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Plan for Employees Safety as We Return to Work

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More and more companies across are either asking employees to work from home, or maybe even temporarily shutting down. The CDC and other health groups remind us to wash our hands, cover our coughs and sneezes, wear a mask and practice social distancing—but what can workplaces do about this virus? Well, the Occupational Safety and Health Administration (OSHA) has prepared some guidance for that big question!

The OSHA Guidance on Preparing Workplaces for COVID-19 addresses several common questions about how to prepare for, and deal with, the coronavirus in the workplace. Below are some points from the OSHA advisory report to help you consider workplace safety through a new lens.

LEARN MORE ON THE GUIDANCE ON PREPARING WORKPLACES FOR COVID-19

Develop an Infectious Disease Preparedness and Response Plan;

Employers develop an infectious disease preparedness and response plan that addresses level(s) of risk associated with their worksites and the tasks performed at those sites. Such considerations may include:

  • Where, how, and to what sources of COVID-19 workers may be exposed to, including, for example, the general public, customers, coworkers, sick individuals, or individuals at particularly high risk of infection
  • Non-occupational risk factors at home and in the community
  • Workers’ individual risk factors, such as advanced age, chronic medical conditions, and pregnancy
  • Controls necessary to address those risks

Develop, Implement, and Communicate about Workplace Flexibilities and Protections; maintaining flexibility when dealing with HR matters, including:

  • Actively encouraging sick workers to stay home
  • Ensuring and making workers aware of sick leave policies that are flexible and consistent with public health guidance
  • Impressing upon staffing agencies the importance of sick workers staying home
  • Recognizing that health care providers may be overtaxed during this crisis, refraining from requiring workers to immediately obtain a health care provider’s certification to validate illness or to return to work
  • Maintaining flexibility to allow workers to stay home to care for sick family members
  • Being sensitive to workers’ concerns about pay, leave, safety, health, and other issues that may arise during infectious disease outbreaks
  • Providing appropriate training about business-essential job functions and worker health and safety, including proper hygiene practices and the use of any workplace controls (including PPE)

Implement Workplace Control; preventing exposure to COVID-19 hazards through the following:

  • Engineering controls. Physical measures include using high-efficiency filters, increasing ventilation, and installing physical barriers such as clear plastic sneeze guards.
  • Administrative controls. This involves HR policies, safety equipment and procedure training.
  • Safe work practices. Examples include “no-touch” trash cans and alcohol-based hand rubs.
  • Personal protective equipment (PPE). This includes gloves, goggles, face shields, etc. Note: While there’s no COVID-19-specific OSHA PPE standard, some regulations may apply here.

Implement Basic Infection Prevention Measures; These measures should include:

  • Frequent and thorough hand washing by employees, customers, and worksite visitors (if soap and running water are not available, provide hand wipes containing at least 60 percent alcohol)
  • Encouraging sick or symptomatic employees to stay home
  • Providing customers and the general public with tissues and no-touch trash receptacles
  • Establishing flexible worksites and/or flexible work hours (e.g., staggered shifts) to increase physical distance among employees and others
  • Discouraging employees from using others’ phones, desks, offices, tools, and other equipment, and maintaining regular and routine cleaning and disinfecting with EPA-approved products

LEARN MORE ABOUT EPA-APPROVED PRODUCTS

Reynolds + Rowella’s HR Consulting team is here to assist you in implementing the OSHA’s guidance to create a plan tailored to your business or other employment challenges related to COVID-19. Please reach out to Katie Hall for assistance.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

ALERT: Safe harbor for PPP loans under $2 million

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The Small Business Administration (SBA) has released new guidance regarding the good-faith certification for Paycheck Protection Program (PPP) loans.

On May 13th, 2020, the SBA established a “safe harbor” for borrowers receiving PPP loans with an original principal amount of less than $2 million.

The new safe harbor was made by adding “FAQ 46” to the SBA’s previously-issued PPP guidance. FAQ 46 provides that any borrower which, together with affiliated entities, receives PPP loans with an original principal amount of less than $2 million “…will be deemed to have made the required certification concerning the necessity of the loan request in good faith.”

