Summary of COVID-19 relief options for small business

We know you’re concerned for your business and confused by all the new legislation and relief programs being established to help small businesses stay afloat during this unprecedented COVID-19 pandemic. We’ve fielded numerous inquiries from our clients over the past few days, and to help answer those questions we are providing this summary of the resources as we understand them. Keep in mind, the landscape is fluid and ever changing, and we will continue to monitor the information so we can assist you in navigating the available options that apply to your business. Some programs offer immediate assistance, while others involve credits available on your 2020 tax filings.  

Expect delays for unemployment benefits and SBA loans. Given the historical volume of applications, these entities are being overwhelmed on a daily basis. Some people have resorted to applying in the middle of the night to get applications through. Be prepared to wait 4 weeks or more before receiving actual checks. And unfortunately, the line is likely to only get longer.

Local Business Support

• Prosper Portland: On Thursday, Prosper Portland announced a $1.38M small business relief fund. Sole proprietors are eligible for $5,000 in grants, while business with up to 50 employees are eligible for $10,000 in grants. The application period closes on Wednesday, April 1, so you must hurry! The Prosper Portland website also shares that a small business relief fund loan of up to $50,000 is coming soon.
• Beaverton Emergency Business Assistance Program: Beaverton has an emergency assistance program for businesses with 50 or less employees, who are directly impacted by the Governor’s executive orders. The program reimburses up to $2,500 per month.
• Hillsboro Crisis Funding: Hillsboro will provide up to $500,000 in grant funding to small businesses of up to $5,000 each. Priority will be given to businesses with under 10 employees.
• Tualatin Economic Stabilization Fund: Tualatin is allocating $250,000 in grants to qualifying businesses – with 55 employees or less and a physical Tualatin storefront – who have been impacted by COVID-19.  
• Local business resource pages:   
  • Portland Business Journal Small Business Resource Guide
  • Westside Economic Alliance COVID-19 Resources for Businesses and Employees

National Coronavirus Aid, Relief, and Economic Security (CARES) Act

• Forgivable loans through your bank: The CARES Act has allocated $350 billion for administrative loans of up to $10 million per business. Loan money used for the specific purpose of keeping workers on the books through the end of June, or paying rent or mortgage, will be 100% forgivable – converting from loan to grant. These SBA loans are being facilitated banks, most of which are in the process of creating loan landing pages with applications now, but all are waiting on the SBA for final guidance for this program. We suggest checking with your bank about its program and getting on a list to be notified when applications are available. If you do not have a banker to work with, we can provide referrals.
• Disaster assistance loans through the Small Business Association: Due to the COVID-19, disaster assistance loans are also available up to $2 million per small business. These are long-term loans for businesses impacted by COVID-19. The interest rate would be 3.75% for small businesses and 2.75% for nonprofits. These loans are directly through the SBA, and we encourage you to apply now to get in the rapidly growing queue. The CARES Act is also adding $10 billion for grants of up to $10,000 to provide emergency funds for businesses with 500 or less employees. the act 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 to maintain payroll, and is not required to be repaid, even if the borrower’s request for a 7(b) loan is denied.
• Relief from existing SBA loans: There is $17 billion to cover six months of payments for existing SBA loans.
• Unemployment increase of $600/week: The act adds $600 a week in eligibility on top of what states already offer. Additionally, it will include eligibility for self-employed and 1099 workers (or “gig workers”) who normally don’t qualify. Learn more. Details on the new criteria are still to come. Here is the latest FAQ from the state of Oregon regarding unemployment benefits for employees.  
• 50% Employee Retention Credit: Businesses that have lost more than 50% of revenues due to COVID-19, who continue to pay employees, will be eligible for a 50% credit of wages until gross receipts exceed 80% of the period before COVID-19.
• Delaying employer’s share of social security tax (6.2%): The employer’s share of social security tax through Dec. 31, 2020 will be deferred, with 50% due by Dec. 31, 2021 and the remaining 50% due by Dec. 32, 2022.
• Individual Stimulus Payments: $1,200 for each individual, $500 for each child. The phaseout begins at $75,000 individual / $150,000 couple based on the 2019 tax return, if filed (or based on the 2018 tax return, if not yet filed). 
• Charity Contributions: The new law temporarily lifts the limits on charitable giving for 2020. While cash contributions to public charities are generally limited to 60% of a taxpayer’s adjusted gross income (AGI), the CARES Act allows such contributions to be deducted up to 100% of AGI for 2020, with any excess contributions available to be carried over to the next five years. For corporate donors, the limit would increase from 10% of adjusted taxable income to 25%.

Read an in-depth account of the CARES Act, including real-world examples. 

National Families First Coronavirus Response Act
The United States has enacted the Families First Coronavirus Response Act, which requires employers with fewer than 500 employees to provide paid leave to employees who are impacted by COVID-19 and offer tax credits to employers that do so. The law takes effect on April 1 and expires on Dec. 31, 2020. Notification must be given to employees.
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The law contains three sections of particular interest for employers:

• Emergency Paid Sick Leave Act - Full-time employees must be provided with 80 hours of paid sick leave. Part-time employees are entitled to paid sick leave amounting to the average number of hours they work over a two-week period.
• Emergency Family and Medical Leave Act Expansion – Adds public health emergency leave (PHEL) in which eligible employees may use up to 12 weeks of job-protected leave to care for their child under 18 years of age if their school or place of care has been closed, or their childcare provider is unavailable, due to a public health emergency.
• Tax credits for emergency leave - Employers with fewer than 500 employees are allowed a credit against employer Social Security tax liability equal to 100 percent of the qualified sick leave wages paid by the employer, subject to specific caps. The tax credit effectively reduces the amount of federal employment taxes that must be deposited with the IRS, intended to provide the funds needed to pay sick and family leave benefits under the law. Because the credit is fully refundable, employers will receive reimbursement of the amount paid, subject to the caps, even if their tax liability is less than the amount paid out in the required leave. Emergency paid sick leave and PHEL wages paid are also exempt from Social Security taxes otherwise imposed on the employer.

There is an exemption for businesses under 50 employees if providing the paid leave would jeopardize viability of the business. Specific guidance for employees under 50 employees has not yet been released. 
 
We hope this summary has helped inform your understanding of the options and resources available at this time. This relief legislation is one of the largest bills in US history and since it just passed, everyone is doing their best to decipher and implement its various components. Our team is working hard to interpret and explain the information to you and assist you with your business-specific questions, as well as complete 2019 tax filings for both our business and individual clients. We appreciate your patience and understanding as we all navigate a year we will certainly never forget.

​Please take care of yourselves, your families, your employees, and your customers during this difficult time. We are all in this together.