LAST UPDATED: April 13, 2020
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This resource guide will summarize the Coronavirus Aid, Relief, and Economic Security Act – or the CARES Act – as it relates to small business economic relief for payroll expenses, including rent, utilities, healthcare and retirement costs, two mechanisms by which the federal government will directly assist U.S. residents, and how the NJ State assistance programs will aid NJ small businesses economically harmed by the COVID-19 pandemic.
Needleman Managment presents this material for informational purposes only, and it is based solely on our best understanding at this time. We do not claim to be lawyers, accountants or tax professionals. We accept no liability for any action based on this information nor for any errors or omissions. We strongly suggest that you discuss the material provided herein with your legal and tax professionals.
The Paycheck Protection Program (“PPP”) assists small businesses (with fewer than 500 employees) with zero-fee loans of up to $10 million to cover payroll and other operating expenses, like rent. Of this loan, up to 8 weeks of the cost of payroll, interest on debts, rent, and utility costs can be forgiven. Loan amounts not forgiven will have their payments on principal and interest deferred for one year.
Click here for more detail on eligibility, use of the PPP loans and links to access SBA Lenders.
The Small Business Administration is easing requirements for Economic Injury Disaster Loans (“EIDL”); these loans, up to $2 million, are available with interest rates of 3.75% for businesses and 2.75% for nonprofits affected by the COVID-19 pandemic. The principal and interest payments on EIDL Loans will be deferred up to 4 years. PLUS, the CARES Act has specifically created a new emergency EIDL GRANT of $10,000 for small businesses that apply for an SBA economic injury disaster loan (EIDL). IMPORTANT: the EIDL GRANT does not need to be repaid even if the applicant is denied an EIDL LOAN. A small business may apply for both an EIDL GRANT and a Paycheck Protection Program (“PPP”) Loan; the $10,000 EIDL GRANT will simply be subtracted from the amount of the Paycheck Protection Program Loan that is forgivable.
Click here for more detail on eligibility, use of the EIDL loan and grant, and links to applications forms.
If a business opts not to take advantage of the Payroll Protection Program (“PPP”) described above, then it may receive an Employee Retention Tax Credit. The CARES Act has crafted a payroll tax credit program, if the business retains its employees during the pandemic. The business is eligible if the company has been fully or partially suspended as a result of a government order or has experienced a 50% reduction in quarterly receipts Q1 2020 over Q4 2019 as a result of the crisis. For businesses with 100 or fewer full-time employees, they may claim a credit for wages paid to all of their employees, up to $10,000 a person. For businesses with more than 100 employees, they may claim a credit for those employees who are furloughed or face reduced hours.
Click here for more information on Employee Retention Tax Credits.
The CARES Act allows employers to defer paying the employer-portion of the 6.2% of social security tax through the end of 2020. This deferral is not available to businesses if they participate in the SBA Payroll Protection Program (“PPP”) listed above. The employer-portion of the deferred amount will now be due in two installments – 50% is due before December 31, 2021, and the other 50% is due before December 31, 2022.
Click here for more information on Employee Retention Tax Deferral.
The CARES Act provides several forms of tax relief for businesses, including greatly expanding tax deductions for interest from 30% to 50% and expanding the ability to deduct losses from taxable income (modifying NOL carrybacks and carry-forwards). Some industries, such as retailers, restaurateurs, and hotels, will be able to immediately deduct property improvements from their taxes. The CARES Act also permanently fixes the qualified improvement property (QIP) error in the 2017 tax law, so that businesses with QIP investments are now entitled to 100% recovery over 15 years.
For more information on the CARES Act Business Tax Relief, click here.
U.S. residents are eligible for ‘REBATE PAYMENTS.” Eligibility and amounts include:
People who are unemployed will be eligible for an additional $600 per week for up to four months, over and above state unemployment benefits, in an effort to make up for 100% of lost wages. The CARES Act extends unemployment insurance benefits to last an additional 13 weeks, and, most notably, for the first time, unemployment benefits are now available for 1099 contractors and “gig” workers.
For more information on Unemployment Benefits, click here.
The Small Business Emergency Assistance Grant Program will provide up to $5,000 to NJ-based businesses that have between 1–10 full time equivalent employees (“FTE”) who have been affected by the COVID-19 pandemic. The focus of the GRANTS are on small businesses in retail, arts, entertainment, recreation, accommodation, food service, and other services – such as repair, maintenance, personal, and laundry services – to stabilize their operations and reduce the need for layoffs or furloughs. The grant funding is targeted as unrestricted payroll and working capital support, such as for rent and utilities. The grant program will provide funding as quickly as possible.
The NJ Small Business Emergency Assistance Loan Program is designed to provide a direct loan (WITH 0% INTEREST FOR THE FIRST FIVE YEARS) up to $100,000 to NJ-based small businesses and non-profits. Businesses need to have been in existence for at least one-year and have less than $5 million in annual revenue. Businesses need to have been negatively impacted by the COVID-19 outbreak (including, but not limited to: reduction of business hours, complete closure of business, at least a 20% decline in revenue, employees unable to work, required to close by government, or disruption of supply chain).
IMPORTANT: the application is not yet open, but will be sometime the week of March 30th.
Needleman Managment sincerely thanks our tenants for their tenancy with us, and we thank all of our staff, contractors and vendors who work with us. We are grateful to you each. We hope you, your families, your staff and your clients remain well.