PPP Loan FAQs

Borrowers whose PPP loans over the $2 million threshold may be subject to review by the SBA for compliance with program requirements, including the certification of economic need.

Please contact John Priola with any questions regarding your organizations PPP loan and the safe harbor rule.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

PPP Loan Forgiveness Application

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American flag waving with the Capitol Hill in the background

The U.S. Small Business Administration (SBA) has released additional Paycheck Protection Program (PPP) guidance in the form of the PPP Loan Forgiveness Application.

The main benefit of a PPP loan is the ability to have the principal balance of the loan forgiven if the loan proceeds have been spent on qualifying costs. In a previous article, we included the SBA PPP Loan Borrow Fact Sheet which includes debt forgiveness guidance, however we recommend that you consult with a professional to better understand the details and application to your specific situation.

PPP Loan Forgiveness Application

Reynolds + Rowella has developed a tool and processes to help our clients track eligible payroll and non-payroll costs, as well as calculate debt forgiveness amounts to aid in compliance with the PPP. Please contact John Priola or Patrick Butler if you would like to learn more about this service.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

SBA Q&A

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On April 24, the Small Business Administration (SBA) and Department of the Treasury published a Q&A outlining how businesses of varying structures can calculate their payroll costs to determine the value of loans they are eligible to receive through the Paycheck Protection Program (PPP).

The guidance, formatted in a Q&A format, provides information and steps for a variety of small businesses including: self-employed with no employees; self-employed with employees; documentation  business owners will provided depending on how they report their income; how partnership should apply for PPP loans; how is the maximum PPP loan amount is calculated for S corporations and C corporations; how it is calculated for eligible nonprofit organizations, nonprofit religious institutions, veterans organizations, and tribal businesses; and what other documentation can be provided for the purpose of substantiating the applied-for PPP loan amount.

As noted by the guidance document: “The U.S. government will not challenge lender PPP actions that conform to this guidance and to the PPP Interim Final Rules and any subsequent rule making in effect at the time.”

TO READ THE FULL Q&A, click here.

If you have any questions about your eligibility for PPP loans or how to apply for one, contact a Reynolds + Rowella advisor.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

The SBA Releases Advice On Avoiding Stimulus Program-Related Fraud

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The U.S. Small Business Administration (SBA) has warned the public to be on the lookout for scams related to the stimulus programs offered in response to the COVID-19 pandemic.

The SBA has identified grant fraud, loan fraud and phishing schemes related to the stimulus program:

Grants

  • SBA does not initiate contact on either 7a or Disaster loans or grants.  If you are proactively contacted by someone claiming to be from the SBA, suspect fraud.

Loans

  • If you are contacted by someone promising to get approval of an SBA loan, but requires any payment up front or offers a high interest bridge loan in the interim, suspect fraud.
  • SBA limits the fees a broker can charge a borrower to 3% for loans $50,000 or less and 2% for loans $50,000 to $1,000,000 with an additional ¼% on amounts over $1,000,000.  Any attempt to charge more than these fees is inappropriate.
  • If you have a question about getting a SBA disaster loan, call 800-659-2955 or send an email to disastercustomerservice@sba.gov.
  • If you have questions about other SBA lending products, call SBA’s Answer Desk at 800-827-5722 or send an email to answerdesk@sba.gov.

Phishing

  • If you are in the process of applying for an SBA loan and receive email correspondence asking for personally identifiable information (PII), ensure that the referenced application number is consistent with the actual application number.
  • Look out for phishing attacks/scams utilizing the SBA logo.  These may be attempts to obtain your PII, to obtain personal banking access, or to install ransomware/malware on your computer.
  • Any email communication from SBA will come from accounts ending with sba.gov.
  • The presence of an SBA logo on a webpage does not guaranty the information is accurate or endorsed by SBA.  Please cross-reference any information you receive with information available at www.sba.gov.

All questions related to your Paycheck Protection Program loan, should be directed to the bank processing your loan application.

Report any suspected fraud to OIG’s Hotline at 800-767-0385 or online at www.sba.gov/about-sba/oversight-advocacy/office-inspector-general/office-inspector-general-hotline.

