Because carriers look negatively on lapses in coverage, unless you are closing your doors for good and plan on dissolving your business, you should continue your business-related insurance policies. Reach out directly to your commercial insurance agent/broker to discuss any available relief options that your carrier(s) may be able to grant.
FEDERAL CARES ACT RELATED RELIEF
You can view our article about the CARES Act relief here
Economic Impact Payments
A one-time payment of up to $1,200 for individuals or $2,400 for married couples
Parents also receive $500 for each qualifying child
Taxpayers above these AGI amounts will have the payment amount reduced by $5 for each $100 above the $75,000/$150,000 thresholds
Economic payments will be available through 2020
Whichever tax return you have filed most recently, 2019 or 2018, will be the one the IRS uses information from to calculate the payment amount
Must have filed either 2019 or 2018 tax returns.
Individuals with an adjusted gross income up to $75,000
Married couples filing jointly with an adjusted gross income up to $150,000
Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
The IRS will calculate and automatically send the economic impact payment via direct deposit into the same bank account shown on your most recent tax return. For those who didn’t provide bank information, the Treasury is planning a web-based portal for taxpayers to provide the info.
Paycheck Protection Loan Program
Small and medium-sized businesses qualify for a federal loan, with loan forgiveness, dependent on workers remaining on payroll or being re-hired.
The deadline to apply is June 30, 2020
Lenders have 60 days from the date of application to give their decision
Fully guaranteed by the federal government through Dec. 31, 2020
500 or fewer employees at each location (for franchise and multi-location owners)
Loan amount based on 250% average monthly payroll cost for the previous year (i.e. if you have $100,000 average monthly payroll, you'd be eligible for a $250,000 loan.
Seasonal employers included up to $10 million
Waived collateral requirements
Waived "credit elsewhere" requirements
Loan forgiveness for the amount of the loan used for:
Payroll costs, defined as compensation to employees (salary, wage, commissions, cash, paid leave, severance payment); and compensation to sole proprietors or independent contractors (including commission-based compensation) up to $100,000 in 1 year, prorated for the covered period)
Payment for group health benefits, including insurance premiums
State and local payroll taxes
Group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
Payments of interest on mortgage obligations
Rent/lease agreement payments
Loan forgiveness amount will be reduced if employers
Lay off more employees compared to prior periods, unless all employees since February 15th are rehired
Reduce employee salary or wages by more than 25% during the covered period between February 15th and June 30th unless all employees whose wages/salary was reduced, will have wages increased to previously reduced wages prior to June 20th.
You can visit the SBA’s Payroll Protection Program webpage here
Economic Injury Disaster Loan & Loan Advance
$10,000 Loan Advance deposited within 3 days of application, that does not have to be repaid, even if the loan is not approved
Low-interest disaster loan of up to $2 million
3.75% for small businesses and 2.75% for private nonprofit organizations
Long-term repayments, up to a maximum of 30 years.
Use to cover accounts payable, debts, payroll and other bills you are unable to pay due to coronavirus.
If you need help applying you can contact:
SBA Disaster Assistance Customer Service Center at 1-800-659-2955
San Diego and Imperial Small Business Development Center (SBDC) guidance through your business recovery process, including applying for disaster recovery loans if needed via the online service, which can be requested by clicking here
Questions can be directed to the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail firstname.lastname@example.org
You can visit the SBA’s COVID-19 Economic Injury Disaster Loan & Loan Advance site here
SBA Express Loan Changes
Temporary loan maximum of $1 million through December 31, 2020
Waiver of Prepayment Penalty
Loans taken out specific to the CARES Act will have no prepayment penalty for any payment made on or before December 31, 2020.
504 Loan Payment Deferment
The SBA issued a notice that lenders can and should work viable businesses suffering cash flow problems.
7(a) lenders - If not sold on the secondary market, Lenders may grant up to a six- month deferment. If sold on the secondary market, Lenders may grant a one-time unilateral deferment of up to 90 days without investor consent.
Certified Development Companies - May defer loan payments for up to six cumulative monthly payments or 20% of the original loan amount, whichever is less.
Interest accrues during a deferment period, and maybe handled in one of these ways:
Paid during deferment
Paid in a lump sum at the end of deferment
Payment increased for a period of time after the deferment ends to make catch up payment
After deferment the payments can be applied to accrued interest, then to principal
The SBA encourages payment during periods of deferment, even if it is only $1, to get in the habit of making payments and keeping your pre-authorized payment method active.
Contact your lender directly to apply for deferment.
Federal Tax Extension
Individuals and businesses can postpone filing and paying taxes until July 15, 2020
State Tax Extension
Individuals and businesses can postpone filing and paying taxes until July 15, 2020
Defer Federal Payroll Taxes
Allows employers and self-employed individuals to defer the employer 6.2% share of Social Security tax they are responsible for paying.
Deferred taxes must be paid over the next two years, at least half by Dec. 31, 2021 with the remaining half due by December 31, 2022.
Another option is to contact the IRS and request an installment plan for your tax bill or ask to be put in Currently Not Collectible status.
Unemployment for Self-Employed
APPLY HERE NOW (for California application)
Temporary Pandemic Unemployment Assistance Program
Self-employed, independent contractors and individuals with limited work history who are unemployed, partially unemployed or unable to work.
Pays 100% of your regular income with a minimum of $600/week
Maximum of 39 weeks of benefits
Additional $600 per week in benefits for four months
Does not require you be actively seeking work
Eligibility dates from Jan 20, 2020, through Dec 31, 2020
Employee Retention Tax Credit
Refundable payroll tax credit for 50% of qualified wages paid by employers, subject to closure due to COVID-19, to employees during the COVID-19 crisis
Employers whose operations were fully or partially suspended as a result of the shut-down order
Employers whose gross receipts declined by more than 50% compared to the same quarter the previous year.
