UPDATES IN RESPONSE TO COVID-19 · Stimulus Package: Business Assistance What to Know / Overview • April 3- application opens for small businesses and sole proprietors • April

UPDATES IN RESPONSE TO COVID-19

CARES Act and Other Updates

TOPICS Coronavirus Aid, Relief, and Economic

Security Act (CARES Act)

Other Updates

CARES Act

Individual Assistance

Business Assistance

$2 Trillion Relief

$2 Trillion = $2,000 Billion = $2,000,000 Million

Checks to Individuals and Married Couples

• Based on 2019 tax returns if filed, 2018 tax returns if 2019 not filed, or based on Form SSA-1099 for

Social Security Benefits if filing not required (less than the standard deduction)

• If no 2018 or 2019 tax return filed and no Social Security - would receive a credit against your tax liability on your

2020 tax return if you file as long as you still meet the requirements

• **Must have a valid SSN for yourself, your spouse, and any qualifying children on your tax returns

• Those claimed as a dependent on another’s tax return won’t be receiving payment

• Payments will be made now through December 31, 2020

• Recalculate payment as an advance payment of credit on your 2020 tax return

Stimulus Package:


Stimulus Package:


Be Smart. Be Patient. Stay Calm.

And Don’t Give Your Info.!

Stimulus Package:


Stimulus Package:


Q&A

Unemployment Insurance Expansion

• CARES Act provides $250 billion in extended unemployment benefits

• Expansion is for individuals who are eligible for unemployment benefits under state or federal law

• How much is the expansion? Provides an additional $600/week unemployment benefits for the next 4

months (until July 31), on top of whatever a person would normally receive in their state

• CARES Act extends benefits an additional 13 weeks, for a total of 39 weeks in most states, through

December 31, 2020

• - The additional 13 weeks would be $600/week

Stimulus Package:


Pandemic Unemployment Assistance

• Temporary federally funded program to cover individuals who are self-employed, consultants, independent

contractors, part-time employees, or those who lack sufficient work history

• Covers individuals who are not otherwise eligible for unemployment or have exhausted their benefits

• Unemployed, partially unemployed or out of work due to the following reasons:

• Individual was diagnosed with COVID-19 or experiencing symptoms of COVID-19

• Individual(s) in household has been diagnosed with COVID-19

• Primary caregiver for child/children unable to attend school/facility closed as a direct result of COVID-19

• Individual cannot reach work due to quarantine from COVID-19

• Individual has been advised by a healthcare professional to self quarantine

• Individual was scheduled to begin employment and does not have a job or is unable to reach the job as a direct result of COVID-19

• Individual has become a major supporter for household because the head of household died from COVID-19

• Individual has been forced to quit a job as a direct result of COVID-19

• Individual’s place of employment is closed as a direct result of COVID-19

Stimulus Package:


Pandemic Unemployment Assistance

• Disqualified if able to work remote with pay or are/can receive sick pay or other paid leave benefits

• Do not need to show proof of actively seeking work

• Retroactive to January 27, 2020; ends December 31, 2020; maximum 39 weeks

• 100% of the covered individual’s regular weekly compensation; no less than $600 per week

• No waiting week

• For Ohio per the Lt. Gov. this will be available on an entirely separate website that needs set up

• Will take weeks to set up but the unemployment will be retroactive

• State of Ohio is working with various tech. teams to get up and running a.s.a.p.

• Pennsylvania working on separate portal for self-employed unemployment benefits

Stimulus Package:


Other Provisions

• Waiver of 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement

accounts for coronavirus-related purposes

• Income subject to tax over 3 years

• Taxpayer may recontribute the funds to a qualified retirement plan without regard to contribution limits if made

within 3 years

• Waiver of all RMD rules for 2020

• Allows for an exclusion of up to $5,250 from income for payments of an employee’s education loans

• Payment can be made to the employee or directly to the lender

• Applies to payments made by an employer after

date of enactment and before January 31, 2021

• Changes for charitable contributions

• $300 above-the-line deduction

• Elimination of income limitation for 2020

Stimulus Package:


Q&A

$367 Billion to the SBA

& About 30 Million Small Businesses

means

Roughly $12,200 available to Each Small Business

Stimulus Package:

Business Assistance

Paycheck Protection Loan

• **Forgivable loan**

• Incentivize employers to keep and rehire employees

• Generally for businesses with 500 or less employees (including sole props. and eligible non-profits)

• Exceptions apply for larger businesses and industries www.sba.gov/size-standards

• Must apply by June 30

• Waiver of affiliation rules for businesses in accommodation and food service industries, franchises and

businesses receiving financial assistance under the SBA

• Non-recourse

• Low interest rate

• Payment deferral of at least 6 months and not more than 1 year

Stimulus Package:

Business Assistance

http://www.sba.gov/size-standards




• Loan cannot exceed $10 million and is the lesser of:

1. 2.5 x previous 12 month average monthly payroll costs

plus outstanding amount under the SBA disaster loan program

or

2. If business non-existent in prior year period then

2.5 x January-February 29, 2020 average monthly payroll costs

plus outstanding amount under the SBA disaster loan program

Stimulus Package:

Business Assistance


Stimulus Package:

Business Assistance

Employee

Salary, wage, commission, or similar compensation

Cash tip or equivalent

Vacation, parental, family, medical, or sick leave

Allowance for dismissal or separation

Group health care benefits

Retirement benefits

State or local tax assessed on compensation of employees

Payroll Costs

Sole Prop. Or Independent Contractor

Wage, commission, income, net earnings from self-

employment, or similar compensation

Not more than $100,000 in 1 year as prorated for the

covered period


• Borrowers must confirm that:

a. The loan is necessary to support ongoing operations due to current economic conditions

b. The loan will be used to keep employees on payroll, make mortgage, lease, and utility payments

c. No other pending applications are duplicative of the covered loan request

d. They have not received amounts for the same purpose or duplicative amounts from February 15,

2020 to December 31, 2020

Stimulus Package:

Business Assistance

Q&A


Stimulus Package:

Business Assistance

LOAN FORGIVENESS

• Eligible for loan forgiveness if payments made by the borrower during the 8 week period after

the loan origination date are spent on payroll, interest on mortgages, rent, and utilities

• Amounts must be substantiated to the lender

• Amounts forgiven would not be taxable to the borrower or business owner

• Reduced if the business decreases headcount or salaries and wages but without regard to employees

rehired or salaries and wages restored by June 30, 2020

• If remaining balance exists after reduction then that balance would continue to be guaranteed by

the SBA and the loan would have max. maturity of 10 years from date when the borrower applies

for loan forgiveness at a max. interest rate of 4% with 0 loan fees and repayment fees


Stimulus Package:

Business Assistance

PARTIAL LOAN FORGIVENESS

Forgiveness reduced if there is a reduction in the number of employees OR a reduction

of greater than 25% in wages paid to employees:

• If there is a reduction in the number of employees

• A reduction of greater than 25% in wages paid to employees


Stimulus Package:

Business Assistance

EXAMPLE

$1.2 million payroll cost for 12 month period

/ 12 months

= $100,000 average monthly payroll cost

x 2.5

= $250,000 what you can get for a loan


Stimulus Package:

Business Assistance

How to Prepare to Apply

1) Articles of Incorporation/Organization for each borrowing entity

2) Bylaws/ Operating Agreement for each borrowing entity

3) Copies of all owners' Drivers Licenses

4) Payroll Expense Verification Documents a.) Payroll Summary for the last 18 months

b.) IRS Forms 940 and 941

c.) 1099s Issued

d.) PEO or Leased Employee Agreements and copies of trailing 12 month invoices

5) Trailing 12 month Profit and Loss Statement

6) Most recent Mortgage Statement (if you own your building)

7) Copy of your lease agreement (if you rent your building)

8) Last 3 months of utility bills

9) Completed Bank Application (not yet available)

10) Personal Financial Statement (format not confirmed)

*Be patient.*


Stimulus Package:

Business Assistance

What to Know / Overview

• April 3- application opens for small businesses and sole proprietors

• April 10- application opens for independent contractors and self-employed

• Due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll

• Applications are through any 7(a) lender, federally insured depository institution, federally insured credit

union, and Farm Credit System institution that is participating

• All loan terms will be the same for all applicants

• Payments can be deferred for 6 months with a two year life of the loan

• No penalty for prepayment

• Funding is on a first come, first serve basis so preparation and early application is KEY

Other SBA Loan Programs

Stimulus Package:

Business Assistance

• Economic Injury Disaster Loan (EIDL) • Terms-up to 30 years, $2 million

• Interest at 3.75% for businesses and 2.75% for non-profit organizations

• *NEW INFO.* $17 Billion for SBA payment of borrower principal, interest, and fees for a 6-

month period beginning with the next payment due, for 7(a) including Community

Advantage, 504, and Microloan borrowers. This is not a deferment but is actual debt

forgiveness for the borrower.