Click here for tips from the Better Business Bureau on spotting small business loan scams.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

How to Manage COVID-19-Related Business Risks

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The coronavirus (COVID-19) outbreak has had a crippling effect on the global economy. This is clearly uncharted territory. As millions around the globe do their best to minimize their exposure to the virus, business owners and managers face an uncertain and stressful future.

Faced with faltering demand, anxious employees, health safety risks and a lack of clarity regarding what the future holds, what can small and medium-sized business owners do to prepare for a global economic slowdown? Here are eight steps to consider to help your company navigate these uncertain times.

1. Develop Financial Scenarios

Create best, worst and most likely financial scenarios for your company. Consider these questions:

  • How much do you estimate revenue will change over the short and long run?
  • Which costs are variable vs. fixed?
  • How long will it take for you to run out of cash and inventory?
  • Is there extra cushion to draw from on your line of credit?

Projecting financial statements for the next few months may require some guesswork, but the exercise may uncover areas that require immediate attention. For example, you may find an opportunity to reduce your costs by canceling a subscription or downgrading a service.

2. Scrutinize Your Cost Structure

It’s important to dedicate additional time to combing through every line item of your financial statements for costs to remove. As a general rule of thumb, if an expense doesn’t directly contribute to generating revenue, consider removing it. Also look for ways to lower your costs. For example, if you’ve not switched insurance companies recently, now may be the time to seek an alternative, lower-cost provider.

3. Reach Out to Lenders, Landlords and Creditors

As the effects of the economic slowdown take hold, many business owners worry that they’ll default on a loan, face an eviction or be sued for unpaid debts. The federal government and many individual states have already taken steps to stop evictions. How far such government remedies extend and for how long remain unknown.

If your business is unable to make a payment on a loan, mortgage or unsecured debt, be proactive and reach out to share your situation. You may find those you owe money to are receptive to amending the terms of your arrangement in these challenging times.

4. Reconnect with Key Customers

Reach out to major customers and learn of the challenges they face. This provides an opportunity to engender long-term customer loyalty and goodwill. Depending on your company’s financial health, you may be able to offer support, including providing discounts on future orders or extending payment terms.

These conversations also will provide information to improve the accuracy of your financial projections. And you’ll open the line of communication in case circumstances deteriorate further.

5. Communicate Regularly with Employees

It’s human nature to struggle with uncertainty. Make communicating with employees a priority — even if you have no news to share.

Employees need to know you understand their concerns. They must also believe you have their best interests at heart. If you anticipate laying off staff or cutting their hours and know of companies in a hiring mode, share that information with employees. When normal operations resume, former employees may return if they remember your willingness to help them in times of crisis.

6. Revisit Your Staffing Model

Ideally, small businesses would like to keep valued employees on the payroll as long as possible. But, for some businesses, now might be the time to engage contractors instead of full-time employees. By doing so, you’ll potentially lower your costs and increase your staffing model’s flexibility.

7. Consider Bartering

Instead of exchanging cash with supply chain partners, be open to bartering goods and services with other businesses. Bartering allows you to conserve cash. Plus, connecting with other businesses may help uncover additional tools and techniques to help your company weather the economic fallout from the COVID-19 outbreak. Be aware that bartering does have tax implications.

8. Monitor Government Responses

Federal and state governments are working on various financial relief measures to help businesses during these trying times. In addition to following local and national news, reach out to your tax, human resources and legal advisors to let them know you’re interested in gaining access to government aid when it becomes available. Also sign up for email communications from federal agencies, including the Small Business Administration (SBA) and the IRS, to make sure you learn of the programs as soon as they’re available.

WE’RE ALL IN THIS TOGETHER
Now’s the time to confront the reality of COVID-19 head on. That requires a collaborative effort with your customers, suppliers, employees, creditors and professional advisors. By working together to fortify your defenses, you’ll be in a better position to protect your business and ensure its survival during these unprecedented times.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

PPP/EIDL Forms and Fact Sheet Update

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The CARES Act is designed to provide assistance to many businesses that may not meet the customary small business thresholds, including two loan program and the potential for loan forgiveness —eligible small businesses who have been economically impacted by the COVID-19 pandemic should strongly consider taking advantage of the loan programs.

