More Information On Existing COVID-19 Aid Available To U.S. Businesses
As Connecting the Dots readers are aware, there are several federal programs currently underway from which firms with fewer than 500 employees can draw financial support. On Monday, April 6 MSCI hosted a call for members with the U.S. Chamber of Commerce to discuss these programs. A replay of the call is available here.
By the end of last week, however, the USCC was warning that, while thousands of small businesses have applied for disaster loans from the U.S. Small Business Administration (SBA), the current allocations for the these programs will not be sufficient to meet the average loan request of $200,000. The USCC is working with allies in the business community, including MSCI, to secure additional funding for the programs outlined below.
- Economic Injury Disaster Loan (EIDL) Program. Due to the large demand for COVID-19 aid, the SBA issued updated guidance last week that indicated it will limit initial EIDL loan disbursements to $15,000 in addition to the advance of up the $10,000 grant. The USCC has more information about this program here. Information from the SBA is available here. For immediate assistance on a question or application, please email DisasterCustomerService@sba.gov.
- Paycheck Protection Program (PPP) Loans. The US. Department of the Treasury last week released a new Frequently Asked Questions (FAQ) document to further help small businesses apply for PPP loans, which businesses can access here. This document addresses or resolves a number of questions or concerns businesses had with the program. For example, it provides improved guidance on businesses that are eligible for the program. Congress clearly stated that any business is eligible for PPP loans under whichever of two thresholds for counting employees is greatest: either (1) a threshold of 500 or fewer employees; or (2) a threshold for businesses within certain industry categories with applicable SBA employee-based size standards. However, the U.S. Small Business Administration initially appeared to limit businesses that would qualify for PPP loans to those that meet two size thresholds: the 500 employee threshold and the revenue/gross receipts standard (for the industries where gross receipts is the controlling factor in size determination). The FAQ resolves this issue, clearly stating that “… a business is eligible for a PPP loan if the business has 500 or fewer employees whose principal place of residence is in the United States, or the business meets the SBA employee-based size standards for the industry in which it operates (if applicable) ….” The FAQ also addresses how employees are counted for eligibility in PPP. (Click here for additional information about how foreign employees should be counted.)
- Employee Retention Credit. The CARES Act, the third stimulus bill passed by the U.S. Congress, provides automatic payroll tax relief to companies. This Employee Retention Credit can provide up to $5,000 per employee in credits to employers of all sizes. No approval is necessary and the estimated refundable portion of the credit can be advanced, but firms that use the Paycheck Protection Program cannot also use this retention credit program. Click here to read the National Association of Wholesalers’ Legal Advisory explanation of this program. Click here to read the USCC’s review of this program.
- Operating Loss Carryback. The Internal Revenue Service (IRS) has issued guidance for the CARES Act’s net operating loss (NOL) carryback provision. This provision allows companies to use tax losses from 2018, 2019, and 2020 to offset income from the prior five years. A new tax deadline extension also builds on prior IRS guidance and now allows firms to delay certain estimated tax payments. Per the IRS, “any individual or corporation that has a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15 to make that payment, without penalty.” A press release the IRS action can be found here, and the guidance document can be found here.