How Business Owners Can Benefit from the Stimulus Package
Washington Extends a Helping Hand – What Does It Mean for Business Owners?
Last month brought an unprecedented $2 trillion stimulus package passed by Congress to help Americans during the coronavirus pandemic. However, understanding what that help specifically looks like for you and knowing what you need to do to take advantage of it can be ambiguous.
While the Coronavirus Aid, Relief and Economic Security (CARES) Act seemingly has something for everyone (stimulus checks, tax deferrals, expanded unemployment benefits), a significant sum of money has been earmarked to aid small business owners. With required shutdowns and shelters-in-place enforced nationwide, business owners have been hit particularly hard.
Should you endeavor to read the 900-page bill in its entirety, it can be found here. If that’s not how you had hoped to spend your time, we have highlighted a few specific areas that all small business owners should have on their radar screen.
The Paycheck Protection Program
The Paycheck Protection Program (PPP) authorizes up to $349 billion in forgivable loans to help small businesses bridge the gap between now and whenever the economy turns around. This is a crucial program not only for business owners, but for the economy as a whole. According to the U.S. Small Business Administration (SBA), nearly two-thirds of all jobs in the country come from small business.
These PPP loans offer low-interest rates of 0.5 percent up to $10 million to assist in paying employees of small businesses and re-hiring those who may have been recently laid-off due to COVID-19. PPP loans will also help business owners pay rent, utilities and other needs, such as employee benefits, during the eight-week period after the loan is made. Payments will be deferred for six months.
These loans may be considered a grant if you meet certain guidelines, which would require no payback.
Economic Injury Disaster Loans
The SBA Economic Injury Disaster Loan (EIDL) offers assistance of up to $10,000 to business owners who have less than 500 employees, freelancers and independent contractors who are currently experiencing difficulties because of the current climate. These loans will not have to be paid back.
SBA Express Loans
Business owners who already have a relationship with the SBA can also apply for an Express Loan. These traditional seven-year loans have low rates and up to $25,000 that can be made available very quickly. Like many of the loans and programs in the CARES Act, the purpose of this loan is to aid small business owners in keeping up with payroll, rent, insurance payments and other needs.
You can click here for more information or to apply for any of the loans mentioned above.
Other Assistance – What About Personal Needs?
Financial planning for business owners can be complex. In addition to company financing, there are also personal financial needs that may be affected at this time when many are struggling to keep their doors open. The CARES Act can also help in the following areas.
If you have a federally insured single-family mortgage loan, you are eligible to receive up to one year of mortgage forbearance. Various qualifications must be met. To see if you qualify, call your mortgage servicer to discuss their forbearance process.
Student Loan Debt
All payments on federal student loans have been suspended until September 30, 2020. There will also be no interest accrued on eligible loans from March 13, 2020 to September 30, 2020.
However, not all loans qualify for this program. Discuss your options with your loan provider to determine whether your loan is eligible or ineligible. Stoppage of payments on ineligible loans will accrue fees and penalties, so a double-check is worthwhile here.
The April 15, 2020, federal tax-filing deadline was extended to July 15. This new deadline applies to individual returns, corporations and trusts. You do not need to file any forms to get the extension. The same extension also applies to estimated tax payments that were due on April 15 and June 15 – they are both now due on July 15. Late payment penalties and interest will not start accruing until July 16. You can file Form 4868 if you need additional time beyond July 15 to file your return.
The deadline for state taxes have also been extended in many areas.
Don’t Go It Alone
The past handful of weeks have been trying indeed. Remember, stress and fear can cause emotional decision making. Financial planning should be based on “cooler heads prevailing.” Read our recent blog post: When the World Feels Like It’s Falling Apart – Big Mistakes to Avoid.)
A proper course of action is to remain focused on your long-term goals and discuss any concerns with a fiduciary financial advisor you trust. For those able to shelve their anxiety, opportunities may abound. Linscomb & Williams recently examined why lower stock prices can actually be a good thing.
If you’d like to discuss your financial situation, contact us. The Linscomb & Williams team is here for you.