How to save your business with the stimulus package

As COVID-19 continues to dominate the news, it’s important to remember that the wave of uncertainty will pass.  Your goal to have a thriving business does not need to change.  But how you get there does.  Which is why your focus needs to remain on managing the interim, and what viable options are available to keep your business and your employees afloat.

As you know, Congress passed the largest stimulus bill in history on March 27, 2020.  Dedicating $350 billion in relief to small businesses.

Changes and regulations are changing daily so it’s important to understand your options and take action quickly.  The stimulus package has many nuances, so strap in and get ready to look at every area of your business.  From payroll to healthcare to paid time off…it all matters.

We’ve broken down the package in laymen’s terms and provided checklists, links and resources so you can make the best decisions for your business and employees.

CARES Act: Payroll Protection Loan, Employer Tax Credit and Employer Social Security Tax Deferment: Under this act, employers have been given options to help cover payroll and related expenses.

1. Employer Tax Credit for Employee Retention:  This tax credit is available for employers who experience full or partial operation suspension due to a COVID-19 government shut down order, or employers whose gross receipts decline more than 50% when compared to the same quarter in the prior year.

• • Tax credit based upon qualified wages paid to employees or incurred between March 13, 2020 and December 31, 2020.
  • Employers with 100 or fewer full-time employees: All employee wages will qualify for credit regardless of whether employer is open or subject to COVID-19 shut-down order.
  • Employers with greater than 100 full-time employees: Wages paid to employees will qualify for credit only if employees were not providing services due to COVID-19 related circumstances.
  • Maximum credit per employee: The maximum credit is $5,000 per employee. It is based upon the first $10,000 of compensation, which includes health benefits paid to an eligible employee.

Additional information can be found here.

2. Employer Social Security Tax Deferment:  Employers may defer their share of Social Security tax deposits (i.e., the 6.2% tax paid on employee wages) for 2020 over the next two years.

• • 50% of employers’ Social Security tax will be due on December 31, 2021.
  • 50% of employers’ Social Security tax will be due on December 31, 2022.
  • Deferral is not available if employer has had loan forgiveness under the CARES Act’s new SBA loan forgiveness provisions.

OR

3. SBA Loans – These loans will be extended at 2.5 times historical average monthly payroll, will be forgiven if used for payroll, health insurance, rent and or utilities. After the initial 8 weeks they will convert to a 4% interest rate and up to 10-year term for any remaining balance not forgiven. These loans will not require collateral or personal guarantees. Get a US Chamber of Commerce Guide & Checklist here.  You may also apply @ SBA Loan Application or contact your banker.  Should you need additional help or if you are looking for some personalized service, feel free to reach out to Song Keovongsak with United Community Bank @ 678-234-0081.  He has offered to help businesses with their loans.

If you want to take advantage of the SBA Loan, most banks will want the following items to help expedite the application process:

1. 2017, 2018, and 2019 business taxes. If 2019 is not completed, include 2016 and an end of the year P&L and Balance Sheet for 2019
2. Current 2020 P&L and Balance Sheet
3. Current debt schedule
4. Current A/R and A/P aging reports if available
5. 2017, 2018, and 2019 personal taxes. If 2019 is not completed, include 2016 and a W2/K1 for 2019
6. Personal Financial Statement
7. Copy of payroll tax filings between February 15^th, 2019 and February 15^th, 2020
8. Monthly rent expense

Please note the SBA loans are time critical and are designed to keep employees working through the crisis.  They will be granted through 6/30/20 or until the money is spoken for, which means time is of the essence.

Healthcare’s reaction

Insurance carriers have also tried to help employers by implementing temporary changes through July 2020.  Changes range from eligibility waivers to emotional support depending on the carrier therefore, it is essential that you contact your broker to determine how your plans may have been altered.  To help you navigate, we have provided a benefits briefing from the stimulus package here  and compiled an initial list of questions you may want to ask your provider:

1. Can temporarily laid off employees stay on the group plan?
2. Are grace periods extended?
3. How long are waiting periods for employees who return to work after temporary reduction of hours or layoff?
4. If business is being closed due to COVID-19, can coverage continue?
5. Can benefit plans be downgraded to reduce premiums?
6. What, if any, emotional support is the carrier providing during COVID-19?

Remember, to check with your carrier for specific provisions to your plan.  Additionally, you may want to ask if there are any other plan designs that would reduce premiums.  Many level funded options are a fraction of the cost for many groups and provide all the same benefits.  If you’d like to learn more about this strategy, reach out to Stephen at Great South Benefits Group.

Summary of DOL Guidance for FFCRA:  The Department of Labor has issued multiple forms of guidance to clarify and address the Families First Coronavirus Response Act. Get a summary here to keep the facts straight.

HR Help:  Most employers are are riddled with employee questions from how do I layoff employees to how do I manage illness in my workplace and still keep going?  Regardless of your question, there are human resource companies ready to support you.  This company fielded over 6200 calls in just two weeks with their team of experts and their make it whole guarantee.  Check out TSG-HR Help Desk, it may be the best resource you find all day.

Of course, if you need more information regarding any of these topics, please feel free to reach out. I’m happy to help you find the answer.