Coronavirus Relief Act and CARES Act provisions to help small businesses and nonprofits
These provisions have their restrictions, guidelines, and limitations for qualifications. We have summarized some of the current programs for your convenience. You should review all guidelines before applying for any of them.
Payroll Protection Program (PPP)
Authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. Under the program, small businesses with 500 or fewer employees are eligible for loans to pay up to eight weeks of payroll costs, and most mortgage interest, rent, and utility cost over an 8-week period after the loan is made.
The loan amounts will be forgiven as long as loan proceeds are used to cover qualifying payroll costs, mortgage interest, rent and utility costs. Loan payments can be deferred for six months. No collateral or personal guarantees are required. Forgiveness will be reduced if full-time headcount declines, or if salaries decrease. Treasury noted at least 75% of the forgiven loan amount must have been used for payroll.
Lenders may begin processing loan applications as soon as April 3, 2020. View and download the Paycheck Protection Program Application.
View and download the Coronavirus Emergency Loans Small Business Guide and Checklist from the U.S. Chamber of Commerce.
Employee retention credit
A refundable payroll tax credit for 50% of qualified wages (up to $10,000) paid directly by employers to certain employees during the COVID-19 crisis.
The credit is provided for the first $10,000 of compensation, including health benefits paid to eligible employees. An employer is eligible for this credit only if they were carrying on a trade or business in 2020 and the operation of the business is fully or partially suspended by government due to COVID-19 or the business has seen a significant decline in gross revenue (50% less than in the calendar quarter of the prior year) and until the business has a quarter where it is recovered sufficiently to 80% of prior year’s revenue.
If a business receives a loan under the new Payroll Protection Program (above), the business is not eligible for an Employee Retention Tax Credit.
Economic Injury Disaster Emergency Grants
An emergency advance of up to $10,000 to small businesses and private nonprofits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). Grants and loans may be used to keep employees on payroll, pay for sick leave, meet increased production costs due to supply chain disruption, or pay business obligations, including debts, rent, and mortgage payments.
Delay of Payment of Employer Payroll Tax and Self-Employment Tax
The new law helps alleviate the burden on employers struggling to make payroll by allowing the employer’s share of 6.2% of Social Security tax that would be due form the date of the Cares Act enactment (March 27, 2020) through December 31, 2020, to be paid on December 31, 2021 (50%) and December 31, 2022 (50%).
If a business receives a loan forgiveness under new Paycheck Protection Program (above), the business in not eligible to defer payment of payroll taxes.