27 March 2020
Many businesses have been asking what they can do to get the necessary funds they need to keep their businesses in operation. Many have also asked if they should "lay off" all of their employees, or if they have other potential options.
The purpose of this post is to provide you with a few potential options in dealing with the above issues:
SBA Economic Injury Disaster Loans
As the coronavirus pandemic prompts disaster declarations at the state and county level, small businesses and not-for-profits in those areas can apply online for low-interest loans through the U.S. Small Business Administration (SBA).
An SBA Section 7(b) Economic Injury Disaster Loan provides up to $2 million to help business with fewer than 500 employees pay fixed debts, payroll, accounts payable, and other bills that can’t be paid due to the loss of revenue caused by a declared disaster. The loans cannot be used to cover lost profits.
The interest rates for the loans are 3.75% for small businesses and 2.75% for not-for-profits. The SBA determines terms on a case-by-case basis, based on each borrower’s capacity for making monthly loan repayments. The maximum loan term is 30 years.
The loans also offer a one-year deferment on payments. This means that the first payment isn’t due until a year after the official date of the loan. However, interest starts accruing on the loan the moment the funds are disbursed.
Please click this link to learn more and apply SBA Loan Application
Employee Related Issues
Many clients have also asked what their options are with employees besides laying them off. The IRS is coming our with various tax credits to assist with the payment of workers impacted by the Corona Virus.
The IRS has established a special section focused on steps to help taxpayers, businesses and others affected by the coronavirus. We have been told that this page will be updated as new information is available. Please click this link to learn about these programs IRS Employee Wage Programs
Looming Tax Return Deadlines
At this point in time the IRS has also extended the due date of all income tax returns, and tax payments due on April 15, 2020 until July 15, 2020.
We hope that you follow the recommendations of health officials and stay safe through this unsettling time.
Questions? Contact NEHPBA.
Info from Napoleon/Christopher R. Lambert & Associates
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