COVID-19 Update – The CARES Act, PPP and more
This week’s COVID-19 updates
Many of us are adjusting to a new normal of staying home as much as possible, and finding ways to work remotely, if that’s an option. Federal and state governments are putting together financial resources to support small business, and many other organizations are doing what they can to help business owners keep the lights on and maintain sanity during these strange days. Here are some of the most helpful resources we’ve found lately.
CARES ACT UPDATES
Economic Impact Payments (aka Stimulus Checks)
On Saturday, April 11, the US Treasury announced via Twitter that the first stimulus payments had been deposited in bank accounts. The first wave of payments will be going out to people who have already filed a 2018 or 2019 tax return, and for whom the IRS has direct deposit information. According to a timetable from the House Committee on Ways and Means, the next wave of payments should happen in about ten days. These will go out to Social Security beneficiaries who did not file a 2018 or 2019 tax return, and who receive their benefits via direct deposit.
A third wave of payments will begin in May. These will be paper checks sent to people for whom the IRS does not have direct deposit information. These will be sent in “adjusted gross income” order, starting with the lowest income. It may take as long as 20 weeks to get all the checks issued.
If you were not required to file a tax return because your income was below the filing threshold, the IRS has a portal where you can enter your information. Kay Bell explains how it works in this post.
If you need to update your banking information or your mailing address, or if you want to track your stimulus check, the IRS will have a portal up in the coming days that will allow you to do so.
Paycheck Protection Program
As many as 70 percent of small businesses have applied for loans through this program since it began accepting applications on April 3. However, the rollout of this new program – while speedy compared to the usual glacial pace of legislation – hasn’t been altogether smooth. While some 550,000 loans, worth $141 billion have been approved, few have seen cash in their bank accounts. Some of the rough start can be attributed to the volume of need, as the SBA works to process more loans in a few days than the organization typically approves in a year.
This article in Forbes answers 10 of the most commonly asked questions about this program. The AICPA, which has been working closely with Congress, Treasury and the SBA, compiled this list of recommendations for documents to be used in PPP applications.
The Treasury department issued guidance – which it continues to update – for lenders and borrowers in the form of FAQs. Of special interest to small business owners, the answer to question 14 confirms that payments to independent contractors are excluded from payroll costs. The answer to question 15 clarifies that payroll costs should be gross, not net.
While some in the press have lauded this program as “free money” for all small businesses, there is a potential for fraud – and the possibility for future legal problems if business owners aren’t careful, as this article in Forbes outlines. Federal prosecutors learned how to find and prosecute fraud among recipients of funds during the 2008 financial crisis, and will be on the lookout for telltale signs of wrongdoing.
Employee Retention Credit
The IRS has created a form for claiming this credit and has a list of FAQs to clarify how this works. Briefly, this is a refundable tax credit against certain employment taxes that is equal to 50 percent of wages paid between March 12, 2020 and December 31, 2020.
In this article on Forbes, Tony Nitti explains how small businesses can get the most benefit out of this credit by doing a bit of upfront planning.
HELP FOR SMALL BUSINESSES
Small businesses generate 44 percent of economic activity in this country and make up 99.9 percent of all businesses. COVID-19 has brought many to a complete or near standstill. The Small Business Majority has put together a series of daily webinars and links to resources for small business, with a focus on those in Colorado, California, Illinois and Virginia. Some webinars are even in Spanish.
Intuit and GoFundMe have a partnership to help small businesses in need. Their Small Business Relief Initiative allows community members band together to provide targeted financial support for the small businesses they want to help. Intuit provided $1.5 million in funds for matching grants of $500 for campaigns that raise at least $500.
LinkedIn has made a number of courses aimed at small businesses free through June. These courses cover topics including self-care, marketing, managing remote teams and financial planning.
One method that small businesses get much needed cash in the door today is by selling gift cards. This article from Intuit explains how businesses can get started doing that. Many states are setting up sites to gather information and make it easy for people to help out. For example, the New Mexico Economic Development Department set up a central website for patrons to buy gift cards for participating small businesses.
The pandemic won’t last forever, but it’s likely that businesses won’t be quite the same as they were before we knew about the coronavirus. This article in Harvard Business Review has ideas for preparing your business for the post-pandemic world.
Futurist and founder of XPRIZE Peter Diamandis discusses three things he’s hopeful about and three things that small businesses should do to prepare for what comes next.
Thank you for your continued support and patience as we work to wade through government packages, announcements and updates each week. We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!