There is a lot of information out there related to the CARES Act also known as the COVID -19 stimulus package. We boiled down the act to the aspects that will be most relevant to our valued clients. This blog is meant to give our clients a general guideline of programs that will be available to their businesses and their employees.
Paycheck Protection Program
The bill authorizes $350 billion in loans up to 10 million for small businesses that employ up to 500 employees.
The loans can be used to pay wages, paid sick or medical leave, health insurance premiums, business mortgage payments and rent, utilities.
The amount of the funds spent during the first 8 weeks on the above listed expenses might be converted to a grant if the business retains its employees.
Emergency Economic Injury Disaster Loans (EIDL) and Grants
The CARES Act expends the eligibility for access to EIDL to include small businesses, private non profits, as well as sole proprietors or independent contractors.
The SBA loans can be approved based on the applicant’s credit score.
There is an additional 10 billion for grants to businesses that do not qualify for the EIDL loans.
Unemployment Insurance
The Pandemic Unemployment Assistance program is available through December 31st, 2020 to self employed, independent contractors and those with limited work history who are unable to work as a result of this public health emergency.
Increased unemployment benefits by $600 per week up to four months.
Increased funding for state sponsored Shared-Work programs.
Employee Retention Credit
The Act provides a refundable payroll tax credit for 50 percent of wages paid during the coronavirus crisis.
Eligible employers are companies that were fully or partially affected by State shut down orders and/or experienced a 50% decline in gross receipts as compared to the same quarter last year.
For employers with less than 100 full time employees, all wages qualify for the credit whether the employer is open for business or subject to a shut down order.
The credit is provided for the first $10,000 of compensation including health benefits paid to an employee.
The credit is provided for wages paid from March 13 to December 31, 2020.
Paid Sick Leave Credit
For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee's regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.
Child Care Leave Credit
In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee's regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Delay Employer Payroll Taxes
The Act allows employers to defer payment of the employer share of payroll taxes.
The deferred employment taxes are to be paid over the following two years, first half due December 31 2021 and second half by December 31,2022.
Employer Payments of Student Loans
Enables employers to provide a student loan repayment benefit to employees on a tax free basis, up to $5,250 annually.
The provision applies to any student loan payments made by an employer on behalf of an employee after the date of the enactment and before January 1st, 2021.
Please stay tuned for future updates and please don’t hesitate to contact us with any questions specific to your business. We are here to help. Stay safe and be well!
We compiled this blog on information from the following sources:
Internal Revenue Service – www.irs.gov
U.S. Chamber of Commerce – www.uschamber.com
AIA – www.aia.org
AICPA – www.aicpa.org
SBA – www.sba.gov