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Covid Assistance Information

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We understand this is a scary time of uncertainty, and many of small businesses are being hurt by the loss of income due to the stay at home ban. We have compiled the latest resources available to business owners. We will try and update with updates when they are made available.

There are 4 programs we have found that are available that can assist your business during this difficult time. At the bottom of this page, we also included some other important information, such as extended filing deadlines, etc.

1. Emergency Economic Injury Disaster Loans and Grants

*We recommend applying for this STAT, as a $10,000 emergency funding grant may be available within 3 days of applying, and is yours to keep even if you are denied the loan.

Eligible Entities:

  • A business (including (i) a cooperative, (ii) an Employee Stock Ownership Plan (ESOP) or (iii) a tribal small businesses) with not more than 500 employees.
  • Any individual operating as a sole proprietor (with or without employees) or an independent contractor.
  • Private nonprofit organizations (the term is not defined for purposes of EIDL Loans, but elsewhere in the Act “nonprofit organization” is defined as 501(c)(3) tax-exempt organizations. It is unclear whether other types of nonprofit organizations are eligible, such as social welfare organizations, trade associations, etc.); and small agricultural cooperatives.

Requirements that are waived:

  • No personal guarantees required on advances and loans below $200,000.
  • Applicants do not have to have been in business for the 1-year period before the disaster (but need to be in operation on January 31, 2020).
  • Applicants do not have to show that they cannot obtain credit elsewhere.

Determination of ability to repay. The loan may be approved based solely on the credit score of the applicant (no tax returns required), or SBA may use alternative methods.

Emergency Grants

  • Any Eligible Entity that applies for an EIDL Loan can apply for a grant in an amount as requested by the applicant, but not to exceed $10,000.
  • Grant to be paid within 3 days after the SBA receives the EIDL application.
  • Applicant has to provide a self-certification form under the penalty of perjury that it is an Eligible Entity.
  • Can be used for any allowable purpose, including payroll, paid sick leaves, cost of materials, rent or mortgage, or other obligations that cannot be met.
  • The grant does not have to be repaid even if the EIDL Loan is denied.

2. Paycheck Protection Program (see SBA website)

*This loan will be forgiven if used for payroll, rent, mortgage, so get your payroll records in order so when applications start being accepted, you'll be ready. 

The CARES Act (Act) establishes the Paycheck Protection Program, an expansion of the Small Business Administration (SBA) 7(a) loan program, and authorizes $349 billion for the program. Importantly, the Act also increases the SBA guarantee percentage from 85% to 100%, and establishes a loan forgiveness program for Paycheck Protection Program loans. The loan period for this program ends June 30, 2020.

Small Business Eligibility. The Act establishes the program’s eligibility to include (i) companies with no more than 500 employees, and (ii) companies with no more than their applicable size standard under the SBA’s existing requirements based on their North American Industrial Classification System (NAICS) classifications, if higher. Use your Industry Code at the SBA website to see if you are considered a small business by the SBA: www.sba.gov/size-standards. Both full and part time employees are counted. For companies that fall into the classification for accommodations and food service (e.g., hotels, restaurants, taverns), the 500-employee maximum helpfully applies to each location. The Act also suspends the SBA affiliation rules for companies in the accommodation and food service classification (code 72). The Act also makes nonprofit organizations, veterans organizations and tribal business concerns eligible for Paycheck Protection Program loans if they meet the preceding requirements. Importantly, for purposes of the Paycheck Protection Program, eligible “nonprofit organizations” are limited to organizations exempt from federal income tax pursuant to section 501(c)(3) of the Internal Revenue Code, and “veterans organization” refers to a section 501(c)(19) organization.

Alternate Sources of Credit Rules. The Act suspends the SBA’s requirement that the company not have alternate sources of credit.

Maximum Loan Amount. The maximum loan amount is the lesser of (i) $10,000,000; or (ii) the average monthly payroll amount for the trailing 12 months (or, if not in business during the period from February 15, 2019 through June 20, 2019, then for the period from January 1, 2020 through February 29, 2020), times 2.5, plus the amount of any pre-existing emergency loan to be refinanced.

Use of Loan Proceeds. Loan proceeds may only be used for payroll, employer group health, interest on mortgage obligations, rent, utilities, and interest on other debt incurred before February 15, 2020.

Loan Terms. The interest rate is set at 4 percent. Collateral and guarantee requirements are waived. Repayment is deferred for at least 6 months, and up to 1 year, based on guidance to be issued by the SBA within 30 days after the date of enactment of the CARES Act. Loans made are nonrecourse, except to the extent that the proceeds are used for unpermitted purposes.

