Among the many relief provisions passed by Congress are small business loans. The SBA is known for business loans, but recently passed laws energizing the offerings. As with most government programs, everything is in the details.
Even before the current crisis, the SBA offered the Economic Injury Disaster Loan (EIDL) program, which is still available. The newer offering is the Paycheck Protection Program (PPP) loan program. Some businesses should apply for the EIDL program now and possibly refinance it into their PPP loan later.
Some Tax Implications
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) grants a payroll tax credit for employment taxes owed by certain eligible employers. Typically, these include, but are not limited to, businesses that had to close because of COVID-19.
Also, employers may be able to defer the employer portion of any Social Security taxes for the period beginning on March 27, 2020, and ending before January 1, 2021. Half of the employer portion of any Social Security taxes for the payroll tax deferral period can be deferred until December 31, 2021. The second half can be deferred until December 21, 2022.
Potential borrowers have a lot to consider. A key point is that any borrower who gets a PPP loan forgiven cannot claim a payroll tax credit or deferral of payroll tax also offered under the CARES Act.
Contact us for guidance and best options for your situation.