Paycheck Protection Program Forms and Fact Sheets

Application forms and fact sheets for the PAYCHECK PROTECTION PROGRAM (PPP) under the CARES Act have been made available from the Treasury Department.

Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing Small Business Administration (SBA) lenders. Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders. Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

View Sample SBA Loan Application

The fact sheet encourages small businesses to apply for a PPP loan as quickly as possible, as there is a funding cap on the program, and lenders will need time to process loan paperwork. While there is a trade-off between relief benefits under the PPP and certain BUSINESS TAX PROVISIONS OF THE CARES ACT (specifically the Employee Retention Credit and payroll tax deferral), you may want to submit an application as soon as possible, and subsequently optimize benefits under the PPP and business tax provisions of the CARES Act before executing loan documents.

View Borrower Fact Sheet

Contact your financial institution to for a list of required loan application documents.

Economic Injury Disaster Loan Program Form

The SBA has started collecting information in order to make a loan under SBA’s Economic Injury Disaster Loan Program to qualified application that are impacted by the Coronavirus (COVID-19).

If you are considering applying for both the EIDL and the PPP Loan in any entity, the ability to consolidate the two loans may have passed, however you should submit the online EIDL application —we were given guidance that the deadline for EIDL if you were doing both was 3/31, but we think it makes sense to apply anyway if you haven’t already done so. 

Part of the EIDL is a grant for those who submit an application for disaster assistance. Applicants who meet the qualification criteria to apply for an EIDL loan and submit an application to the SBA, will receive a $10,000 advance within three business day. The EIDL grant does not need to be repaid.

View EIDL Program Application

EIDL Overview

Given the various qualification criteria, the programs and incentives enacted under the CARES Act must be evaluated separately for each business, considering industry, legal requirements and financial and other contractual commitments during this challenging time. Please CONTACT US or connect with your R+R advisor to discuss your organization’s questions, concerns, and priorities.

Please note that this is a fluid and quickly-moving situation, and Reynolds + Rowella will continue to monitor and update this page as new information becomes available.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

CARES ACT UPDATE: TAX RELIEF FOR INDIVIDUALS

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The Coronavirus Aid, Relief and Economic Security Act (CARES Act), passed on March 27th, is designed to provide relief to individuals and business. This legislation addresses concerns ranging from small business interruption to individual, family, and business economic relief. This summary focuses on those provisions relevant to individuals.

Recovery Rebates

Individuals, other than nonresident aliens and individuals who can be claimed as dependents (whether or not they were claimed as such) who have a Social Security number, are eligible for a one-time refundable federal income tax credit. The tax credit is:

  • $1,200 ($2,400 for individuals filing jointly);
  • plus $500 for each dependent (under age 17), which could be a child of the taxpayer or other qualifying relative.

The amount of this credit is reduced and phased out for taxpayers with more than a threshold adjusted gross income (AGI). The amount of the credit is reduced (but not below zero) by five percent of the taxpayer’s AGI in excess of: 

  • $150,000 for joint return filers
  • $112,500 for head of household filers
  • $75,000 for filers other than joint filers and head of household filers.

The credit is based on the individual’s 2019 tax information, but 2018 tax information will be used if the 2019 income tax return has not been filed. So, if a taxpayer would not qualify for the credit in 2018 but would in 2019 it is imperative to get the 2019 income tax return filed as soon as possible to avoid delay. Additionally, if the taxpayer is not required to file a tax return, the Service will look to the taxpayer’s Form SSA-1099, social security benefit statement or RRB-1099 Social Security Equivalent Benefit Statement – but you are better off filing a tax return.

The payments will be made between now and December 31, 2020. In many cases, it will be paid electronically if you have provided direct deposit information to the IRS on your 2018 or 2019 tax returns.

