loans are not intended to replace lost sales, lost profits, or provide assistance for expansion
- Applications are made via the SBA Disaster Assistance Program at disasterloan.sba.gov
Economic Injury Disaster Loan Emergency Advance
- This loan advance will provide up to $10,000 of economic relief to business that are currently experiencing temporary difficulties
- This loan advance will not have to be repaid
- The application is brief and can completed online at covid19relief.sba.gov
Delay the Payment of Employer Payroll Taxes
- Employers can defer payments of their share of the social security tax over the following two years.
- First half due 12/31/2021 and second half due 12/31/2022.
- You are not eligible to defer this payment if you are participating in the Payroll Protection Program.
Business Interruption Coverage provided by your insurance carrier
- Many business and commercial property policies include coverage for “Business Interruption:
- You may be entitled to an insurance payment for loss of revenue when closure is related to property damage and/or government mandate.
- The insurance industry is being reviewed frequently to determine how to address business owners’ needs.
- Premier Claims offers complimentary policy reviews to see if you have coverage.
- You can upload your policy and request your complimentary review by our legal team by visiting premier-claims.com/loss-of-business-due-to-coronavirus
Written by CFO Melissa Hurrington