***Some information below is subject to change given the fast-moving nature of the current situation, please reference our most current posts for up to date information.***
Here is a list of suggestions surrounding COVID-19 and what you can do for your business:
- Does borrowing additional funds with the SBA Disaster Loan program make sense?
- For continuing operations
- As restart-up capital for when COVID-19 is over
- The SBA disaster loan program restricts the businesses from the loan program being proposed in the Senate Coronavirus Aid, Relief and Economic Security (“CARES”) Act proposal. More details on the Act below
- More information on the SBA Disaster Loan program can be found by clicking here. Here are some details:
- Up to $2 million at a maximum of 3.75% interest rate and up to 30-year terms
- Available to small businesses (click here for general size standards) agricultural cooperatives, aquaculture enterprises and nonprofits affected by disaster to help meet working capital needs or normal business operating expenses through the recovery period
- What happens if Nebraska shuts down all non-essential businesses?
- Consider directing employees to the Disaster Unemployment Assistance by clicking here. We have been informed that this may not affect your unemployment rate in the future.
- Know that layoffs will reduce the Loan Forgiveness provision being proposed in the Senate CARES Act proposal. More details on the Act below
The Senate is meeting today (March 21st) at 11 am CST to work on the CARES Act. The Act needs to be passed by both the Senate and the House prior to becoming a bill, therefore the items below can and will change.
- Small Business (fewer than 500 employees) Interruption Loans –
- allows the company to receive up to $10 million to cover payroll, mortgage payments, rent, utilizes, and other debt obligations
- business must be in operation on March 1st with paid salaries and payroll taxes
- not eligible if you received an SBA Disaster Loan
- Loan Forgiveness
- applies to all SBA guaranteed loans
- forgives total payroll costs paid between March 1, 2020 – June 30, 2020 (“covered period”) and debt obligations incurred before the covered period that is paid during the covered period
- up to $33,333 per employee during the covered period
- excludes sick and family leave paid under the Families First Act
- reduced by
- average number of full-time (“FTE”) employees per month during covered period/average “FTE” per month during the same period (March – June) in 2019
- any compensation reduce by more than 25% during the covered period
- documentation for loan forgiveness is submitted to the lender for review and lender must issue a decision in 15 days
- forgiven debt under the Act will be excluded from gross income
- Corporations can delay estimated tax payments until October 15, 2020
- Delay employer Social Security payroll tax (6.2% of gross wages) until January 1, 2021
- Carry back five years net operating losses earned in 2018 – 2020
- Leasehold improvements (“LHI”) would be treated as 15-year property instead of 39-year property. Bonus deprecation (deduct a majority of the asset immediately) can also be taken on LHI now and the loss can be carried back 5 years.
Please keep in mind that the CARES Act is just a proposal and a lot can change. We will keep you updated on changes.
The information contained above is presented as a general understanding of this topic and is not to be relied upon as professional guidance. We recommend you consult with your professional and apply your specific circumstances to the content provided here before acting upon any information discussed above.