The payments will be made between now and December 31, 2020. In many cases, it will be paid electronically if you have provided direct deposit information to the IRS on your 2018 or 2019 tax returns. In the event the IRS does not have an individual’s direct deposit information, a web-based portal is being developed by the Treasury to provide banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.

Qualified Retirement Plans

The 10% penalty for early withdrawals from retirement accounts is removed for coronavirus-related distributions, which are defined to include distributions made on or after January 1, 2020 and before December 31, 2020 to either:

  • An individual diagnosed with COVID-19 or whose spouse or dependent is diagnosed with COVID-19;
  • An individual who experienced adverse financial consequences as a result of quarantine, lay-off, reduced hours, inability to work due to child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Secretary of Treasury.

An individual taxpayer may receive Coronavirus related distributions during 2020 up to $100,000 and may elect to spread out the income inclusion over a three-year tax period. The taxpayer may then repay the distribution within 3-year period following the distribution and such repayment will be treated as a tax-free rollover.

The CARES Act also stipulates that the limit on loans from qualified plans is increased from $50,000 to $100,000.  The loan is limited to the present value of the non-forfeitable accrued benefit of the employee under the plan. The loan limit is increased for a 180-day period starting on March 27, 2020.

Temporary Waiver of Required Minimum Distributions

For calendar year 2020, the Act waives the required minimum distribution rules for certain defined contribution plans and Individual Retirement Accounts:

  • A defined contribution plan under section 403(b).
  • A defined compensation plan which is an eligible deferred compensation plan under section 457.
  • An individual retirement plan.

 Charitable Contributions

To incentivize charitable contributions, the CARES Act provides an above-the-line deduction for qualified charitable contributions up to $300 for individuals who do not itemize deductions. A qualified charitable contribution is a charitable contribution which is made in cash to a charitable organization that is not a supporting organization, Donor Advised Fund or a contribution carryover from a prior year. The CARES Act also increases the income limitations on charitable deductions by suspending the 50% AGI limitation for 2020.

Individuals may deduct qualified contributions in 2020 up to 100% of their AGI. Any excess qualified contributions are carried forward to future years in the same manner as other charitable contribution carryovers.

Reynolds + Rowella professionals are closely following the development of COVID-19 relief measures in order to offer insight into the potential impacts on taxpayers. If you have questions about how the CARES Act may affect your personal tax situation, please contact your R+R tax advisor.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

CARES Act: Understanding the Economic Provisions for Small Business

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On March 27th, Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act. While the bill contains numerous economic and healthcare response-related provisions, this summary focuses on a few aspects of the economic provisions for small business owners.

Paycheck Protection Program

The CARES Act focuses on providing economic relief with a newly-created tool: the Paycheck Protection Program (PPP). This program expands the existing Small Business Administration (SBA) loan program and allows the SBA to provide additional loans and loan forgiveness to businesses and certain individuals as a result of the COVID-19 pandemic.

PPP loans may be obtained by contacting an SBA-approved lender. The SBA will provide loans through the PPP during the covered period, from February 15, 2020 to June 30, 2020.

Eligibility:
  • Small businesses are eligible for a loan if they employs 500 employees or fewer, or are in an industry that has an employee-based size standard through SBA that is higher than 500 employees;
  • Restaurants, hotels, or a business that falls within the North American Industry Classification System (NAICS) code 72, “Accommodation and Food Services,” and with each locations having 500 employees or fewer
  • Tribal businesses, 501(c)(19) veteran organizations, and 501(c)(3) nonprofits, including religious organizations. Nonprofit organizations are subject to SBA’s affiliation standards;
  • Independently owned franchises with under 500 employees, who are approved by SBA;
  • Eligible franchises can be found through SBA’s Franchise Directory.
How much can I borrow:

Loans are essentially limited to the lesser of 2.5 times the average monthly payroll costs during the 1-year period prior to the loan, or $10,000,000. Special calculation rules apply for seasonal workers and self-employed individuals.

