Published on: September 12, 2020 Last modified: November 9, 2020

Is Your Business Getting All Its Possible COVID-19 Tax Relief? 4 Available Small Business Loan Programs

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    Businesses of all sizes have been impacted by the COVID-19 pandemic this year, but smaller ones have been hit the hardest. Recent research shows nearly 80 percent have felt negative effects ranging from temporary or permanent closures to layoffs and revenue loss, each of which can be debilitating on its own. Combined, these effects can be detrimental. 

    Federal programs have rolled out to help these businesses and employers stay afloat during the economic downturn, and several have gotten a lot of publicity.

    There are many relief initiatives that you may not be aware of that could provide the help you need to keep moving forward, however. 

    Here’s an overview of the COVID-19 relief options the United States government has provided, as well as the tax breaks and financial support of which you may still be able to take advantage as 2020 nears its end.

    FFCRA and the CARES Act

    Two Acts were passed in March of this year to provide relief to businesses and individuals. The pieces of federal legislation were termed the Families First Coronavirus Response Act (FFCRA) for individuals, and the Coronavirus Aid, Relief, and Economic Security (CARES) Act for businesses. 

    business owner in need of small business loan programs

    Here’s what you need to know about each one:

    • FFCRA is the $192 billion piece of legislation enacted on March 19, 2020. 
    • The Act created tax credits for employers and unemployment insurance benefits in states hit hardest by the pandemic.
    • The CARES Act quickly followed on March 27, 2020.
    • CARES included the Payment Protection Program (PPP) loan, grants for communities and small businesses, and stimulus checks to taxpayers.

    Most of the other available aid programs stem from these two Acts, which provided aid at a critical time but also left a lot of questions. Many provisions in the CARES Act will expire at the end of 2020 if another stimulus bill isn’t passed, for example, leaving many businesses waiting to see if more help is on the way. 

    Small Business Loan Programs

    Just a few federal relief programs implemented this year are still available, since another round of stimulus hasn’t been approved. These initial programs were either drained of funds or were only intended to run for a short time. Here’s a look at the Small Business Administration’s (SBA) key loan and relief programs.

    1. Payment Protection Program (PPP) Loans

    The SBA’s PPP loans aimed to help small businesses keep existing employees on their payrolls and prevent widespread unemployment. Companies applied for the funding through their financial institutions, and participating banks were thus overrun by the complicated application process, subsequent application reviews, and then submission and information relay tasks. Some additional facts:

    • The PPP stopped accepting applications on August 8, 2020.
    • Banks were delayed in reaching the PPP loan’s forgiveness stage and began accepting applications in early September. 
    • More than 5 million loans were approved under the PPP as of August 8, reaching total disbursements of over $525 billion.

    Now, businesses must understand the forgiveness process. There’s no current deadline to apply, but businesses must submit an application before the loan matures — which is either two or five years from the date the loan was issued.

    2. Economic Injury Disaster Loan (EIDL)

    The EIDL program is still active, and was rolled out to offer smaller firms and nonprofits necessary economic relief if they were suffering from temporary loss of revenue during the pandemic. Technically, businesses with up to 500 employees could qualify for both EIDL and PPP loans. EIDLs are low interest, fixed rate loans with a 30-year maturity, and payments are eligible for a one-year deferral.

    3. SBA Bridge Loans

    Businesses that need operating funds while waiting for an EIDL disbursement may qualify for an SBA Express Disaster Bridge Loan. This program makes up to $25,000 in cash available quickly, and any loaned amounts will be repaid by proceeds from the EIDL. These fast and easy loans can help small businesses deal with temporary loss of revenue.

    4. SBA Debt Relief

    The SBA is also providing debt relief to businesses with current SBA loans. The organization will cover six months of principal, interest, and fees for all its existing loan holders of 7(a), 504, and microloans in regular servicing status. It will also cover new 7(a), 504, and microloans disbursed before September 27, 2020.

    It’s important to pay attention to the fine print when determining which programs your business can use to stay afloat during this unprecedented time. Each program has stipulations that may impact loan amounts or deferral options. Employers that received PPP or EIDL loans are not eligible for the debt relief program, for example.

    Tax Breaks for Businesses

    Loans were not the only aid unveiled this year. Additional tax credits may have dropped under your radar, but knowing about them can help you cut your tax liabilities and improve your overall bottom line. These breaks are intended to help you save money to keep your business afloat or provide much-needed financial support to distressed workers. Such tax credits are especially advantageous during the current economic downturn. 

    These tax credits can help you cut your tax bill:

    • Employee Retention Credit
      This is a refundable tax credit against certain employment taxes equal to half of the qualified wages paid to employees between March 13, 2020, and January 2, 2021.
    • Credit for Sick and Family Leave
      This reimburses small- and mid-sized business owners for providing their employees with pandemic-related paid sick and family leave.
    maternity leave in pandemic for pandemic business relief program
    • Pass-through deduction
      The pass-through deduction still applies, even though it’s not a COVID-specific tax break. It was introduced in the Tax Cuts and Jobs Act (TCJA) in 2017 and allows eligible businesses to deduct 20 percent of their qualified business income. Eligible businesses include sole proprietorships, limited liability companies (LLCs), limited liability partnerships (LLPs), partnerships, and S Corporations.

    Additionally, some employment and payroll taxes can be deferred until December 31, 2020, under the CARES Act and a new executive order signed by President Trump. Deferrals may increase employees’ paychecks now, but it’s important to remember that deferred taxes will still have to be paid back in 2021. 

    Know Your Options

    This has been an unprecedented year, and many business owners are worried they might be leaving money on the table during the pandemic or whether there are details that might make their companies ineligible for relief from available programs. It’s important to know that you have resources at your disposal to get the answers you need. Work with an experienced tax attorney to ensure you’re taking advantage of all the relief options and tax breaks for which you qualify. 

    The 2020 year may be nearing its end, but your company is far from through the craziness that has ensued. You still have a lot to sift through to prepare for the 2021 tax season, and partnering with a trusted team helps make sure nothing gets missed.

    Get Help with Small Business Loan Programs

    The Silver Tax Group team is here to help! Get in touch with us today for assistance with all your tax-related questions and concerns.

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