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On March 31, 2020, Matt Garrett, TGG founder and CEO, helped small business owners and employers alike to understand the economic stimulus package. This bill is complicated, but also extremely important for small businesses during these uncertain times. Here are a few key takeaways from the bill, and how you can move forward with your business plan.
First, through disaster loans, that are administered through the SBA, with lower interest rates, are capped at $2 million. The SBA has seen its complications with these loans, as people are applying for them who may not qualify. There is also the SBA PPP loan which you cannot have alongside the disaster loan, so consider which one is better for your business. The SBA PPP has been refunded since it ran out in May, so applications are still being taken.
Don’t forget about local grants. While Coronavirus has been around for a few months, there are still funds available to help small businesses through this tough time.
Loan abatement is available for those that have an SBA loan. In Section 1107, existing SBA loans are able to defer principal and interest payments for the next 6 months, without limitation to applying for other programs. Some banks are considering abating principal and interest payments on loans pre-COVID, so be sure to ask your bank how they can help you through this process.
Consider the tax changes that have come about through this bill. Chat with your CPA about what these implications may mean for your business. This bill allows you to accelerate your depreciation, and get refunds on your previous tax returns, which means more cash in your pocket to utilize elsewhere.
Under Section 2302 of the Stimulus Package, you can delay your federal payroll tax filing. They will be deferred to the following two years, 50% due at the end of 2021, and 50% due at the end of 2022. Keep in mind, if you decide to defer payroll taxes, you will not be able to forgive your SBA PPP loan, Matt goes into detail in the video on how to decide which path may be better for your business.
Employee retention credit gives you up to $15,000 per employee against your payroll taxes as a credit at the end of the year. With 50 employees you could have up to $750,000 in the bank at the end of it. But there are a few things you must consider before you move forward.
First, did you shut down during COVID-19? You must have shut down or have experienced a 50% decline in gross receipts. If you have fewer than 100 employees, you can also not participate in the Payroll Protection Program. You are likely better off doing the SBA PPP if you are eligible, so consider which path may be better for you. Matt details the potential scenarios in the video above.
The SBA PPP can seem complicated, there are eligibility requirements, usage restrictions, and other considerations you must take before you decide to apply. In this webinar, Matt explains how you can use this loan, and get it completely forgiven at the end. Be sure to track all expenses used with the SBA PPP funds, and use them ONLY for payroll and utility expenses.
It is likely that the Paycheck Protection Program will be the best option for your business, but there are other programs that may help your business in other ways. Check out the various scenarios Matt works through to see what program would help your business the most.
At TGG, we have put together an SBA Loan organizer to apply for your SBA PPP loan. With the final regulations out on the SBA PPP, if you are eligible begin to apply when you’re organized and ready.
When you understand where your business stands, and have organized accurate financials you will be able to set yourself and your business up for success. Contact us to receive a 15-minute financial assessment, and see how our teams can help you through this uncertain time!
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
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