Employers that take paycheck protection loans are NOT eligible for this credit
The first $10,000 of compensation, including health benefits, paid to an eligible employee based on qualified wages paid or incurred March 13, 2020, through December 31, 2020
Employers with greater than 100 full-time workers:
Qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above
Contributions to health insurance costs qualify but exclude amounts you already received a tax credit on
Employers with fewer than 100 employees:
All wages count, whether the business is open or closed during shut down
Credit provided on the first $10,000 of compensation, including health benefits, paid to an eligible employee
Advanced Tax Credits for Paid Leave
Allows employers to receive an advance tax credit for required paid family and sick leave under the Families First Coronavirus Response Act (FFCRA) instead of having to be reimbursed
Dollar-for-dollar reimbursement from the IRS in the form of a tax credit
Allows employers to retain as their tax credit otherwise-owed payroll taxes up to an amount equal to the costs they incurred in providing FFCRA compliant leave
If such payroll tax retention is insufficient to cover the costs of the FFCRA leave the employer provides, the employer may request an advance of anticipated tax-credits and refunds
Modifications for net operating losses
Provide financial assistance and liquidity to corporate taxpayers
Allows modification for net operating losses by relaxing the use of NOL
Temporarily removes the taxable income limitation.
NOL arising in a tax year beginning 2018, 2019 or 2020 can be carried back five years
Allows a corporation to fully offset income by utilizing losses and amending prior year returns to provide cash flow by claiming a refund of previously paid federal income taxes
Allows non-corporate taxpayers (pass-through businesses and sole proprietors) to utilize excess business losses and access critical cash flow to maintain operations and payroll for their employees.
Removes the limitation on the deduction of business losses for taxable years beginning before December 31, 2020
Contact your CPA to find out if your business qualifies and if this provision would help
Recover Corporate AMT Credits
Allows for accelerated recovery of their AMT credits, initially to be refunded over several years, ending in 2021
Businesses can claim a refund for the full amount of alternative minimum tax (AMT) credits available, as shown on the business’ previously filed return
To claim this refund prior to filing a 2019 tax return, businesses will need to file Form 1139, Corporation Application for Tentative Refund, before December 31, 2020
Business Interest Limitation
Ability to deduct more interest expense for tax years 2019 and 2020
Interest Expense deduction based on 50% of the adjusted taxable income (ATI)
For tax years 2021 and later, the deduction reverts to the previous 30% ATI limitation
Write Off Qualified Facility Improvement
Ability to fully write off costs associated with improving facilities
Immediately write off costs associated with improving facilities, rather than having to depreciate the improvements over the 39-year life of the building
Allows amendment to a prior-year tax return to increase access to cash flow
Possibly file a Form 3115 and tax the deduction in 2019 or 2020
Excise Tax on Distilled Spirits Used to Produce Hand Sanitizer
Businesses who use distilled spirits to produce hand sanitizer in response to the COVID-19 pandemic will be exempt from paying excise tax for the 2020 year on those spirits
Use Retirement Plan Funds without Penalty
The 10% early withdrawal penalty is waived for distributions up to $100,000 from qualified retirement accounts for coronavirus-related purposes made on or after January 1, 2020
The distribution amount will be taxed over three years, but you can recontribute the funds within the three year period without affecting the annual cap on contributions.
There is also additional flexibility on loans from certain retirement plans for a coronavirus-related distribution. Contact your CPA to determine your eligibility
IRA’s, 401Ks and other qualified trusts, certain deferred compensation plans and qualified annuities are eligible.
Required minimum distribution rules for certain retirement plans in the calendar year 2020 are also waived
Contact your CPA and/or Financial Advisor to discuss eligibility and financial benefits.
CITY OF SAN DIEGO RELIEF
Small Business Relief Fund
Grants and forgivable or low to zero-interest-rate loans to eligible small businesses with 100 or fewer Full-Time Equivalent employees (as of Feb 28, 2020) for working capital.
Amounts will range from $10-$20k
Economic Relief Package
This economic relief package of 6.1 million reduces fees, provides certainty and offers support to local employers affected by COVID-19 and includes the following programs:
1. Tax Certificate Deferral Program
Business owners will not be penalized for late renewals for up to 120 days
One-year forgiveness period for Business Tax Certificate penalties and surcharges when re-establishing delinquent accounts
2. Commercial Utility Deferral
Suspends water billing fees
Removes late payment penalties
Ensures no commercial account shut-offs
3. Extension of All Building Permits
Extension of at least 180 days, rather than closing after 90 days of inactivity
Can be extended further upon review, determined on a case by case basis
Residential and Commercial Eviction Moratorium
Temporarily halts evictions in the City of San Diego from March 25-May 31, 2020
Tenants must demonstrate a substantial decrease in income or medical expenses caused by COVID-19 in order to qualify
Tenants are still responsible for the rent and a landlord may recover rent at a future time
CRAF Restaurants Care/COVID-19 Grant
Restaurants Care is a program of the California Restaurant Association Foundation (CRAF)
For restaurant employees facing an unforeseen hardship
Cover basic living expenses (rent, food, and utilities) as someone works through a crisis
If approved, notified via email and check sent within 7-10 business days
*Please note we are not attorneys so this is not legal advice. This is our interpretation of the programs that are available to you. You should seek the guidance of an attorney and/or CPA to help facilitate these programs. The details of these programs are constantly changing, and we will do our best to keep you updated as we find out more information.