Information about the Recently Passed CARES Act:
On March 25, the Senate passed the Coronavirus Aid, Relief and Economic Security Act or the ‘‘CARES Act.’’ Of course, every business will need to determine what applies to their specific situation and there may be additional sections or grants that may apply that are not listed here (at nearly 900-pages, the bill is a big one). Here is a brief recap on sections of the Act that may benefit many of our customers.
Section 1102: Qualifying small businesses may apply for low-interest loans under the government-backed Paycheck Protection Program. Many requirements have been waived and loans may be used for most ordinary business expenses, such as payroll, insurance, rents and utility payments.
Section 1106: Loan borrowers may be eligible for loan forgiveness for qualifying expenses, including payroll and mortgages, during the eight weeks following the loan origination date. Certain employee retention policies may apply in order to qualify.
Section 1110: Eligibility for Economic Injury Disaster Loans has been expanded with reduced requirements, including personal guarantees in some instances, for applications.
Section 1112: The SBA may pay principal, interest and any fees on existing qualifying loans for a period of six months.
Section 2301: A refundable payroll tax credit may be available for 50% of qualified wages paid to employees during the COVID-19 crisis. Credit amounts depend on a variety of factors, including number of employees, reduction of gross receipts and whether paid employees were unable to provide services for COVID-19-related reasons.
Section 2302: An employer’s share of applicable Social Security tax may be deferred and paid in part over the next two years.
Section 2303: Net operating losses from 2018, 2019 and 2020, which are typically limited by taxable income and may not be carried back to prior years, may now be carried back for five years and are no longer limited by taxable income.
Section 2304: The limitations on loss for sole proprietors and pass-through businesses are modified to permit accessing excess losses to increase cash flow.
Section 2306: The restriction on the amount of interest expense that businesses may deduct from adjusted taxable income is increased to 50% for many taxpayers.
Section 4003: Qualifying mid-sized businesses may be eligible for loans. Certain restrictions, including maintaining employment levels, refraining from off-shoring jobs for a period of time and remaining neutral in union organizing efforts apply.
The following links may help you find some of the resources mentioned in the CARES Act:
Coronavirus (COVID-19): Small Business Guidance & Loan Resources
Contains the following:
Work Share programs
Many states offer “work share” programs to help businesses during economic downturns. Businesses using these programs can retain their workers while also reducing payroll and hours. Check with your local employment office for details.