For small businesses that are being shut down due to Coronavirus COVID-19 here are some resources that are available. Feel free to call us at Davis Miles McGuire Gardner for specific advice (the advice is free from Davis Miles McGuire Gardner with your monthly membership with LegalShield). If you are already a client, we are ready to help:
1) U.S. Small Business Administration (SBA) is offering small businesses and certain non profits federal disaster relief in the form of low-interest loans for specific working capital purposes. This emergency lending program is separate and distinct from the SBA guaranteed payroll loans authorized under the CARES Act. https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-provide-disaster-assistance-loans-small-businesses-impacted-coronavirus-covid-19.)
2) The Coronavirus Aid, Relief, and Economic Security (CARES) Act: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
- The main features for small businesses are emergency grants and a forgivable loan program for companies with 500 or fewer employees. There are also changes to rules for expenses and deductions meant to make it easier for companies to keep employees on the payroll and stay open in the near-term. A) Emergency grants: The bill provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs. B) Forgivable loans: There is $350 billion allocated for the Small Business Administration to provide loans of up to $10 million per business. Any portion of that loan used to maintain payroll, keep workers on the books or pay for rent, mortgage and existing debt could be forgiven, provided workers stay employed through the end of June. C) Relief for existing loans: There is $17 billion to cover six months of payments for small businesses already using SBA loans. https://www.npr.org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package and https://disasterloan.sba.gov/ela/
- The bill sets aside roughly $500 billion in loans and other money for big corporations. These companies will have to pay the government back and will be subject to public disclosures and other requirements
- Businesses of all sizes: The bill establishes a fully refundable tax credit for businesses of all sizes that are closed or distressed to help them keep workers on the payroll. The goal is to get those employees hired back or put on paid furlough to make sure they have jobs to return. The credit covers to 50 percent of payroll on the first $10,000 of compensation, including health benefits, for each employee.
- For employers with more than 100 full-time employees, the credit is for wages paid to employees when they are not providing services because of the coronavirus. Eligible employers with 100 or fewer full-time employees could use the deduction even if they aren’t closed.
- Relief for companies that sponsor defined benefit pension plans. The CARES Act provides companies with cash flow concerns additional time to meet their single-employer plan funding obligations by delaying the due date for “minimum required contributions” otherwise due during 2020 until Jan. 1, 2021, at which time the 2020 contributions plus interest will be due.
3) Debt Finance during Covid19: Should you draw down revolving lines of credit? Are you considering federal payroll loans and other relief? Now is the time to talk to your lender. Contact us with questions regarding loan documents and other legal issues.