15 Apr 25 strategies to save business and get benefit of relief fund from the USA government
The world right now is in a situation of chaos as the pandemic COVID-19 is progressing and is taking over the regular functioning of our lives be it eating, living, going out for work or even breathing. Everything has transformed overnight and fallout that has been caused in social, health, business and political sectors will echo for the time being. The paramount for now around the world is the safety concerns and the control of the pandemic spread.
As an enterprise our foremost concern is to address all your concerns. We would love for you to stay at home and abide by the rules of quarantine and self-isolation and take care of yourself and your loved ones. The humanity is in tough times and we are in this together. Hotlines and helplines have been set up and a lot of help is being provided by NGO’s and NPO’s and in times of crisis this is what we should take advantage of. Considering we are together going to get through this, we have lined up 25 Strategies that will help you get through the times of current crisis.
- Pay check Protection Program (PPP) SBA Loan: Pay checks for employees is proving to be the biggest expense increasing matter and is also extremely important for the sustainability of the employees in the current case. In this case the Congress has introduced the PPP loan program, a trustable option to help employees in this time of distress and also the owners in the same time and move forward steadily. Small businesses of any C Corp, LLC, sole proprietorship, type–S Corp, or independent contractor—only those with employees less than 500 qualify for the above. If the money mounts over $10,000 then it would not be considered as a payroll for any employee. Also, the loan receivable is based on 2.5 time of the average of company’s payroll policy including other benefits like health and retirement. Any kind of surety or guarantee is not requiring. 75% of the sanctioned loan must be used for employee pay check and the remaining can be used for rent, necessities, and basic utilities. And, if used in the suggested manner the entire loan shall be pardoned. Such excusing will not be considered “forgiveness of income debt”.
- SBA Economic Injury Disaster Loans (EIDL): In case your business has been hit by the COVID-19, you can apply for an EIDL loan directly from the SBA instead of your regular bank. You can be lent up to $2 million at a lower interest rates of 3.75% (2.75% for non-profits); the rates remain fixed for the full 30-year tenure of the loan received. EIDL are supposed to be used for working capital (i.e., to pay fixed debts, payroll, accounts payable), and not lost sales or profits or for expansion of the current capital or to pay off already existing debts. EIDL does not have any kind of policy that excuses the loan. 20% shareholders or owners of the business must give a surety or any form of guarantee but at the same time no property will be ceased. You can definitely apply for PPP and EIDL, instead you must as in just the case of applying our democratic government can grant you a sum of $10,000.
- Medium Sized Loans for Businesses: The COVID-19 Aid, Relief, and Economic Security Act (CARES) Act policy is providing loans for smaller businesses and NPO’s at a low interest at 2% with a condition of having employees only up to 10,000. The loan must be put in use to look after the employer’s workforce which counts to 90% of the money with full compensation and benefits, till September 30, 2020. Paying off debts and instalments would be pardoned for a period of at least 6 months.
- Main Street $600 Billion Lending: This has been introduced for businesses with a taskforce of less than 10,000 people. The maximum sanctionable amount is $25 million where the minimum is $15 million with the interest capped at 4% that being the maximum. This requires no repayment for one year in a term of four year. The recipient can only use it to pay payroll and not for the clearance of any other existing debts. This also limits purchasing of stocks or any kind of compensation including declaring the dividends.
- Large Loans for businesses: These are specifically for businesses that have been hit hard in the midst of the progressing pandemic, and for such enterprises where credit cannot be availed. The loan will be sanctioned at the current market rate, will be secured with the condition of the term being five years. Employment levels of at least 90% before COVID-19 is suggested to be kept by the business.
- $5,000 per Employee for all Businesses: The condition for this scheme is that the firm is supposed to lay off the employees and not fire them and hire them back as soon the conditions stabilise. On this condition they are eligible to receive $5,000 per employee. Any business that gets a PPP loan is not eligible for this, no double cross happens. For the first $10,000 retention credit is also available for up to 50%.
- Loan Forbearance from SBA: If there is a previously existing SBA loan that has been accounted for your business, the CARES Act requires the Government to automatically make payments for the period of 6 months for starting from the 1st of April for you. Free payments should not be put forward as income. This is for real.
- Extensions to Pay Employer Payroll Taxes: Owners are allowed to extend the deadline for the dollars that parts for the business owner for Social Security taxes, which is an accountable sum. Extension is provided to pay the sum- until December 31st, 2021 to pay only half of it and the rest half can be paid until December 31st, 2022.
- Modifying Net Operating Losses: Net operating losses (NOL) in the existing year cannot be taken back for reductions. This currently a subject of limitations on taxable income. According to the policies of the new ACT, the NOL that arose in the previous years can be put back to at least five years. Looking back at tax returns starting from 2013 onwards the policy can be leveraged upon by using the losses and fixing all the returns. You can be eligible for a quick refund before fixing returns, all you need to do is ask for it.
- Lottery ticket for Real Estate investors: You can use the devaluation of real estate to set up to an amount of $500k in terms of capital gains in a year. This, now hold no limit for the year 2018 and throughout 2020. Which also means the returns in the year 2018 and 2019 can be fixed to leverage the most out the current situation.
