by Francisca Pretorius

COVID-19: Useful Resources

Last updated: June 4, 2020

General Information and Business Support

SBA Support other than Paycheck Protection Program

  • ExpressLoan allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct EIDL. SBA expanded program eligibility to include small businesses nationwide adversely impacted by COVID-19.
  • Community Advantage loan program allows mission-based lenders to assist small businesses in underserved markets with a maximum loan size of $250,000.
  • Microloan program involves making loans through nonprofit lending organizations to underserved markets. Authorized use of loan proceeds includes working capital, supplies, machinery & equipment, and fixtures (does not include real estate). The maximum loan amount is $50,000 with the average loan size of $14,000.
  • 504 loan program is designed to foster economic development and job creation and/or retention. The eligible use of proceeds is limited to the acquisition or eligible refinance of fixed assets.
  • Debt relief The SBA will automatically pay the principal, interest, and fees of current 7(a) loans for a period of six months. The SBA will also automatically pay the principal, interest, and fees of new 7(a) loans issued prior to September 27, 2020.

CARES Act support other than Paycheck Protection Program

Payments to Individuals

  • Amount:
    • Individuals: People earning up to $75,000 a year will be eligible to receive $1,200. Individuals earning up to $99,000 a year will receive a reduced amount (reduction of $5 for every $100 in income above $75,000).
    • Married couples: Couples are eligible for a $2,400 check if their adjusted gross income is less than $150,000 a year. Reduced checks on a sliding scale will go out to married couples who earn up to $198,000. Married couples also will receive an additional $500 for every child.
    • Head of Household: People who file tax as a “head of household” (usually single parents with children) are eligible to receive $1,200 if they earn up to $112,500 a year. Reduced checks on a sliding scale are available for heads of household earning up to $136,500 annually. Heads of household will also receive an additional $500 per child.
  • Calculation: Based on your most recent tax return. If you have not filed 2019, your 2018 tax return will be used. If you have not filed your 2018 return, you can use a 2019 Social Security statement showing your income. Here is a calculator.
  • Application process: None necessary. If the IRS has your bank account information, it will transfer the money via direct deposit.
  • Payment: Within 3 weeks by direct deposit or check. However, in the past (2008) it took up to 8 weeks.

Unemployment Benefits Expansion

  • Eligible Workers: Expanded to include partially unemployed and self-employed individuals (including individual contractors, gig workers, freelancers) that cannot work because of COVID-19 (for example, workplace being shut, or caring for a child).
  • Ineligible Workers: Those who can tele-work for pay and those who receive paid or sick leave benefits.
  • Amount of Benefit: Depends on each state. Eligible workers (including the self-employed) would get an extra $600 per week through the end of July on top of the state benefit. In addition, for those who need it, the Act provides an additional 13 weeks of benefits beyond what states typically allow.
  • Calculation of Benefit: Benefit amounts would be calculated based on previous income
  • Duration of Expanded Benefits:  Expanded coverage would be available to workers who were newly eligible for unemployment benefits for weeks starting on Jan. 27, 2020 and through Dec. 31, 2020.
  • How to apply: see our first newsletter for information.

Payroll Tax Relief for Businesses

  • Employers may delay paying payroll taxes due from March 27, 2020 to December 31, 2020. Half of the 2020 payroll taxes will be payable on Dec 31, 2021 and the other half on Dec 31, 2022.
  • Self-employed individuals may defer only 50% of payroll taxes due from March 27, 2020 to December 31, 2020. 25% of the 2020 payroll taxes will be payable in 2021, and the other 25% in 2022.
  • This deferral is not available to any business that receive a PPP loan that was forgiven.

Modifications for Net Operating Losses (NOL)

  • Businesses can carry back losses from 2018, 2019, and 2020 to the previous 5 years.
  • This allows for an immediate claim for refund for taxpayers who had taxable income during the carry-back time period.
  • For tax years 2019 and 2020, businesses can utilize NOLs generated in prior years to offset 100% of taxable income.

Employee Retention Refundable Payroll Tax Credit

  • Any employer, including non-profits, whose business has been fully or partially closed as a result of a COVID-19 related government order, or which has seen at least a 50% drop in quarterly gross receipts as compared to 2019, is eligible to claim a refundable payroll tax credit for up to 50% of qualified wages paid after March 12 and before January 1, 2021.
  • The wages that can be counted toward the credit depend on the size of the employer.
  • Creditable wages are limited to $10,000 per full-time employee. Wages include compensation paid to employees and health care costs paid for these workers.
  • Credit is refundable to the extent it exceeds the employer portion of social security taxes reduced by the paid sick leave and paid extended FMLA
  • Not available if business receives PPP loan.

Coronavirus Related Retirement Distribution

  • The Act waives the 10% penalty on coronavirus-related early distributions from 401(k)s and IRAs, which applies to distributions made at any time during 2020.
  • Americans that are subject to mandatory minimum distributions from their retirement accounts are able to keep their capital invested during 2020,  instead of being forced to cash out to draw on that capital without penalty.

Student Loans

  • Until September 30, 2020, there will be automatic payment suspensions for any student loan held by the federal government. Interest will not accrue during this time.

Other Topics

Force Majeure and Contractual Obligations

Force majeure (French for ‘superior force’) allows for excuse or delay in performance in the event of circumstances beyond the control of the parties. This may affect your business in the following ways: you may be able to delay or stop performing any services or providing products that you are contracted to provide due to COVID 19. On the other hand, service- and product providers may inform you that they can no longer render services or provide products to your business due to the pandemic. Below some information on the topic.

  1. Force Majeure and COVID 19
  2. Considerations about COVID 19 triggering Force Majeure clauses
  3. Force Majeure clauses under New York and Delaware Law

The application of ‘force majeure’ depends on how your contract is drafted. Please get in touch if you have any questions about your current contracts.

See also: Contractual Obligations during COVID-19 

If you have any questions or want to schedule a consultation to discuss how COVID 19 or any of the relief efforts may affect your business, please contact us.