Payroll Calculation Includes:
  • Salaries, wages and commissions, cash tips, vacation pay and family/sick leave
  • Severance payments, retirement payments, insurance premiums or other group health care benefits, state and local taxes assessed on compensation.
The calculation does not include the following:
  • Compensation in excess of an annual salary of $100,000 for any individual employee.
  • Payroll taxes, railroad retirement taxes, income taxes and any Compensation of an employee whose principal place of residence is outside the United States.
  • Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116– 5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act.

Debt payments on small business loans made during the period between January 31, 2020 and such date in the future where loans will be authorized to be refinanced may also be included when calculating expenses.

What can I use my loan for:

Payroll costs (as defined above), group healthcare benefits, insurance premiums, and interest (but not principal) on mortgages or other debt incurred prior to February 15, 2020, rent on any lease in force prior to February 15, 2020, and utility payments.

How is loan eligibility determined:
  • Borrower was in operation on February 15, 2020
  • Borrower had employees and paid salaries/wages and payroll taxes to those employees
  • Borrower paid independent contractors for services performed

All fees will be waived and the government is the guarantor of the note, not the borrower.

Additionally, the following options are available under the CARES Act:
  • Deferment of SBA loan repayments for up to one year for:
    • Eligible borrowers that were in operation on February 15, 2020 and had an approved loan or loan pending approval on or after the date of enactment
    • All borrowers are presumed to be impacted by COVID-19 – no substantiation required
    • SBA Express Loans are increased from $350,000 to $1,000,000 through December 31, 2020

Loan Forgiveness

PPP loan forgiveness will be available for certain operational expenses incurred by the borrower in the first eight weeks after the loan’s origination. These operational costs are generally the same as the operational costs that are allowable uses for the PPP loans, such as payroll costs, rent, utilities, interest on mortgage obligations, and payments of other debts incurred prior to February 15, 2020.

Loan forgiveness will be limited to the percentage obtained by dividing:
  • The number of full-time equivalent employees during the 8-week period after the SBA loan closes over the number of employees on the payroll between February 15, 2019 and June 30, 2019 or average number of employees on the payroll between January 1, 2020 and February 29, 2020 – whichever is a better result for the applicant
The loan forgiveness is further reduced where 
  • The most recent full quarter the employee was compensated during the covered period is reduced by greater than 25% during the period from February 15, 2020 and June 30, 2020 (eligible compensation is still limited to the $100,000 previously discussed or approximately $37,500)

For employees rehired that were terminated or furloughed between February 15, 2020 and approximately April 26, 2020 (30 days following enactment) no reduction in loan forgiveness is required as long as they are rehired prior to June 30, 2020 at their previous salary/wage rate. It doesn’t have to be the same employee. They only look at the number of employees, not specific employee and amounts paid.

Applications for forgiveness must be supported with the following filings:
  • Payroll tax returns filed with the IRS
  • State income, payroll and unemployment filings
  • Documentation related to the payment of mortgage interest payments, rent and utilities paid between February 25, 2020 and June 30, 2020
  • The applicant must certify funds will be used to retain workers and maintain payroll
  • Decisions must be made within 60 days

Emergency EIDL Grant

In an effort to get necessary funds into the hands of businesses suffering as a result of COVID-19 as quickly as possible, the CARES Act permits applicants for Economic Injury Disaster Loans (EIDLs) to request an advance of up to $10,000 from the SBA that need not be repaid even if the applicant is subsequently denied an EIDL and which may be used for any purpose allowable under Section 7(b)(2) of the Small Business Act, including:

  • Providing paid sick leave to employees unable to work due to the direct effect of the COVID-19
  • Maintaining payroll to retain employees during business disruptions or substantial slowdowns
  • Meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains
  • Making rent or mortgage payments
  • Repaying obligations that cannot be met due to revenue losses

Employee Retention Credit

The CARES Act provides for an employer federal tax credit against the Social Security portion of payroll tax that the employer pays.

