As a small business owner, did you know that the new Covid-19 stimulus that was enacted at the end of December 2020 (H.R. 133) contains several provisions that are designed to your business? The “headline” with regards to the stimulus is the $600 direct payments to most Americans who make $75,000 or less. However, businesses (small businesses, in particular) have been equally hard hit. The relief provisions discussed below might help your business as it continues to navigate the economic uncertainties of Covid-19.
Families First Coronavirus Response Act Leave Not Extended
The emergency paid FMLA leave and sick leave provisions of the FFCRA (Families First Coronavirus Response Act) expired on December 31, 2020. The new stimulus law does not obligate employers to continue this paid benefit. However, Congress did extend the FFCRA’s refundable tax credits for covered employers that choose to voluntarily continue to provide paid FMLA and sick leave.
Relief Extended for Federal Contractors
The new law extends the expiration date for CARES Act Section 3610 through March 31, 2021, to reimburse federal contractors for paid leave that they provide to certain employees or subcontractors who are unable to work as a result of the COVID-19 crisis and who also cannot telework because their job duties cannot be performed remotely.
Tax Benefits Continued
Was your company taking advantage of deferring payroll tax payments? If so, good news! The new stimulus package also extends the repayment period of deferred payroll taxes through December 31, 2021. And Congress extended the CARES Act’s employee retention tax credit to July 1, 2021. Congress increased the credit rate from 50% to 70% of qualified wages and the eligibility for the credit was extended by reducing the required year-over-year gross receipts decline from 50% to 20%.
Paycheck Protection Program Related Matters
The new law also provides over $284 billion for the small business PPP (Paycheck Protection Program) to allow for a second round of loan payments. Almost as welcome, Congress confirmed that PPP loan funds spent on covered loan expenses will be deductible as a business expense. For any company that received PPP funds and also received and EIDL loan or advance, that amount of EIDL loan or advance will not be deducted from the PPP loan forgiveness amount. Regardless of whether your company previously received a PPP loan, you may be eligible for a first or second PPP loan.
Have you been dreading the PPP loan forgiveness application? Fear not. There is now a simplified loan forgiveness application for loans under $150,000 (previously $50,000). A borrower can receive forgiveness by completing a one-page certification that includes (a) the number of employees the borrower was able to retain because of the covered loan, (b) the estimated amount of the loan spent on payroll expenses, and (c) the total loan amount. The borrower must also attest that they complied with the rules of the PPP program.
The Economic Injury Disaster Loans is Still Available
EIDL (Economic Injury Disaster Loans) will be available directly through the SBA for all of 2021. Congress allocated $20 billion more to the program. The $1,000 per employee grants are also still available but the SBA now has up to 21 days to issue the grants.
Other Changes You Don’t Want to Miss Out On
The new stimulus package is long and complex. Some of the additional “goodies” packed into the law are listed below. Don’t fail to take advantage of these money saving opportunities simply because you were not aware. C2 can help you navigate the new changes so that you can take advantage of all the changes that affect your business.
- Employers can now defer their share of social security taxes through March 2021 and pay those amounts back as late as the end of 2022.
- Employer may deduct 100% of business meals that take place at a restaurant for 2021 and 2022.
- If you already have an existing SBA Section 7(a) or 504 Microloan, you may be able to request up to 8 months of forgiveness of principal and interest payments. And if you apply for a new loan before September 20th, the SBA will forgive your first 6 months of principal and interest (up to $9k per month).
- There are two new set-asides for small business borrowers with 10 or fewer employees and businesses located in Low to Moderate Income (LMI) areas for loans up to $250,000.
C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.
