COVID-19 FEDERAL RESPONSE Leveraging federal programs for immediate relief and long- term stabilization in the wake of COVID-19 This presentation is provided for general informational purposes. Because every situation is unique, this summary is no substitute for legal or tax advice. No representation is made that the quality of legal services performed by Fortif Law Partners, LLC is greater than the quality of legal services provided by other lawyers. This information is current as of April 3, 2020.
Action Items 1 2 3 4 5 6 7 8 Refundable Mid-Sized Expanded Expanded Payroll Tax PPP Employee EIDL Businesses Unemployment Other Paid Leave & Deferral Insurance Retention Loan FMLA Credit Program Small Business Large Business Nonprofit Individual
Summary of Federal Tools 1 Paycheck Protection Forgivable Loan Program Program (PPP) Loan 2 Expanded Employee Relief Paid Leave & FMLA 3 Refundable Employee Tax Relief Retention Credit 4 Payroll Tax Deferral Tax Relief
Summary of Federal Tools Summary of Federal Tools 5 Economic Injury Loan and Grant Program Disaster Loan (EIDL) 6 Mid-sized Business Loan Program Loan Program 7 Expanded Employee Relief Unemployment Insurance 8 A variety of federal tools Other intended to counteract the effects of COVID-19
Paycheck Protection Program Loan All businesses operating as of Feb. 15, Loans can be • payroll costs, 2020 with fully forgiven • interest on mortgages, 500 or fewer • rent, • and utilities when used to pay: employees - SBA will require that 75% of the forgiven amount be used for payroll. including: Forgiveness reduced if FTE headcount declines or salaries and wages decrease. • nonprofits (501(c)(3)s and churches with or without tax-exempt status as long as they satisfy the Applicants can apply and Businesses and sole proprietors can apply as of: requirements of 501(c)(3)), accept EIDL • veterans organizations (501(c)(19)), April 3, 2020 • tribal concerns, AND • self-employed individuals, Independent contractors and self-employed • sole proprietorships, and Small Business Debt individuals can apply as of: • independent contractors. Relief, in addition to the April 10, 2020 Businesses in certain industries are PPP loan, as long as eligible even if they have more than 500 there is no duplication in employees (NAICS Codes beginning PPP loans will be available through June 30, 2020. the uses of funds. with ’72’ use 500/location). https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf https://www.sbc.senate.gov/public/_cache/files/9/7/97ac840c-28b7-4e49-b872-d30a995d8dae/F2CF1DD78E6D6C8C8C3BF58C6D1DDB2B.small-business-owner-s-guide-to-the-cares-act-final-.pdf
Paycheck Protection Program Loan The sum of payments of any compensation with respect to employees that is: Payroll Costs • Salary, wage, commission, or similar Include compensation; • Payment of cash tip or equivalent; • Payment for vacation, parental, family, medical, and sick leave; • Allowance for dismissal or separation; • Payment required for the provisions of group health care benefits, including insurance premiums; • Payment of any retirement benefits; or • Payment of state or local tax assessed on the compensation of employees. https://www.sbc.senate.gov/public/_cache/files/9/7/97ac840c-28b7-4e49-b872-d30a995d8dae/F2CF1DD78E6D6C8C8C3BF58C6D1DDB2B.small-business-owner-s-guide-to-the-cares-act-final-.pdf https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf
Paycheck Protection Program Loan • Compensation of an individual employee in excess of an annual salary Payroll Costs of $100,000, as prorated for the DO NOT Include covered period • Taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code (EXPLAIN) • Any compensation of an employee whose principal residence is outside of the United States • Qualified Sick leave for which a credit is allowed under the Families First Coronavirus Response Act • Qualified Family leave where a credit is allowed under section 7003 of the Families First Coronavirus Response Act https://www.sbc.senate.gov/public/_cache/files/9/7/97ac840c-28b7-4e49-b872-d30a995d8dae/F2CF1DD78E6D6C8C8C3BF58C6D1DDB2B.small-business-owner-s-guide-to-the-cares-act-final-.pdf https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf
