Business Resources — Federal
The Coronavirus Aid, Relief, and Economic Security Act of 2020 (the CARES Act) has passed.
The CARES Act relief package promises to deliver $2 trillion in federal funds. It includes $377 billion for small businesses, including loans that offer loan forgiveness for funds spent on payroll, rent, mortgage interest, and utilities.
Regulations and procedures are still being developed, but the major programs and initiatives of the Act include:
Small Business & Non-profit Lending (< 500 employees)
- Small Business Paycheck Protection Program: This new program sets aside $350 billion in government-backed loans, modeled after the existing SBA 7(a) loan program, that allow businesses and non-profits with less than 500 employees to borrow enough to cover monthly payroll costs for businesses for up to 2.5 months. If used for payroll, mortgage interest or other qualified expenses, these loans will be forgiven as long as the employer continues to employ its workers or rehires them when they reopen for business.
Business Tax Support
- Employee Retention Credit: Employers whose business operations were suspended due to COVID-19 or whose earnings declined by over 50% are eligible for a refundable payroll tax credit for 50 percent of wages paid to employees during the COVID-19 crisis. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee.
- Deferred payroll taxes: Employers and self-employed individuals can delay the payment of the employer share of 2020 payroll taxes, to be paid over the following two years.
- Net Operating Loss carryback: Rules regarding net operating loss have been modified to remove the 80% taxable income limitation, and losses can now be carried back five years.
- Excess Loss Limitations: The excess loss limitation (ELL) rules for pass-through entities are suspended.
- Interest Expense Limitation: The interest expense limitations are increased to 50% from 30% for tax years beginning in 2019 or 2020. Taxpayers can also elect to calculate the interest limitation for 2020 using their 2019 adjusted taxable income as the relevant base, which often will be significantly higher.
- Advance on credit refunds: Allows employers to receive an advance tax credit rather than a refund.
- Charitable contributions: There is a new provision that provides an above-the-line deduction for charitable contributions, plus, the limits on charitable contributions are changed.
- Property improvements: Businesses are able to immediately write off costs associated with improving facilities under this provision, rather than depreciating improvements over the building lifetime.
Support For Employees
- Unemployment: The program provides $250 billion for an extended unemployment insurance program and expands eligibility and offers workers an additional $600 per week for four months, on top of what state programs pay. It also extends UI benefits through Dec. 31 for eligible workers. The deal applies to the self-employed, independent contractors and gig economy workers.
- Direct payments: Americans who pay taxes will receive a one-time direct deposit of up to $1,200, and married couples will receive $2,400, plus an additional $500 per child. The payments will be available for incomes up to $75,000 for individuals and $150,000 for married couples.
- Use of retirement funds: The bill waives the 10% early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes, retroactive to Jan. 1. Withdrawals are still taxed, but taxes are spread over three years, or the taxpayer has the three-year period to roll it back over.
- 401(k) Loans: The loan limit is increased from $50,000 to $100,000
A useful chart from Dept of Labor explaining unemployment insurance under the CARES Act: https://labor.ny.gov/ui/cares-act.shtm
Small business owners are also eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. To apply for a COVID-19 Economic Injury Disaster Loan, click here.
Additional info can be found via the following links:
- SBA Coronavirus Small Business Loan Page
- Coronavirus (COVID-19): Small Business Guidance & Loan Resources
- SCORE is offering assistance in filling out SBA loan applications
- Small Business Development Centers are also offering assistance
Small business owners are also eligible to apply for the USSBA’s Economic Injury Disaster Loan advance of up to $10,000., which provides small businesses with working capital loans of up to $2 million that can provide vital economic assistance to help overcome the temporary loss of revenue they are experiencing.
To apply for a COVID-19 Economic Injury Disaster Loan, click here.
Federal Tax Credit to Support Paid Sick Leave
Employers with less than 500 employees can claim a special 100% reimbursement for employee paid leave, up to 80 hours paid sick leave and expanded paid child care leave per employee. Self-employed individuals can receive an equivalent credit. We recommend discussing this option with your accountant or tax professional. For more information, please visit the IRS website.
Federal Tax Deadline Extended
On the Federal level, the Treasury Department and the Internal Revenue Service are providing special tax filing and payment relief to individuals and businesses in response to the COVID-19 outbreak. The filing deadline for tax returns has been extended from April 15 to July 15, 2020.
Business Resources — City + State
Governor Cuomo has ordered all non-essential businesses to direct 100% of their employees to work from home. Only essential businesses will be permitted to function with in-person employees. All New Yorkers are urged to remain indoors to the greatest extent possible to protect their physical and mental health.
Empire State Development also refined its Workforce Reduction Guidance to prohibit all non-essential construction and clarify that worksites at essential construction projects must maintain social distance. The Guidance includes roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing and homeless shelters. Affordable housing projects, in this case, are defined as any project that includes at least 20% affordable units.
NYC Small Business Support
To help small businesses deal with the impact of COVID-19, the City has launched the NYC Small Business Continuity Loan Program. This program is available to New York City businesses with fewer than 100 employees that can demonstrate at least a 25% decrease in revenue as a result of COVID-19. Eligible businesses can apply for an interest-free loan up to $75,000. Find out more and apply here.
The Employee Retention Grant is available for small businesses with fewer than 5 employees to cover 40% of payroll costs for two months to help retain employees. Find out more and apply here.
Stay up to date on City programs as more details become available here.
Governor Cuomo signed a bill guaranteeing job protection and pay for New Yorkers who have been quarantined as a result of novel coronavirus. More info here.
Employees who experience reduced hours (by 50% or more for full-time personnel) or layoffs due to COVID-19, may be eligible to apply for unemployment benefits from New York State.The standard seven day waiting period has been lifted and affected employees can begin to apply for and drawing benefits immediately. More info here: https://www.labor.ny.gov/home/…
Moratorium on Foreclosures + Evictions
The Governor also announced a 90-day moratorium on residential and commercial foreclosures, and that New York State’s income tax filing deadline has been extended to July 15 and that no interest fees or penalties will be assessed against businesses for failing to timely file their state sales taxes. New York City’s court system has suspended all eviction proceedings, in addition to other ‘non-essential cases’, beginning March 17 and a 90-day moratorium on evictions for commercial and residential tenants (through June 20).
The NY State Department of Financial Services has issued a new directive to New York State mortgage servicers to provide 90-day mortgage relief. The directive includes:
- Waiving mortgage payments based on financial hardship;
- No negative reporting to credit bureaus;
- Grace period for loan modification;
- No late payment fees or online payment fees; and
- Postponing or suspending foreclosures.
Businesses Helping out
The State has called on businesses to produce needed supplies related to COVID-19. New York urgently needs companies to help in addressing the need for medical supplies and Personal Protective Equipment. More information can be found at ESD’s website, here.
The NYC Economic Development Corporation is seeking businesses with the ability to source and/or make products to support the City’s COVID-19 response work. Learn more here.
During this time, the three Business Improvement Districts (BIDs) that DBP manages are maintaining their high level of service with our Pubic Safety and Clean Street teams.
If you wish to report a safety issue, please contact: DBP Public Safety Office: 718-797-5996 / firstname.lastname@example.org In cases of emergency, always call 911.