The information below is a summary of the CARES Act recently passed signed by President Trump to mitigate the financial impact of the coronavirus pandemic. The information below is subject to change as additional details emerge around how these programs will be implemented.
DISCLAIMER: Fiona & Colin Theseira and RE/MAX United do not provide tax, legal, financial or accounting advice. The information below is for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. Please consult your own tax, legal, financial and accounting advisors to understand how the new CARE Act applies to your situation.
View CARES Act for Individuals and Families
This program is different and separate from the program in Phase III (“CARES Act”), and participating in this program may make the borrower ineligible for participating in the Phase III program. These loans are issued by the government, and not by banks. Businesses with an urgent need for financing may wish to seek more conventional SBA 7(a) loans due to anticipated delays in finalizing terms and details.
More information: https://www.sba.gov/funding-programs/disaster-assistance
Businesses (including sole proprietors & self-employed) & non-profits (except those with Medicaid funds) and
Must have been “substantially affected by COVID-19,” which is interpreted as:
Maximum maturity of 2 years, the amount to be the lesser of (a) $10 million or (b) 2.5x the average total monthly payments by the applicant for payroll costs incurred for 2019; plus
For newer companies, or those with seasonal employees, average payroll costs from January 1 to February 29, 2020 are used for part (b)
An eligible recipient shall be eligible for forgiveness of indebtedness in an amount equal to the cost of maintaining payroll continuity and other allowable costs during the covered periods (8 weeks from loan origination). The borrower shall submit an application to the lender, including documentation verifying the number of full-time equivalent employees on payroll and other costs specified under “Allowable Use:”
At least 75% of the loan funds must be used for payroll expenses to qualify for forgiveness.
The amount of any loan forgiveness will be reduced by any reductions in employee wages (in excess of 25% for any employee) or a reduction in the number of employees during the covered period.
A previously-received EIDL loan that has been refinanced into a PPP loan is eligible for forgiveness.
Canceled indebtedness under this section shall be excluded from gross income
SBA loans that have already been distributed receive 6 months of loan forbearance on principal interest and fees.
Businesses with 500 or fewer employees that have current SBA loans
Income Tax Filing & Payment
Several local jurisdictions are supporting small businesses with loans, grants, or deferment of tax and fee collections.
Check with providers as many companies, utilities, etc. are providing discounts, payment deferrals and/or grants to small businesses.
Delays of payment of Employer Payroll Taxes
Changes to Net Operating Loss Rules to use losses today against past profits to claim refunds
Increases to the amount of interest expense businesses may deduct from 30% to 50% for 2019 and 2020