  • A credit will be allowed for 50% of employee wages against payroll taxes per quarter
  • Limited to $10,000 of wages per employee for all quarters (basically a maximum of $765 per employee)
  • An eligible employer is one in business during calendar year 2020 and was closed by executive order of a governmental authority or there is a significant decline in gross receipts for the period beginning the first quarter after December 31, 2019 for which gross receipts are less than 50% for the same quarter of the prior calendar year and ending with the first calendar quarter after the quarter where business receipts are 80% of the same calendar quarter of the year before
  • The employer cannot have more than 100 employees during 2019 to be eligible for the credit
  • Limited to the amount of wages that would have been paid for working an equivalent duration during the 30 days prior to such eligible period (i.e. 50% decline in gross receipts period)

Please note employers taking advantage of the Paycheck Protection Loan/Loan Forgiveness are not eligible for the credit

Delay of Payment of Employer Payroll Taxes

CARES Act allows employers and self-employed individuals to postpone deposits of their share of federal Social Security tax on employees’ wages paid as of the enactment date through and including December 31, 2020.

  • For payroll taxes imposed between March 27, 2020 and January 1, 2021, an employer may defer the payment of 50% of the taxes imposed to
    • December 31, 2021 for the first 50%
    • December 31, 2022 for the remainder

Please note employers taking advantage of the Paycheck Protection Loan/Loan Forgiveness are not eligible for this relief

Loan Documents can be found at the following link:  https://www.sba.gov/disaster/apply-for-disaster-loan/index.html

You can either upload the completed documents at the Small Business Administration website or work with your local lender using the forms located at the website link above.

In the event that you would like a referral to a local bank that will be supporting this program please let us know and we will be happy to provide an introduction.

The COVID-19 pandemic has created a constantly-changing situation for businesses of every size and industry. As future legislation is developed, deadlines are updated, and additional challenges and opportunities are uncovered, Reynolds + Rowella dedicated team is committed to understanding and applying this information to help you. Please continue to visits the R+R COVID-19 Resource Center frequently as updates will be added the situation progresses.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

Legislation Impacting Your Business (Action Requested)

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On Wednesday, March 25th the Senate passed an updated version of the Coronavirus Aid, Relief and Economic Security (CARES) Act. The bill builds upon earlier versions of the CARES Act. This legislation has the potential to directly impact your business in a significant way. While there are many facets of this bill that seek to provide economic relief in response to the Covid-19 outbreak, there are three that are most likely to be of immediate concern to you:

BUSINESS RETENTION LOANS FOR SMALL BUSINESSES

SBA loans will be issued for an amount equal to approximately 8 weeks of payroll and qualifying overhead. If conditions are met (retaining employees, etc…) the loan will convert to a grant and will be forgiven. Every FDIC insured financial institution will be eligible to make these loans and funds can be disbursed the same day the application is filed. The Treasury will be issuing further guidance in the coming days and the program is expected to be operational in approximately 3 weeks.

EMPLOYEE RETENTION CREDIT

This provision provides a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shutdown order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.

The credit is based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13 through December 31, 2020.

PROVISIONS FOR INDIVIDUALS

For individuals the package provides direct payments of $1,200 per adult and $500 for each child to lower and middle-income Americans. Phaseouts begin at $75K for individuals and $150K for married couples. Checks are anticipated in mid-May. Additionally, unemployment insurance will be extended to four months and the benefits bolstered by $600 weekly with eligibility being expanded to cover more workers.

Again, these are just three of the major provisions addressed in the CARES Act. CLICK HERE TO FIND AN OUTLINE OF ALL OF THE KEY PROVISIONS.

Reynolds + Rowella wants to make sure you were fully aware of this legislation and encourage you to take early action on it. We anticipate there will be significant demand for the forgivable SBA loans so it makes sense to reach out to your lenders now. In the event that you would like a referral to a local bank that will be supporting this program please let us know and we will be happy to provide an introduction.

During this extraordinary event, we want to make sure our firm is supporting you to the best of our ability. Please don’t hesitate to reach out if we can provide any immediate assistance. You can also expect a R+R team member to contact you during the weeks ahead to check in and provide you with information on additional new regulations and legislation that might apply to you and your business.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

where to find us and how to call us

90 Grove Street / Ridgefield, CT 06877 / Office: 203.438.0161 / Fax: 203.431.3570
51 Locust Avenue / New Canaan, CT 06840 / Office: 203.972.5191