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How Main Street Businesses Can Get Help for Their Cash-Flow Crisis

April 05, 2020

The temporary cash-flow crunch caused by the coronavirus pandemic means workers and small businesses need help. With stay-at-home orders in place in most states, Americans are not going out and spending money at restaurants and other local businesses—and layoffs have begun.

Thankfully, the CARES Act provides quick cash for businesses through loans and tax relief. Now businesses can get help to re-hire laid off workers, to keep the lights on, and to continue serving their communities where possible.

  • Workers Can Get Back on Payrolls and Stay There With the “Paycheck Protection Program.” By working with their bank, small businesses can get eight weeks of cash-flow assistance through 100 percent federally guaranteed loans. If the business uses the money to maintain payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven. And as we’ve reported before, churches are eligible.

To learn more about eligibility requirements, visit SBA’s “Paycheck Protection Program” website or contact your banker. For more information about church eligibility, click here.

  • Main Street Businesses Can Receive Debt Relief. For six months, SBA is required to pay all principal, interest and fees on all existing SBA loan products including 7(a), Community Advantage, 504, and Microloan programs for six months. 

To learn more information, visit the SBA’s webpage on 
debt relief.

  • Contractors Also Get Help.Federal agencies are required to extend contract performance periods and promptly pay small business contractors impacted by COVID-19.

Independent contractors are also eligible for forgivable loans under the “Paycheck Protection Program”.

  • If You Pay Half, We’ll Pay Half.With the new “Employee Retention Credit,” Business of all sizes that face closure orders or suffer economic hardship due to the coronavirus crisis that continue to pay employees that are furloughed may be eligible for a 50% credit on up to $10,000 of wages paid to those employees. 

For more information,see more from the IRS here.

  • $350 Billion in Interest-Free Loans Through Payroll Tax Deferral. Businesses of all sizes can avail themselves of payroll tax deferral which acts like an interest-free loan. It allows businesses to postpone paying their share of the 12.4 percent Social Security payroll tax owed on their workers’ wages. That will help provide liquidity quickly to struggling businesses, which typically pay those taxes semiweekly or monthly. Half of the taxes will be due at the end of 2021 and the other half at the end of 2022.

The payroll tax deferral is available to anyone and everyone, although businesses with Payroll Protection loans may have some limitations. Stay tuned to this space for updates.

  • Immediate Tax Refunds by Carrying Back Losses. Businesses can also “carryback” losses from 2018, 2019, and 2020 to the previous 5 years, which will allow businesses access to immediate tax refunds. The limit of 80 percent of taxable income is also suspended, so taxable income can be fully offset by these business losses. 
  • Tax Refunds for Investments in Qualified Improvement Properties: Small businesses that made investments in Qualified Improvement Properties during 2018 and 2019 can receive tax refunds now. This will reduce costs for interior improvements to buildings and encourage companies to invest.

These federal resources are here to help Main Street have cash now.

Want to read more on the fight against Coronavirus? Read our Coronavirus Bulletin here which contains our extensive FAQ about recent federal actions.