Underwriting. Loan underwriting is delegated to participating banks and financial institutions, without going through normal SBA channels. Underwriting is based on COVID-19 impact, not ability to repay.

Loan Forgiveness. Borrowers are eligible to have loan amounts forgiven to the extent that they are used to pay for payroll expenses, interest on covered mortgage obligations, covered rent obligations, and utilities, during the period ending June 30, 2020. For federal income tax purposes, any amount that would be included in such borrower’s gross income due to such loan forgiveness is excluded from gross income.

Applications will be available starting apx. April 3rd. Visit SBA website for details.

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*We are NOT affliated with Lendio, but found this video explanation of these programs most helpful.

 

3. Families First Coronavirus Response Act: Employee Paid Leave Rights

*This is a great program for some instant relief to your workers, as we are in a stay at home ban in Washington State. This leave is to be IN ADDITION to any sick leave your employee has accumulated in Washington under its sick leave laws.

The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The Department of Labor’s (Department) Wage and Hour Division (WHD) administers and enforces the new law’s paid leave requirements. These provisions will apply from the effective date through December 31, 2020.

Generally, the Act provides that employees of covered employers are eligible for:

  • Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
  • Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor; and
  • Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

Covered Employers: The paid sick leave and expanded family and medical leave provisions of the FFCRA apply to certain public employers, and private employers with fewer than 500 employees.[1] Most employees of the federal government are covered by Title II of the Family and Medical Leave Act, which was not amended by this Act, and are therefore not covered by the expanded family and medical leave provisions of the FFCRA. However, federal employees covered by Title II of the Family and Medical Leave Act are covered by the paid sick leave provision. 

Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.

Eligible Employees: All employees of covered employers are eligible for two weeks of paid sick time for specified reasons related to COVID-19. Employees employed for at least 30 days are eligible for up to an additional 10 weeks of paid family leave to care for a child under certain circumstances related to COVID-19.[2]

Notice: Where leave is foreseeable, an employee should provide notice of leave to the employer as is practicable. After the first workday of paid sick time, an employer may require employees to follow reasonable notice procedures in order to continue receiving paid sick time.

Qualifying Reasons for Leave:

Under the FFCRA, an employee qualifies for paid sick time if the employee is unable to work (or unable to telework) due to a need for leave because the employee:

  1. is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  2. has been advised by a health care provider to self-quarantine related to COVID-19;
  3. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
  4. is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
  5. is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or
  6. is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

Under the FFCRA, an employee qualifies for expanded family leave if the employee is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.

Duration of Leave:

For reasons (1)-(4) and (6): A full-time employee is eligible for 80 hours of leave, and a part-time employee is eligible for the number of hours of leave that the employee works on average over a two-week period.

For reason (5): A full-time employee is eligible for up to 12 weeks of leave (two weeks of paid sick leave followed by up to 10 weeks of paid expanded family & medical leave) at 40 hours a week, and a part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.

Calculation of Pay:[3]

For leave reasons (1), (2), or (3): employees taking leave are entitled to pay at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period).

For leave reasons (4) or (6): employees taking leave are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period).

For leave reason (5): employees taking leave are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period).  [4]

4. Employee Retention Credit

*This is a good option for businesses NOT seeking a small business loan, and are down 50% in their profits from last year this quarter, or are shut down due to quarantine. This credit is good for up to 50% of wages paid.

The Treasury Department and the Internal Revenue Service on March 31st, 2020 launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Does my business qualify to receive the Employee Retention Credit?

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must fall into one of two categories:

  1. The employer's business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
  2. The employer's gross receipts are below 50% of the comparable quarter in 2019. Once the employer's gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

These measures are calculated each calendar quarter.

How is the credit calculated?

The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.

How do I know which wages qualify?

Qualifying wages are based on the average number of a business's employees in 2019.

Employers with less than 100 employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit.

Employers with more than 100 employees: If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

I am an eligible employer. How do I receive my credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees' wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer's employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.

 

Other Important Covid Crisis Updates Affecting Small Businesses

The IRS has extended the tax filing deadline to July 15th, 2020. You can find the latest IRS information at their NEWS ROOM page.

As of now, the IRS has NOT extended payroll quarterlies, due April 30th, 2020, but we will watch for updates.

Washington State L&I is granting a 90 day penalty & interest free payment program if you are unable to pay your L&I premiums. If we prepare your quarterly reports, let our office know if you would like us to request a payment plan for you.