• Apply at disasterloan.sba.gov

• $10,000 advance available • Funds will be made available within three days of a successful application, and this loan

advance will not have to be repaid

Stimulus Package:

Business Assistance

PPP EIDL

Generally businesses and non-profits with less than 500

employees

Comes from a 7(a) lender

$10 million max. can be forgiven up to principal amount (subject

to certain criteria)

10 year max. amortization after forgiveness

Option to defer payment 6 months-1 year after forgiveness

No participation or prepayment fees

No collateral or personal guarantees

Generally businesses and non-profits with less than 500

employees

Comes directly from the U.S. Treasury with no bank involvement

$2 million max. at 3.75% interest rate for small businesses and

2.75% interest rate for non-profits

30 year max. amortization

Deferral for first year principal and interest still accrued

No participation or prepayment fees

Collateral required if loan is >$25,000 and personal guarantee

required if loan > $200,000

Emergency advance up to $10,000 that is not paid back

Q&A

Employee Retention Credit

Refundable Tax Credit for 50% of Wages Paid to Employees

• Would provide refundable tax credit for 50% of wages paid by employers to employees

• Available to employers whose 1) operations were fully or partially suspended due to the coronavirus or 2) gross receipts

declined by more than 50% when compared to the same quarter in the prior year

• Available to be claimed on a quarterly basis but caps at $10,000 (including health benefits ) in total per employee for all

quarters

• Credit based on “qualified wages paid”

• For employers with more than 100 full-time employees, qualified wages are paid when employees are not providing services

due to the above.

• For employers with 100 or less full-time employees, all employee wages qualify for the credit even if the business is open.

• Credit provided for the first $10,000 of compensation (including health benefits) paid to an eligible employee

• Credit provided for wages paid or incurred from March 13, 2020 to December 31, 2020

Stimulus Package:

Business Assistance

Stimulus Package:

Business Assistance

Employer Payroll Taxes Delay of Payment

• Allows deferral of payment of employer’s 6.2% share of Social Security tax

and self-employed 50% equivalent of payroll taxes

• Paid over the next 2 years

• Half due by December 31, 2021

• Half due by December 31, 2022

Stimulus Package:

Business Assistance

EXAMPLE

Stimulus Package:

Business Assistance

**NOTE**

Participating in the Paycheck Protection Program (loan) disqualifies you from deferring the

employer payroll taxes and from taking the employee retention credit.

Q&A

Other Provisions

• Increase NOL carryback period to 5 years

• For those in 2018, 2019, or 2020

• Eliminates loss limitation rules for sole prop. and pass-

through entities

• NOL’s arising before January 1, 2021 to fully offset

income

• Immediately refundable AMT credits for

corporations

• Increase in business interest expense limitation to

50% (from 30%)

Stimulus Package:

Business Assistance

• Immediate write-off of qualified improvement

property

• Increase to 25% of AGI limitation for corporate

charitable contributions

• Also increase to 25% of AGI limitation for contribution

of food inventory

• Alcohol excise tax exemption for alcohol used in

hand sanitizer and suspension of excise taxes on

aviation and kerosene used in aviation fuel

• For 2020 only

Ohio Changes

• State testing for all K-12 schools cancelled for 2019-2020 school year

• State, city, and municipal tax filings due July 15

• OH primary election moved to April 28 and completed entirely through absentee ballots

• Will count if you’ve already cast your ballot

• Recently retired state workers allowed to be rehired at state and youth prisons, Department of Mental Health

and Addiction Services, Department of Veterans Services, and Department of Developmental Disabilities

• No public water disconnection for 60 days

Other Updates

Ohio Changes

• City council, county commission, and board of election meeting video conferences

• Expired driver’s licenses and vehicle registrations extended 90 days after expiration date

• Allowance of recent nursing graduates to apply for temporary 90-day certificate to work immediately

• Transfer of rainy day fund to the general revenue fund (amount to be determined)

• EdChoice no longer using income-based vouchers

• Statute of limitations paused for civil and criminal cases

Other Updates

Pennsylvania Changes

• Emergency order prohibiting terminations by utilities that are under the PA Public Utility Commission

jurisdiction:

• Electric, natural gas, water, wastewater, telecommunication, steam

• PA primary election moved to June 2

• Expired driver’s licenses and vehicle registrations between March 16, 2020 and March 31, 2020 extended until

April 30, 2020

• Temporarily suspended cash payments PA Turnpike and PA Department of Transportation reopening some indoor

facilities at rest areas

Other Updates

Pennsylvania Changes

• New Resources and Loans for Businesses

• COVID-19 Working Capital Access Program (CWCA)

• PA Department of Community and Economic Development

• SBA Economic Injury Disaster Loan (EIDL)

Other Updates

Visit pa.gov and sba.gov for updates

Marcy Angelo, Director of Client Relations

[email protected] or 330.318.3487 ext. 414

Angela Johnson, Communications Coordinator

[email protected]

Tim Petrey, CPA, CGMA, Managing Partner

[email protected] or 330.759.8522 ext. 103

Contact Information

Q&A

Final Questions

Disclaimer

Information provided in this presentation is based on information available as of 3/31/2020.