In this uncertain time, there are a number of programs available to help both businesses and consumers that are facing financial challenges. Things are changing rapidly, but we have included programs available to businesses here and will continue to update as new measures are announced.
The IRS has extended the tax filing and payment date. Tax returns are due July 15, 2020.
Small Business Administration Economic Injury Disaster Loan
Direct loans up to $2 million with no restrictions on business use. Available collateral must be pledged, but is not required. Interest rate is 3.75% for small businesses, 2.75% for non-profits. Term is up to 30 years, offered on a case-by-case basis. Principal amount of loan dependant on proof of actual economic harm to business resulting from Covid-19, inability to pay ongoing expenses as they become due, and inability to borrow funds from any alternative source. Learn more
Finance Authority of Maine Covid-19 Relief Interim SBA Finance Loan Program
Direct loans up to $100,000 to borrowers who have proof of SBA loan commitment. SBA loan pays off FAME bridge loan. Interest rate is WSJ minus 1%, 90 day term and interest only payments. Commitment fee waived unless loan defaults. Requires collateral pledge of all business assets, SBA loan proceeds and unlimited personal guarantees. Learn more.
Finance Authority of Maine Covid-19 Relief Business Direct Loan Program
Direct loans up to $50,000 who can demonstrate other capital sources have been exhausted. Interest rate WSJ minus 1%, 12 month term (can be extended!). Commitment fee .5%. Requires collateral pledge of all business assets and unlimited personal guarantees. Learn more.
Department of Labor Families First Coronavirus Response Act (HR 6201)
PAYROLL TAX CREDITS allowed in the full amount of paid leave benefits for qualified Covid-19 related sick and family leave. Tax credits are also available for the self-employed. Learn more. More information is available on our blog.
Department of Labor Expanded Paid Leave Programs
SICK LEAVE: applies to sick employees who cannot work or telework. Full-time employees are entitled to 80 hours leave at full pay. Part-time employees entitled to the average number of hours generally worked in a two-week period at full pay.
There are no exemptions for small businesses.
FAMILY LEAVE: applies to employees who cannot work or telework because they must care for children whose school or daycares are closed as a result of the Covid-19 pandemic; and to employees who must care for sick dependents. Also applies to sick employees who are still ill after using available sick leave. Small businesses with fewer than 50 employees may be exempt.
Benefits paid after the first 10 days of leave (which are unpaid, or paid from other available sources) in an amount equal to at least 2/3 employee’s regular pay up to a maximum amount of $200/day and $10,000 over the total leave period.
SBA Paycheck Protection Program
Terms: Loan amount based on payroll costs. Businesses may borrow an amount that is 250% of average monthly payroll expenses, up to a maximum principal amount of $10,000,000. No payments due for the first six months.
May be forgiven on the following terms:
- in an amount equal to amount spent by borrower on eligible costs (including payroll costs) in the 8 week period following loan origination. 75% of eligible costs must be used to fund payroll expenses.
- eligible payroll cost is payroll expense less difference from payroll expense in the preceding 12-month timeframe
- amounts not eligible for forgiveness after 12 months are repayable in 2 years at 1% interest
Program details: To qualify, businesses must show that it was operational on February 15, 2020. Loan period is February 15, 2020 through June 30, 2020. Restricted use to payroll and related expenses–borrower must certify funds not used for other purposes, and that funds are not coming from another course to cover the same expenses. Collateral and owner guaranty NOT required. Borrowers cannot borrow for the same purpose under this program and the SBA Disaster Relief Program.
SBA Expanded Emergency Economic Injury Disaster Loan (EIDL)
Terms: SBA may advance up to $10,000 within 3 days to an eligible entity for eligible expenses in advance of final borrower qualification. Recipients NOT REQUIRED to repay advances, even if later denied from loan program.
Program details: Expands eligibility to disaster loans from 1/31/2020 – 12/31/2020 to tribal businesses, cooperatives, ESOPs with fewer than 500 employees, sole proprietors, private non-profits. Loan principal may be transferred by borrower to the Paycheck Protection Program and may be eligible for forgiveness.
SBA Loan Payment Subsidy Program
Payment subsidy available to 7(a), 504 and microloan products. SBA will cover principal, interest and fees on covered loans for a six month period, including loans made up to six months after the enactment of CARE.
IRS Tax Credits & Benefits for Businesses
Employee Retention Credit
Refundable payroll tax credit for 50% of wages paid during the COVID-19 crisis.
- had fully or partially suspended operations as a result of a Covid-19 shut down order; or
- experienced a greater than 50% reduction in gross receipts over the same quarter in the prior year.
Credit available on the first $10,000 in value of gross compensation earned from 3/13/2020 – 12/31/2020. Claimed credit restricted for employers with greater than 100 employees to wages paid to employees who are not able to work as a result of the crisis.
Payroll Tax Deferment
Applies to employers and self-employed individuals. Payment of federal payroll tax may be deferred and repaid in full by 12/31/2022.
Net Operating Losses
Net operating losses arising in 2018, 2019 and 2020 may be carried back five years through amendments to prior returns. Taxable income limitation temporarily removed to allow losses to fully offset income.
Acceleration of AMT Credits
Available AMT credits fully accelerated.
Increased Limit of Interest Expense
Deductible interest expense threshold increased to 50% for tax years 2019 and 2020.
Accelerated Depreciation for Property Improvements
Costs associated with improving property may be immediately depreciated instead of depreciating over 39 years. Businesses may amend prior year returns.
Federal Reserve Direct Lending Programs
The following criteria apply to all direct Reserve loans:
- Alternative financing is not reasonably available;
- The loan is sufficiently secured OR made at an interest rate which reflects the risk of the loan in an amount greater than the applicable rate in advance of the crisis;
- Loan duration must be as short as possible and may not exceed 5 years;
- Borrowers may not engage in stock buybacks or pay dividends in a length of time equal to the loan term plus one year;
- Borrowers must maintain AT LEAST 90% employment levels from March 24, 2020 through September 30, 2020;
- Borrower and its employees must be located in the U.S.; and
- The loan may NOT be forgiven.
Main Street Business Lending Program
Primary Market Corporate Credit Facility
New bonds and loans Bridge financing available in up to four-year periods. Borrowers may elect to defer interest and principal payments during the first six months of the loan, extendable at the discretion of the Reserve.
Secondary Market Corporate Credit Facility
Purchase of existing bonds on the secondary market.
Term Asset-Backed Securities Loan Facility
Enable issuance of asset-backed securities backed by student loans, auto loans, credit card loans and SBA guaranteed loans. Non-recourse loans available to holders of qualifying asset-backed securities (ABS). Loan amount will equal the market value of the ABS less a “haircut” and will be secured by the ABS.
A number of banks are offering relief to customers at this time, including:
- Bank of America (payment deferral, no fees, no credit reporting)
- Capital One
- Chase Bank
- Fifth Third Bank
- US Bank
- Wells Fargo