What You Need To Know Before Applying For Coronavirus Loan Relief
Small business interruption loans from the Paycheck Protection Program of the CARES Act would be available to:
- Companies and some nonprofits with 500 or fewer employees during the period February 15 through June 30, 2020
The maximum loan amount of $10 million could be used for:
- Payroll and employee-related costs, debt, rent and utility payments
Use of these loans for payroll is limited to:
- Compensation of $100,000 / employee, independent contractor or sole proprietor maximum maturity of 10 years interest rate 4% no personal guarantee
These loans are to be administered by banks and credit unions:
- Borrowers should turn to their bank to apply these loans could qualify for loan forgiveness any debt forgiveness will not be subject to federal income tax
Below is a detailed analysis of the provisions related to the availability of loans to businesses, nonprofit and other organizations.
Paycheck Protection Program
These loans are to be administered by banks and credit unions: to apply go to your bank website.
Loans are limited to the lesser of:
- The sum of average monthly payroll costs for the one-year period ending on the date the loan was made multiplied by 2.5, and any disaster loan from the SBA taken out after January 31, 2020 that has been refinanced into a paycheck protection loan, or $10 million
Payroll costs, in turn, are the sum of the following:
- wages, commissions, salary or compensation to independent contractors tips vacation, parental, family, medical or sick leave allowance for dismissal or separation group health care benefits retirement benefits state or local tax assessed on the compensation of employees
Forgiveness of Paycheck Protection Loans
The sum of the following payments made by the borrower during the 8-week period beginning on the date of the loan is forgivable:
- Payroll costs
- Mortgage interest
- Utility payments
To seek forgiveness a borrower should submit to the lender an application including:
- Number of employees pay rates cancelled checks showing: mortgage, rent, or utility payments. Loan forgiveness will not create taxable income payments due on the remaining balance will not be due for six months
There is a provision, however, that reduces the amount that may be forgiven if the employer either:
- Reduces its employees during the 8-week covered period.
- Reduces the salary or wages by more than 25% during the covered period.
- If the employer rehires or increases the employee’s pay by June 30, 2020, this reduction is avoided.
Economic Injury Disaster Loans and Emergency Grants
The CARES Act also expands access to Economic Injury Disaster Loans (EIDLs) and include not only:
Apply here: https://www.sba.gov/page/disaster-loan-applications
- businesses with fewer than 500 employees, but also sole proprietors and ESOPs.
- Loans made before December 31, 2020 no personal guarantee will be required on loans below $200,000.
- EIDL program is expanded to extend to all entities with no more than 500 employees:
- allows a disaster loan to be taken out between January 31, 2020 and the date on which a paycheck protection loan is available for reasons other than paying payroll costs, for example working capital
- creates a new emergency grant to allow a business that has applied for a disaster loan to get an immediate advance of up to $10,000
- the advance can be used for payroll and is not required to be repaid
- for those with existing 7(a) loans the SBA will pay six months of principal, interest and fees on qualifying loans
Employee Retention Credit
The CARES Act provides a quarterly credit against certain employer payroll taxes available to employers that:
- Have experienced a full or partial suspension by government order in their operations and decline in gross receipts due to COVID-19, OR employer’s gross receipts are below 50% of the comparable quarter in 2019 amount of the credit is 50% of qualified wages, not to exceed $10,000 per quarter per employee.
- Once employer’s revenues go above 80% of a comparable quarter in 2019, employer no longer qualifies after the end of that quarter.
- wages are payments to employees while they are unable to work due to the operational or financial difficulties.
- This credit is unavailable to employers that have received a small business interruption loan or paycheck protection program may be limited if the employer took the credit for paid family and medical leave under the TCJA. This payroll deferral only applies to the employer, not the employee, portion of FICA.
Payroll Tax Deferral
CARES Act defers payment of payroll tax liabilities incurred for the remainder of the year:
- For the employer portion of the tax: 50% of 2020 payroll tax liability will be due by December 31, 2020
- The remaining 50% due by December 31, 2022
- Payments are not subject to underpayment penalties
- This payroll deferral only applies to the employer, not the employee, portion of FICA
See the video to know the complete information about how to apply this relief loans
Remember that the requirements are essential for the application of these loans, contact us to help you keep your documentation up to date and give you any consultation so you can enjoy this benefit.
Thanks to FAS & CPA Consultants and Fulton Abraham Sanchez, CPA, I was able to resolve a debt of $479,677.71 that I had with the IRS.
My experience with FAS CPA & Consultants has been incredible, their professionalism is impeccable. I highly recommend them.
I highly recommend FAS CPA & Consultants, they are responsible, efficient and very dedicated.
Strategies for Business Growth, Tax Planning and Offshore Banking
- Accounting & Financial Statements
- Tax Planning for U.S. Real Estate Investors
- Tax Planning For U.S. Hedge and Private Equity Funds
- Tax Planning for U.S. Expats
- Tax Planning For Cryptocurrency U.S. Investors
- Tax Planning For U.S. Cannabis Investors
- Tax Planning For U.S. Fintech Companies
- IRS Debt Resolution
- Offshore Companies
- Offshore Companies In USA
- Offshore Bank Account
- Offshore Banking Licensing
- Offshore Services For Fintech Companies
- Financial Service Provider (FSP)
Request a Confidential Consultation
FAS CPA & Consultants
9000 SW 137 AV Suite 224 Miami, FL 33186 T: 786-462-7899 E: email@example.com