Paycheck Protection Program Loan Maximum loan is the lesser of X and D. X= (A*B)+C How much can I borrow? A) The average monthly payroll costs incurred over the year preceding the date on which the loan is made. B) 2.5 C) The outstanding amount of a loan under subsection (b)(2) that was made during the period beginning on 1/30/20 and ending on the date on which the covered loans are made available to be refinanced under the covered loan. D) $10,000,000 If your entity was not in business between February 15, 2019 - June 30, 2019 your calculation will differ slightly https://www.sbc.senate.gov/public/_cache/files/9/7/97ac840c-28b7-4e49-b872-d30a995d8dae/F2CF1DD78E6D6C8C8C3BF58C6D1DDB2B.small-business-owner-s-guide-to-the-cares-act-final-.pdf https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf
Paycheck Protection Program Loan • Applications can be submitted through: • any existing SBA 7(a) lender or any federally insured depository institution; How do I Apply? • federally insured credit union; • Farm Credit System institutions; and • any other Treasury-approved to participate in the PPP program. • Requires certifications from business and each 20% or greater owner that: • Loan is necessary in light of COVID-19; • Funds will be used for appropriate purposes; • Documentation of number of FTEs and costs will be provided to lender; and • During the period beginning 2/15/20 and ending on 12/31/20 the applicant has not and will not receive another loan under this program https://www.sbc.senate.gov/public/_cache/files/9/7/97ac840c-28b7-4e49-b872-d30a995d8dae/F2CF1DD78E6D6C8C8C3BF58C6D1DDB2B.small-business-owner-s-guide-to-the-cares-act-final-.pdf https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf
Paycheck Protection Program Loan Borrowers must apply through their lender for forgiveness. Forgiveness will be calculated as follows: • During 8-week period after origination of loan, Forgiveness qualified expenses will be forgiven: • Payroll costs, • Interest on Mortgage obligation, • Rent, and • Utilities. • SBA will require that 75% of the forgiven amount be used for payroll. • Forgiveness reduced if FTE headcount declines or salaries and wages decrease. NOTE that the loan funds can be used for a variety of business purposes but using the loan funds for such purposes will reduce the amount forgiven. Additionally, inappropriate uses can lead to criminal fraud charges. For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is 4 percent, zero loan fees, zero prepayment fee. https://www.sbc.senate.gov/public/_cache/files/9/7/97ac840c-28b7-4e49-b872-d30a995d8dae/F2CF1DD78E6D6C8C8C3BF58C6D1DDB2B.small-business-owner-s-guide-to-the-cares-act-final-.pdf https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf
PPP Loan Eligibility & Application Application is available here: https://home.treasury.gov/system/files/ 136/Paycheck-Protection-Program- Application-3-30-2020-v3.pdf https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf
PPP Loan Eligibility & Application Application is available here: https://home.treasury.gov/system/files/ 136/Paycheck-Protection-Program- Application-3-30-2020-v3.pdf https://home.treasury.gov/system/files/136/PPP%20--%20Overview.pdf
Expanded FMLA & Paid Leave Requires nearly all companies with 500 employees or less to Expands Family Medical provide paid leave Leave Act (FMLA) to nearly all employers with for use during COVID-19 pandemic (full- and part-time). less than 500 An exemption to employees Effective as of providing leave for child April 1, 2020 care exists for companies with less than Includes FTE, PTE, and 50 and scheduled to sunset on temporary employees over December 31, 2020 the past 12 months) employees if it would jeopardize the viability of the business. https://www.dol.gov/agencies/whd/pandemic/ ff cra-employer-paid-leave#_ftnref3
Expanded FMLA & Paid Leave Creates six qualifying reasons requiring paid leave: (1) If the employee is subject to a federal, state, or local quarantine or isolation Qualifying Reasons order related to COVID-19; (2) If the employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19 (3) If the employee is experiencing; symptoms of COVID-19 and seeking a medical diagnosis; (4) If the employee is caring for another person who fits into the categories above; (5) If the employee is caring for a child whose school or daycare is closed due to COVID-19; and (6) Similar reasons which will be defined through regulations. https://www.dol.gov/agencies/whd/pandemic/ ff cra-employer-paid-leave#_ftnref3
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