- Emergency Paid Sick Leave (EPSL) Two Weeks: Employers are now supposed to sanction sick leave for employees if they account for less than 500 in counting. The FFCRA requires that the employees that qualify can receive paid leave from work for up to two weeks, where the federal government is responsible for the pay check through payroll tax credits. Employees that qualify are those that cannot afford to work or even telework because of stay-at-home orders, doctor’s recommendations, or are responsible for looking after an individual or children with schools closed due to COVID-19.
- Family Medical Leave (FMLA) 10 Weeks Leave: An employee has the right to ask for a paid leave foe up to 10 weeks of time with limiting benefits and 2/3rd of the totally payroll. In this case a reimbursement to the owner is made with a reduction in taxes that he is liable to pay. Any employee is eligible for the leave who cannot work or work from home due to certain limitations like looking after a child that is minor or other child care issues like schools not functioning for safety reasons or the place of the childcare.
- Section 139 Tax-Free Deductible Payments: The current scenario in regards to COVID-19 is worsening and people need money to sustain, considering the owner is liable to pay the employees to cover basic necessities for family and self. Reimbursable expenses include unreimbursed existing medical expenses, increased utilities, funeral expenses, work from home expenses such as internet connections, computers, office supplies, and increased childcare expenses in the progressing pandemic situation.
- $1,200 Checks to 125 Million People: Pay checks for adults with a sum of $1,200 and $500 for kids below the age of 17 will be provided to people who make $75,000 as individuals and $150,000 as a household. The direct grants phase out to almost zero if the individual earning more than $99,000 or $198,000 for married couples. The cash payments will be based on your tax filling from previous two years. People who claim Social Security benefits but are not tax payers are still eligible for it. Although non-residents are not eligible, but H-1 and L-1 visa holders are eligible to receive the check as they are tax paying citizens. A requirement for the same is also having a social security number. The partners of H-1 and L-1 visa holders that with no SSN won’t be eligible for the pay check. The others who are not legally citizens and also don’t hold an SSN are also not eligible for the same.
- Benefits for Unemployed: Usually the unemployment benefits lasted for up to 26 weeks but in the light of the current situation around the world the same has been extended 39 weeks with and addition of extra 13 weeks. This also includes adding an amount of $600 by the government for up to 4 months. Earlier the benefits could not be claimed by contract workers, uber drivers or freelance employees and other self-employed people but according to the current policies they are now eligible for the same. Also do not forget that all the benefits for unemployment are tax- imposed income. Many employees whose job hours were cut or full-time work put to half time can also apply for these benefits.
- Retirement Money: We do not ideally suggest that you should dive into your future saving unless the situation is completely out of hands. But in times of crisis following a certain rule and finding a new solution might help like the following: I) With an interest rate of 5% a sum of $100,000 dollars can be received and paid back in equal instalments with 10% penalty. II) A penalty free distribution is also possible with money mounting up to $100,000. This money can be kept or paid back. III) For citizens over the age of 72 years old the mandatory distributions for 2020 have been suspended.
- Reporting the Credit: The loan sanctioning party or the lender must allow the suffering borrower/ consumer to skip loan payments of pay a portion of it, and not report the skipped payment to credit reporting agencies so that there is no negative impact on the consumers credit report standing.
- Student Loans: If you are already indebted with a federal student loan, your monthly payments can be suspended through Sept. 30, 2020, without any extra interest. Deductible contributions up to $5000 can be made by the employers for any student loan payments. Taxes will not be imposed on these contributions.
- Tax Deadline Extended: Almost all the States including IRS have revised the deadline for the 15th July for tax filing which was earlier scheduled for the 15th April. In other cases, as well any kind of instalments and returns due to IRS are due for 15th July, 2020. Almost all the states have been following the above timeline.
- Deadline extension for IRA Contribution: A 90-day extension of time for everyone to make their 2019 IRA contribution, of up to $6,000 (or $7,000 if over age 50), until July 15, 2020 has been announced by the IRA for the time being.
- Charitable Contribution Deduction Limitation Eliminated: (AGI) has been adjusted in the gross income limitations on charitable contributions that have been suspended for 2020. In this case more charitable contributions will be deducted if the deductions are itemized.
- H-1, L-1 Visas, Green Cards, I-9s all Have Help: Different types of Visa holder like the H-1 are also allowed to telework where LCA’s can be provided at home according to the ongoing policies. Where physical presence rules have also been pardoned for I-9. USCIS will excuse the delays and will provide flexible timelines.
- Get Out of Contracts: Major clauses help the parties to be free of the contractual obligations in scenarios like the current Coronavirus pandemic where the obligations stated in the clauses re beyond control and cannot be neglected that have eventually led to the delay in the fulfilling of any term. The fact that it’s impossible to perm any stated obligations in times like these should be proved. Theories of commercial disfunction can be used in the current case for excusing no performance.
- Take a look at your Insurance Policies: What we first need to see is how much the business and the revenue has suffered due to the pandemic. Analyse if your Insurance policies have any claim terms or coverage for this particular loss caused by the pandemic in terms of business loss claim, commercial liability, errors or Omissions, and employee compensation.
- Don’t give up already: Several states have restricted commercial and residential evacuation by the landlords, a break has been forces to put on monthly payments to lenders, cities and counties are providing aid and help for those affected by the COVID-19 which is almost all of us whether financially, emotionally or physically. Let’s be in this together and maintain distance.