As promised, in this series of emails we are going to share information and thoughts for alarm company owners on:
- How to cope with and succeed under the President’s Coronavirus “30 Days to Slow the Spread” Guidelines, and
- How to use this time to recover from the Coronavirus crisis and to improve and re-invent your company to make it better, stronger and more profitable this year and next.
The first step is to take maximum advantage of the cash funding that has been made available in the last two weeks from the US Government.
Obtaining this funding quickly is the exclusive subject of this post. Other immediate steps you need to take to re-invent and recover from the shelter-in-place environment will be discussed in subsequent blog posts.
There are three elements of the funding being provided by the Federal Government to mitigate the damage done by the Covid-19 virus and the extraordinary Guidelines and shelter-in-place orders most of us are living under:
I. PPP Program for all businesses:
You need to get your company approved and funded by the PPP Program. It’s a short and easy process.
The PPP Program is a program which was enacted into law barely a week ago, Friday, March 27, 2020 as part of the CARES Act. It provides for immediate funding (a forgivable loan) of 2.5 times your company’s average monthly payroll.
Almost every business will qualify as long as it was in existence on February 15, 2020. It does not matter whether your company is a corporation, an LLC, a partnership or an individual proprietorship. If it has an EIN number and employees you probably qualify.
In addition, after you receive the loan, if you spend the money on employee payroll through June 30, 2020 and account for it as required, the loan will be forgiven. There are no payments due for 6 months and the interest rate is 1%. If the loan is forgiven you will not have to pay back the loan.
In other words, the government will provide funding for you to pay all your employees for 2.5 months (up to a maximum of the first $100,000 annual rate of compensation for each employee).
You apply through your bank. Funding applications began to be accepted Friday, April 3 and a few companies even report they have already received funding.
There are some rules, of course, and links to the additional information and the application provided by the US Treasury are below.
Be sure you also check your bank’s website and follow the instructions there.
You must investigate this and apply immediately. There are reports that the $349 Billion set aside for this program will be insufficient and its first come, first served so get your money today.
Call us if you have any questions.
II. Independent Contractors associated with your company:
Get your Independent Contractors to apply for funding through the PPP Program too.
If any of your staff or vendors is paid as Independent Contractors with end-of-year 1099s they may also file and get funding under the PPP Program. They will be able to borrow 2.5 times their average monthly income as well.
This Program is designed to help Independent Contractors through this crisis period when their Independent Contractor earnings may be less than normal or zero. Since Independent Contractors have never before been included as part of such a Federal Government stimulus program, expect some hitches and wrinkles over the next week.
Independent Contractors can begin applying for funds next Friday, April 10.
Instructions and application forms have not yet been issued, but presumably they will be the same or similar to those that apply to companies. Independent Contractors will presumably apply through their respective banks.
Your Independent Contractors may need your advice and help answering questions. Please give them copies of the information below and call us if you have any questions.
III. Economic Impact Grants to Individuals and Families:
In addition to the PPP Program, the CARES Act provides for one-time coronavirus stimulus checks of up to $1,200 per person for most Americans. The payments are variously called “stimulus checks”, “economic impact payments” and “recovery rebates” and these payments will be paid automatically.
The stimulus payments will be $1,200 for each individual adult plus $500 per child under the age of 16 for those individuals with Adjusted Gross Income (AGI) under $75,000 or on a joint return AGI under $150,000 on their most recently filed 2018 or 2019 tax return. For those with incomes over the threshold, the payments will be phased out so that no payments will be made to individuals with AGI over $99,000 or joint filers over $198,000. These payments are not taxable income, at least for federal income tax purposes.
When will these payments be received?
Pretty darn quick, if your direct deposit information is on file with the IRS or you receive Social Security payments via direct deposit.
On Friday, April 17, 2020 (less than 2 weeks from now) the government has stated it will begin to directly deposit payments in each individual or joint filer’s checking account providing the IRS or Social Security has your direct deposit account information.
If you allowed the IRS to electronically refund your overpayment of taxes in either 2018 or 2019 they already have your account information to make the direct deposit in your account.
If you receive Social Security or Medicare Payments via direct deposit the Federal Government has your direct deposit info and will use that account.
If you have not given your direct deposit information to the IRS or if you have changed bank accounts, the IRS is preparing a website for you to provide them with the information.
Direct deposit is the fastest way to get the payments.
If an individual has never had occasion to register for direct deposit, checks will be mailed to these individuals at the addresses on file at the IRS. However, checks will not begin to be mailed until after all Direct Deposits are sent out which probably means checks will not begin to be sent out until sometime in May.
Since the Treasury reportedly can only prepare and mail about 5 million checks per week, depending on how many Americans will receive their payments by check, it may take as much as 15 or 20 weeks to send all the checks. It may be August before some individuals receive checks.
Individuals will be well served to register their bank account information with the IRS so the payments will be directly deposited. It will be months quicker. Also, if your mailing address has changed, your payments will be further delayed unless you update the IRS’s database.
There are some rules for this program too and an excellent article from Business Insider, dated April 3, 2020, is linked below.
If you have additional questions call us at (800) 232-3584.
The document sources are listed below:
PPP Program Borrower Information Sheet: (PPP) INFORMATION SHEET
PPP Program Overview: SMALL BUSINESS PAYCHECK PROTECTION PROGRAM
PPP Program Lender Information Sheet: (PPP) INFORMATION SHEET LENDERS
PPP Program Application Form: PAYCHECK PROTECTION PROGRAM BORROWERS APPLICATION
Economic impact payment information: https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know
Business Insider “Everything we know about the coronavirus stimulus checks that will pay many Americans up to $1,200 each”: https://www.businessinsider.com/personal-finance/coronavirus-stimulus-check-questions-answers-2020-4