Allevity Blog

Best Federal Stimulus Package Options

Apr 11, 2020

 

Business leaders like you are turning to Allevity with rapid-fire questions on handling the COVID-19 virus in the workplace, from "How do I make sure my employees have a safe work environment?" to "What are my best options in the federal stimulus package?"

We are dedicated to being your best business decision and want to share our research with you.

How do I make sure my employees have a safe work environment?

The Centers for Disease Control (CDC) has developed and continues to update definitive guidelines to help employers plan, prepare, and respond to the virus.

View guidelines for non-healthcare-related employers here:

https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html.

View guidelines and resources for healthcare-related employers here:

https://www.cdc.gov/coronavirus/2019-ncov/hcp/index.html.

Also, the State of California Department of Industrial Relations has developed general industry interim guidelines on preventing exposure.  These are subject to change as the situation evolves.  Consider checking them regularly:

https://www.dir.ca.gov/dosh/coronavirus/General-Industry.html.

What are my best options in the federal stimulus package?

Be aware not all options play well with each other; choosing one may prohibit you from choosing another.  There are rules and hurdles not mentioned here.  Allevity encourages you to do your due diligence and choose wisely.

The bottom line here is that employers need to speak with your business banker and / or CPA.  These professionals can help you make the best decisions for YOUR business.

Payroll Protection Loan (Sec. 1102)

Businesses with fewer than 500 employees qualify; those with more MAY qualify.  Existing Small Business Administration (SBA) loans MUST be refinanced under this program.  The loan amount is approximately 2.5 times the average monthly payroll cost, with a per-employee cap of $100,000.

We've helped many of our clients gather their payroll information for this loan application.  If you need assistance, don't hesitate to reach out to your Allevity representative.

To be 100% forgivable, you MUST use these funds to retain workers and / or make occupancy costs payments. (Occupancy costs are apparently a broad category.)

Payment Abatement for Existing SBA Loans (Sec. 1107)

Existing SBA loans may be eligible for payment abatement.  It does not exclude participation in other programs.

Emerging Economic Injury Grant (Sec. 1107)

For sole proprietors and independent contractors.  Grants of up to $10,000.  It does not exclude participation in other programs.

Employee Retention Credit (Sec. 2301)

$5,000 per employee retained per quarter; $15,000 max credit per employee against payroll taxes.  Several hurdles, including a shutdown or a gross receipts decline of 50% or more due to COVID.  Numbers of employees matter in eligibility requirements, and it's not a magic bullet.  Excludes you from participating in other programs.  Talk to your banker and CPA, and make the right choice for your business.

Payroll Tax Deferral (Section 2302)

Defers the federal portion of your payroll tax payments until December 2021 and 2022.  Excludes you from participating in loan forgiveness for Payroll Protection Loans.

Net Operating Loss (Section 2302, 2304, 2307)

If your business had a historic net operating loss, was limited by corporate AMT, bought equipment, or built out a store, consider refilling 2018 and 2019 taxes.  Tax laws have changed and you might be due a refund.  Talk to your CPA or tax professional.

Specific Industry Loans

Airlines, hospitality, and retail are just some of the specific industries that received special funding.

Disaster Loan

Existed prior to the stimulus package.  Lower interest loans (2.75% - 3.75%) through the SBA.  Loan of last resort for those ineligible for other assistance.  Capped at $2,000,000.  Funds can be used for anything.  MUST be refinanced into a PPL loan.

Questions About the Stimulus Package

Should be directed to your banker or your CPA.  They are the best advisors on the well-being of your business; however, we can help with the execution of the HR and payroll aspects of these relief packages.  All steps you take should be based on your own due diligence and the advice of banking and tax professionals.

Do you have more questions?

Keep them coming! Just shoot an email to marketing@allevity.com.  We'll answer the most common ones here.  If you need specific guidance, don't hesitate to reach out to your Allevity HR Representative.

We're here for you.  Together we'll get through this.

Stay safe!

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