Supporting Texas-12 Small Businesses

There are many resources provided by the Federal Government to provide relief to Small Businesses during this unprecedented crisis.  I want to provide you a list of those resources so that you can determine what is best for you and your small business.

SMALL BUSINESS PAYCHECK PROTECTION PROGRAM (PPP)
WHAT THIS PROGRAM DOES:

In the Paycheck Protection Program funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities.  Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. Loan payments will be deferred for six months. No collateral or personal guarantees are required.  For any portion of the loan that is not forgiven, the interest rate will be 1% and the loan is due in 2 years. The fixed interest rate of  1% was recently changed from 0.5%, in response to concerns that the previous rate did not provide some banks enough to cover the cost of enabling the loans.

WHO IS ELIGIBLE?

Small businesses with 500 or fewer employees—including nonprofits, veterans’ organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors—are eligible. Businesses with more than 500 employees are eligible in certain industries.

HOW TO APPLY:

You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.

Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap.

ECONOMIC INJURY DISASTER LOANS (EIDL) 
WHAT THIS PROGRAM DOES:

The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million, with an advance of up to $10,000. This loan can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.  Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.  The interest rate will not exceed 4% and long-term repayments, up to 30 years, are available.

WHO IS ELIGIBLE?

Small businesses and eligible nonprofit organizations, agricultural cooperatives, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards. 

HOW TO APPLY:

You can apply for these loans through the Small Business Administration website:  https://covid19relief.sba.gov/.

EMPLOYEE RETENTION TAX CREDIT
WHAT THIS PROGRAM DOES:

The Employee Retention Credit is 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.

WHO IS ELIGIBLE?

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 TO APPLY:

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.

Updates on the implementation of this credit, Frequently Asked Questions on Tax Credits for Required Paid Leave, and other information can be found on the Coronavirus page of IRS.gov, https://www.irs.gov/coronavirus.

SBA DEBT RELIEF

In addition, to these programs, the SBA Debt Relief program will provide a reprieve to small businesses as they overcome the challenges created by this health crisis by paying the principal and interest of new and current 7(a) business loans for a period of six months.  This includes Paycheck Protection Program loans.

ADDITIONAL RESOURCES FOR SMALL BUSINESSES

There are many small business resources who can provide additional guidance including any industry specific associations. I have listed some local resources below: