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Small Business Resources for Dealing With COVID-19

Rachel Blakely-Gray and Maria Tanski-Phillips | Apr 02, 2020

Updated 6/5/2020 to reflect the passage of the Paycheck Protection Program Flexibility Act.

From state-mandated stay-at-home orders to stimulus packages, there’s a lot changing because of the coronavirus.

We know you want answers fast. That’s why we’ve put together the following list of coronavirus facts and small business resources.

Federal COVID-19 initiatives

Take a look at the following coronavirus relief measures from the federal government. Use the links to learn more.

Families First Coronavirus Response Act

The Families First Coronavirus Response Act (FFCRA) is the first legislation passed in response to coronavirus. It was signed into law on March 18.

Here’s an overview of what the FFCRA provides:

  1. Paid sick leave
  2. Paid family leave
  3. FMLA expansion
  4. Employer tax credit
  5. Expanded unemployment benefits
  6. Nutrition assistance

1. Paid sick leave

  • Employers with fewer than 500 employees must provide all full-time employees with 10 days (80 hours) of paid sick leave if they meet federal eligibility requirements. Employers also must provide all part-time employees with sick leave equal to the average number of hours worked over a typical two-week period if they meet federal eligibility requirements.
  • Employees are entitled to their regular wage (maximum daily rate is $511) if they are:
    • Subject to a federal, state, or local quarantine/isolation order;
    • Advised by a health care provider to self-quarantine (due to concerns related to COVID-19);
    • Experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  • Employees are entitled to two-thirds of their regular rate (maximum daily rate is $200) if they are:
    • Caring for an individual who is subject to a quarantine or isolation order or advice from a healthcare provider;
    • Experiencing a substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor
  • Employers CANNOT require employees to use other leave (e.g., accrued time off) first.
  • Notify employees of their rights by hanging a Department of Labor poster in your workplace, emailing it to employees, or uploading to your website.

2. Paid family leave

  • Employers with fewer than 500 employees must provide employees who have been employed for at least 30 calendar days with 10 weeks of paid family leave, plus two initial weeks of either unpaid time or paid sick leave.
  • Employees are entitled to two-thirds of their regular rate (maximum daily rate is $200) if they are:
    • Caring for a child under 18 whose school, place of care, or childcare provider is closed or unavailable due to coronavirus precautions.
  • Employees can use FFCRA-mandated paid sick leave to cover the initial 10 days of paid family leave.
  • Notify employees of their rights by hanging a Department of Labor poster in your workplace, emailing it to employees, or uploading to your website.

3. FMLA expansion

  • In addition to requiring paid family leave, the FFCRA expands other aspects of the FMLA (Family and Medical Leave Act).
  • Employees receive up to 12 weeks of job-protected leave when they take time off to care for a child.
  • The same reinstatement provisions apply as under traditional FMLA.
    • Exemption: Restoration to position does not apply to employers with fewer than 25 employees if all three of the following conditions are met:
      • The job no longer exists because of changes affecting employment caused by an economic downturn or other operating conditions that affect employment caused by a public health emergency;
      • The employer makes reasonable efforts to return the employee to an equivalent position; and,
      • The employer makes efforts to contact a displaced employee if anything comes up within a year of when they would have returned to work.

4. Employer tax credit

  • For providing paid sick and family leave, employers are entitled to employer payroll tax credits (equal to 100% of the leave wages) and exemption from employer Social Security tax on those wages, per the IRS.
  • The employer tax credit is refundable.
  • Claim the credit by reporting your total qualified leave wages and related credits for each quarter on Form 941, Employer’s Quarterly Federal Tax Return.
  • Use Form 7200, Advance Payment of Employer Credits Due to COVID-19, to request an accelerated credit from the IRS, if needed.
  • Keep records to back up your employer tax credit claims.

5. Expanded unemployment

  • The FFCRA also expands unemployment benefits by providing greater assistance to states so they can handle the increased claims as a result of coronavirus.
  • $1 billion for additional caseloads and administrative costs.
  • Raises the amount of assistance to states with high unemployment.

6. Nutrition assistance

  • The FFCRA includes funding to ensure nutrition assistance programs have enough resources to help individuals impacted by COVID-19.
  • $500 million in funding for The Special Supplemental Nutrition Program for Women Infants and Children (WIC). WIC provides access to nutritious foods to low-income pregnant women or mothers with young children who lose their jobs or are laid off due to the COVID-19 emergency.
  • $400 million for The Emergency Food Assistance Program (TEFAP) to assist local food banks to meet increased demand for low-income Americans during the emergency.
  • $100 million for USDA to provide nutrition assistance grants to U.S. territories.
  • $250 million for the Senior Nutrition program in the Administration for Community Living (ACL) to provide approximately 25 million additional home-delivered and pre-packaged meals to low-income seniors.
    • Low-income seniors include seniors who are home-bound, have disabilities, or have multiple chronic illnesses.
    • Also covers caregivers for seniors who are home-bound.
  • The act also allows individuals whose child’s school has been closed due to coronavirus (for at least five consecutive days) to receive nutrition assistance.

CARES Act

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, is the second legislation passed in response to the COVID-19 pandemic. It was signed into law on March 27.

Here’s an overview of what the CARES Act provides (and the PPP Flexibility Act enhances):

  1. Employee Retention Credit
  2. Paycheck Protection Program
  3. Employer payroll tax deferral
  4. Economic Impact Payments
  5. Health care
  6. Pandemic Unemployment Assistance
  7. Student loan help

1. Employee Retention Credit

  • The Employee Retention Credit is a fully refundable tax credit for employers.
    • Includes allocable qualified health plan expenses.
    • Equal to 50% of qualified wages paid to employees for Eligible Employers.
    • Applies to qualified wages paid to employees after March 12, 2020 and before January 1, 2021.
    • Eligible Employers may be able to claim the credit for qualified wages paid as early as March 13, 2020.
  • The refundable credit is applied against the employer portion of payroll taxes.
  • The maximum amount of qualified wages for all calendar quarters is $10,000.
    • The maximum credit for an Eligible Employer for qualified wages paid to any employee is $5,000 ($10,000 in qualified wages X 50%).
  • Eligible Employers are private employers, including non-profits, who carry out a business or trade in the 2020 calendar year that either:
    • 1. Fully or partially suspend operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; OR
    • 2. Experience a significant decline in gross receipts during the calendar quarter.
  • The employees who count toward eligibility depend on the number of employees you have.
  • The Employee Retention Credit is allowed against Social Security taxes as well as the portion of taxes imposed on railroad employers of the Railroad Retirement Tax Act (RRTA.
  • Eligible Employers will report their total qualified wages and the related credits for each calendar quarter on their federal employment tax returns (e.g., Form 941).
  • The CARES Act does not require employers to pay qualified wages.
    Eligible Employers may opt to not claim the credit for the Employee Retention Credit.

2. Paycheck Protection Program

  • The Paycheck Protection Program (PPP) provides small businesses with enough money to pay up to 24 weeks of payroll costs, including benefits.
  • Small businesses with 500 or fewer employees qualify for Paycheck Protection Program loans.
  • PPP loans are 100% forgiven if employers use them to cover eligible expenses.
    • Businesses must use at least 60% of the forgiven amount for payroll.
    • Businesses can also use the loans to cover interest on mortgages, rent, and utilities.
  • You must keep employees on payroll to qualify for full loan forgiveness.
  • You cannot receive the Employee Retention Credit if you receive a loan under the Paycheck Protection Program.
    • However, you can defer paying the employer Social Security tax portion.
  • Applications begin:
    • April 3, 2020 for small businesses and sole proprietorships
    • April 10, 2020 for independent contractors and self-employed individuals
  • There is a cap on the loans. The Treasury advises applying as soon as possible to receive a loan. The deadline to apply for a PPP loan is August 8, 2020.
  • You can apply for a loan through the following:
    • Existing SBA 7(a) lender
    • Federally insured depository institution
    • Federally insured credit union
    • Participating Farm Credit System institutions
    • Other regulated lenders who are approved and enrolled
  • Fill out the Paycheck Protection Program Application Form to apply.

3. Employer payroll tax deferral

  • Employers can defer paying the employer portion of their Social Security tax liability under the CARES Act and PPP Flexibility Act.
  • Employers can defer payments that are due between March 27, 2020 and December 31, 2020.
  • Deferred Social Security tax payments are due December 31, 2021 (50% of the deferred amount) and December 31, 2022 (remaining amount).
  • This SS tax deferral is not a payroll tax credit. It is a CARES Act benefit offered in addition to FFCRA and Employee Retention tax credits.

4. Economic Impact Payments

  • The CARES Act will provide most U.S. adults, including businesses, with government-issued stimulus checks based on adjusted gross income (AGI) from 2019 or 2018 (depending on if you’ve filed 2019 yet).
    • Each qualified individual can receive up to $1,200.
    • Individuals get an additional $500 for each child under 17.
  • A single U.S. resident must have an adjusted gross income under $75,000 to receive the full $1,200.
    • Single individuals with AGIs above $99,000 are not eligible to receive a check.
  • Married couples filing jointly with an adjusted gross income below $150,000 can receive a $2,400 (in total) check.
    • Couples with a total AGI above $198,000 are not eligible.
  • If you file as head of household, your adjusted gross income must be less than $112,500 to receive the full stimulus check amount.
    • If you file as head of household and have an AGI above $146,500, you are not eligible for the stimulus check.

5. Health care

  • The CARES Act also provides health care relief for workers and employers who provide coverage.
    • Insurers are required to include COVID-19 testing and diagnostics and preventive services without any cost-sharing.
    • More funding and support for telehealth services related to COVID-19, without cost-sharing.
    • Medicare drugs are moving to three-month supplies.

6. Pandemic Unemployment Assistance

  • The Pandemic Unemployment Assistance (PUA) expands current unemployment benefits to include workers who used to be ineligible.
  • Through PUA, many self-employed individuals, including LLC or S Corp owners, independent contractors, freelancers, gig workers, and farmers are eligible for unemployment benefits.
  • Individuals must be out of work to qualify for unemployment. Employees who are able to work from home and receive pay are ineligible.
  • Although this is a federal initiative, states have to sign up and implement a system before unemployed workers can apply.

7. Student loan help

Other initiatives

Other forms of coronavirus relief include:

  1. Economic Injury Disaster Loans
  2. Tax deferment

1. Economic Injury Disaster Loans

  • When there is a declared disaster, the Small Business Administration offers Economic Injury Disaster Loans to impacted businesses.
  • Small businesses can apply for these loans to help cover payroll, fixed debts, accounts payable, and other bills if they’re impacted by the coronavirus.
  • Economic Injury Disaster Loans have an interest rate of 3.75% for qualifying small businesses and 2.75% for nonprofits.
  • You can apply for Economic Injury Disaster Loans on the SBA’s website.

2. Tax deferment

  • The president issued an emergency declaration that instructed the Secretary of Treasury to provide relief to taxpayers who have been impacted by the COVID-19 emergency.
  • The IRS extended the April 15, 2020 tax deadline to July 15, 2020, allowing individuals and businesses to defer federal income tax filings and payments without penalties and interest.
  • You can view other coronavirus tax relief initiatives on the IRS’s website.

State COVID-19 initiatives

  • Many states have issued stay-at-home orders, which require individuals to only leave for essentials.
  • Non-essential businesses have been forced to keep their doors closed in a number of states. Each state may define which businesses are essential.
  • Most states have mirrored federal tax deferments by also extending state tax deadlines.
  • A number of states have expanded unemployment benefits to aid both workers and business owners.
  • Some of the COVID-19 state unemployment benefits include:
    • Waiving employer SUTA tax account charges
    • Waiving the waiting period to receive benefits
    • Removing work search requirements
    • Extending unemployment benefits eligibility to the self-employed
  • You can learn more about state-by-state coronavirus guidelines and get resources for each state by reading our article.

Coronavirus facts

What is Patriot doing?

  • Implementing software changes to allow employers to record tax credits, delay tax collections, and enter coronavirus-related paid sick and family leave.
  • Keeping customers up-to-date with newly passed legislation and software changes by adding information to the Patriot COVID-19 Resources hub.
  • Patriot has joined an AICPA-led small business funding coalition that supports small businesses that are impacted by the coronavirus outbreak.

This is not intended as legal advice; for more information, please click here.

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