April 1, 2020
Re: A note to our community about the coronavirus (COVID-19)
Dear Small Business Owners,
As the coronavirus (COVID-19) continues to affect local communities and global economies, we want you to know that maintaining business continuity is a priority for us. We’re working to minimize disruptions and impacts to you so that we can still offer the same level of superior service and support you have come to expect from our team.
Recently the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress. This Act is intended to assist business owners in our time of crisis. Below is information we hope will be helpful to your business in this time of need.
The link below is to the Small Business Owner’s Guide to the CARES Act (the Guide). It summarizes the SBA lending and loan forgiveness process as it relates to the CARES Act. We believe that the main areas of focus for our clients are the Emergency Economic Injury Grant and the Paycheck Protection Program.
Emergency Economic Injury Grants and Economic Injury Disaster Loans
This relief allows for a $10,000 emergency advance for those business in dire need of emergency funds. Per the SBA this advance does not need to be repaid under any circumstance as long as it is used for qualifying expenses (see the Guide).
The application for the funds is completed on the SBA website. If you wish to apply after reading the Guide go to the sba.gov website. At the top of the page is a link for immediate application. We believe that these funds are first come, first serve, so if you are in need of a $10,000 advance due to the COVID-19 virus we recommend that you apply immediately.
Paycheck Protection Program (PPP) Loans
This relief allows for a loan that can be forgiven for small business owners who are retaining their staff through the COVID-19 pandemic. This loan is separate from the SBA economic injury loans and should not be taken to cover expenses covered by them. Small business owners will need to contact their local lenders in order to apply for this loan.
In addition to the information provided in the Guide, the links below include a sample application for the loan, the borrower’s information sheet, and a lender’s information sheet. This information is also available on the SBA web site and US Treasury web site.
Key parts in this process are maximizing the loan amount a small business can obtain and determining what counts as payroll costs.
What counts as payroll costs?
- Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee).
- Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit.
- State and local taxes assessed on compensation; and
- For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
How large can the loan be?
Loans can be for up to 2.5 times of your average monthly payroll costs from the last year. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
Mizick Miller is available to help you calculate these figures to make sure you maximize your loan amounts and adhere to the lending rules so that you can achieve loan forgiveness from your lender.
In addition to these SBA resources, there are other sources of relief that may be available to you as a result of this pandemic. Currently we are waiting for further guidance on payroll tax credits for retaining employees (Retention credits) that may be refundable to small businesses who retain staff and are significantly impacted by the pandemic. Please continue to follow us on Facebook, look out for e-mail blasts, and check our web site for more information.
Below are some other links we hope you may find useful as we try to get through these tough times.
Resources are also available to address some of your concerns.
Our commitment to you
Whether you have tax or financial planning questions or need advice on ways to navigate business challenges, we’re here for you. If you have any questions or concerns, please don’t hesitate to contact us at 419-562-0588 (Bucyrus) or 419-294-5109 (Upper Sandusky)
Thank you for allowing MizickMiller to be your accounting and financial information professionals.
Roger R. Miller, CPA, CVA
Matthew J Orians, CPA, CVA