COVID-19 Resource Page

Note: on June 5th the President signed into law a bill that materially modifies existing terms for forgiveness and repayment of PPP loans. The bill (the Paycheck Protection Program Flexibility Act) extends the spending period from 8 to 24 weeks, reduces the spending required for payroll from 75% to 60%, makes payroll tax deferral available for companies who have accepted PPP loans and lengthens the loan period for amounts not forgiven from 2 years to 5 years.

CARES Act

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law on March 27, 2020, providing financial assistance to individuals and businesses impacted by the COVID-19 pandemic.

Deferral of payroll taxes

The CARES Act provides for a refundable payroll tax credit (the Employee Retention Credit) with respect to certain wages paid to employees during periods of a business shutdown or significant decline in gross receipts resulting from the COVID-19 pandemic. The credit cannot be claimed for payroll costs that are used as the basis for a PPP loan (below.)

The act also permits employers to defer payment of the employer portion of payroll taxes owed on wages paid through December 31, 2020, for up to two years. Deferred taxes are due in two installments: 50% by December 31, 2021, and 50% by December 31, 2022. This payroll tax deferral applies to all employers, with no requirement to show any specific COVID-19-related impact.

COVID-related loans

There are two primary forms of loans budgeted for small business (generally less than 500 employees, for-profit or nonprofit):

  • SBA Emergency Injury Disaster Loans(“EIDL”)
  • Payroll Protection Program Loans(“PPP”)

Here are some highlights of each as of April 20, 2020. Either or both could prove useful to you now.

EIDL – https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance

  • Available as expanded until December 31, 2020
  • Administered by the SBA Applicants are encouraged to apply online at the link included above
  • Made directly by the SBA in an amount not to exceed $2 million.
  • Take note of this: the SBA may advance a maximum of $10,000 on an emergency basis to an applicant, up to a limit of $1000 per employee. If the SBA ultimately rejects the application, the applicant may retain this initial advance without needing to repay it.
  • If you are awarded an emergency advance from an EIDL loan, you can roll into a PPP loan (below.)

PPP – https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp

  • Available until June 30, 2020
  • Administered by SBA, but loans made by banks.
  • Apply directly through a bank (on their website) who is an approved SBA lender.
  • Maximum amount is the lesser of $10 million or 2.5 times your average “payroll costs” for the previous 12 month period.
  • Loan will be forgiven as long as you meet following conditions (initial guidelines from the SBA – subject to change):
    • Must be spent within 24 weeks of the loan date, or December 31, 2020, whichever occurs sooner
    • 60% must be spent on qualifying payroll; the rest on qualifying rent, utilities and interest expense.
    • Must preserve your workforce and individual compensation levels according to SBA guidelines.
    • If you take the emergency advance from an EIDL loan (above), your PPP loan forgiveness will be reduced by that amount.
    • Any amount not forgiven turns into a 1.0% loan amortized over a period up to 5 years, with payments deferred for 6 months.

The AICPA has an up-to-date FAQ page on many elements of the the PPP loan, including how to calculate payroll costs and some guidance for the self-employed. Here’s the link: https://www.aicpa.org/interestareas/privatecompaniespracticesection/qualityservicesdelivery/sba-paycheck-protection-program-resources-for-cpas/sba-payroll-protection-program-faqs.html

Texas unemployment compensation

The CARES Act provided for Federal assistance of $600 per week in addition to normal Texas unemployment benefits. This assistance is set to end on July 31, 2020. Here’s a link to the Texas Workforce Commission COVID-19 site: https://www.twc.texas.gov/news/covid-19-resources-job-seekers#covid1StimulusBillUpdate