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.
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.
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.
There are two primary forms of loans budgeted for small business (generally less than 500 employees, for-profit or nonprofit):
Here are some highlights of each as of April 20, 2020. Either or both could prove useful to you now.
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
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