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.