Aid For Small Businesses
Through multiple pieces of coronavirus (COVID-19) relief legislation, all supported by Senator Tillis, Congress has authorized the Small Business Administration (SBA) to issue special loans to employers in need of financial assistance in the coming days, weeks, or months. Specifically, these programs are:
SBA Payroll Protection Program:
Through the SBA, businesses of under 500 employees per location are eligible to receive up to 8 weeks of cash flow assistance through federally guaranteed loans. Importantly, if the employer receiving the loan maintains payroll and does not terminate employees, the portion of the loan used to meet payroll, mortgage obligations, rent, and utilities will be completely forgiven. This is designed to ensure businesses can retain their workers and applies retroactively to February 15, 2020, to help bring workers who may have already been laid off back onto the payroll.
With the President recently signing the bill into law, agencies are now formulating and finalizing rules and guidance. I will keep North Carolinians updated once we receive more guidance and the final details on how the program will be administered.
SBA Economic Injury Disaster Loan Program:
Through the SBA, businesses of all sizes suffering substantial economic injury are eligible to receive low-interest federal disaster loans. Specifically, SBA’s Economic Injury Disaster Loans offer:
- Up to $2 million in assistance to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact
- The interest rate is 3.75% for small businesses and 2.75% for non-profits
- SBA offers long-term repayment to keep payments affordable, up to a maximum of 30 years. Terms are determined case-by-case, based upon borrower’s ability to repay
Existing SBA Loan Relief:
The SBA is required to meet all principle, interest, and fee payments on preexisting SBA loans for the next six months. This includes all loans participating in the SBA 7(a), Community Advantage, 504, and Microloan programs.
Additional information and applications available here.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which Senator Tillis supported, allows employers to delay the payment of their 2020 payroll taxes until 2021 or 2022. This is estimated to provide an additional $300 billion of cash-flow assistance for businesses. Additionally, the legislation reinstated tax provisions allowing businesses to carry back losses from 2018, 2019, and 2020 to the previous 5 years, which gives businesses immediate access to tax refunds.
On March 20, 2020, Department of the Treasury Secretary Steven Mnuchin announced a three-month extension for tax filings, to July 15, 2020. Specifically, this allows individuals and businesses to defer filing without incurring interest or penalties. This is designed to reduce burdens on small businesses and business owners, many of whom pass through their taxes on their individual returns.
Also, N.C. Department of Revenue (NCDOR) recently announced that they will extend the April 15 tax filing deadline to July 15 for individual, corporate, and franchise taxes to mirror the announced deadline change from the Internal Revenue Service. Learn more here.
The Families First Coronavirus Response Act requires employers to provide temporary paid leave to employees who cannot attend work due to personal medical needs, caregiving needs, or childcare needs. Included in this legislation is a refundable payroll tax credit to reimburse employers – dollar for dollar – for expenses they incur for paid sick leave and family and medical leave as well.
Additionally, small businesses under 50 employees may apply for a waiver from the Department of Labor (DOL) to exempt them from paid leave requirements if it would place them in significant financial hardship. DOL is working to implement this waiver process at this time.
Further information for employers and employees on paid leave requirements can be found here.
In a press release, Department of the Treasury Secretary Steven Mnuchin announced, “To protect businesses concerned about cash flow, the Treasury will use its regulatory authority to advance funds to employers in a number of ways. Employers will be able to use cash deposited with the IRS to pay sick leave wages. Additionally, businesses that would not have sufficient taxes to draw from, Treasury will use its regulatory authority to make advances to small businesses to cover such costs.”
The paid leave requirements are designed to be temporary and with the goal of covering as many Americans as possible for the worst of the COVID-19 outbreak. Per Department of Labor (DOL) statistics, 89% of large companies (defined as 500+ employees) already have paid leave regimes in place. With this in mind, Congress decided to focus the paid leave on medium and small-sized businesses. Small businesses (under 50 employees) were specifically provided an exemption process as they generally, have the fewest resources and redundancies to cover unexpected costs.
The North Carolina Small Business and Technology Development Center (SBTDC) system is designed to provide assistance to businesses, especially during disaster recovery. If you are a small or medium-sized business, you can contact your local SBTDC for help assessing the financial impacts on your business, assistance in reconstructing financial statements, evaluations of your credit options, and aid in applying for Small Business Administration (SBA) disaster loans. The SBTDC system provides these services at no cost. To schedule an appointment with a business counselor, call (800) 258-0862 (NC only) or (919) 715-7272.