Fortunately, federal, state, and local governments are stepping up to the plate to create ways to provide Coronavirus relief and aid to businesses and the people who work for them.

In this article, I will share some of the currently available information about various Coronavirus relief, aid, resources, programs, and initiatives in place to help small business owners.

Realize that this is a dynamic topic, and details are constantly changing as agencies and lawmakers continue discussions and decision-making. We will do our best to keep this article up to date with accurate and timely information. However, please refer to the list of resources at the end of this post for the most current information about available developments. Also, consult your attorney and tax advisor for advice and guidance as you assess the assistance you qualify for and navigate the application process.

CDC Guidance for Business Owners

The Centers for Disease Control have created an online interim guide that updates employers on how to plan, prepare, and respond during the COVID-19 outbreak. Within it, they offer recommendations for dealing with sick employees, cleaning the work environment, and creating a response plan. As this crisis will affect virtually every business in the United States, the CDC’s guide is a helpful resource for working through many of the disease-related considerations we all need to address.

Coronavirus Federal Income Tax Relief

The IRS has made changes to tax filing deadlines to help individuals and businesses affected by the impacts of COVID-19.

On March 18, 2020, the U.S. Treasury Department and IRS “issued guidance allowing all individual and other non-corporate tax filers to defer up to $1 million of federal income tax (including self-employment tax) payments due on April 15, 2020, until July 15, 2020, without penalties or interest.” Corporate taxpayers are subject to a similar deferment of up to $10 million of federal income tax payments that would be due on April 15, 2020. They may defer payment until July 15, 2020, without suffering any penalties or interest.

As of an announcement on March 20, the federal income tax payment and filing deadline is extended from April 15, 2020 to July 15, 2020.

The IRS is automatically providing this relief to taxpayers; individuals and businesses do not need to file any additional forms or contact the IRS for the relief. Any unpaid balances as of July 16, 2020, will begin to accrue penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020.

Additional Details about the Federal Income Tax Relief

Individuals:

• Income tax filing and payment deadlines for individual returns, with a due date of April 15, 2020, are automatically extended until July 15, 2020.
• The payment relief applies to all individual tax returns (including self-employed persons and all entities other than C Corporations).
• The relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.

Corporations:

• Income tax payment deadlines are automatically extended until July 15, 2020.
• The relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.

State Coronavirus Relief

Many states have adjusted their payroll tax filing and payment schedules. The American Institute of Certified Public Accountants has created a chart with information about the relief provisions by state. Consider also visiting the website of the agency responsible for taxes in your state to get accurate, up-to-date information on Coronavirus relief options.

Also, many states are offering programs and grants to help small businesses in their jurisdiction. See the U.S. Department of Labor’s state-by-state list of workforce agencies for contact information.

SBA Coronavirus Disaster Assistance

CARES Act Program Overview

SBA Economic Injury Disaster (EIDL) Loans

The U.S. Small Business Administration (SBA) is offering low-interest federal disaster loans to small businesses suffering substantial economic damage because of the Coronavirus. The working capital loans of up to $2 million are available for qualifying small businesses and private, nonprofit organizations in the states and U.S. territories that have been designated as disaster areas.

The passage of the CARES Act, the SBA provided small business owners and non-profits impacted by COVID-19 with the opportunity to obtain up to a $10,000 Advance on their Economic Injury Disaster Loan (EIDL). The Advance is available as part of the full EIDL application and will be transferred into the account you provide shortly after your application is submitted. To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.

The SBA provides a list of all eligible COVID-19 disaster areas on its website. As the Coronavirus situation continues to evolve, that list will change.

Businesses may use the loans to pay fixed debts, payroll, accounts payable and other bills that they are unable to pay because of the COVID-19 situation.

Interest Rates

• 3.75 percent for small businesses without credit available elsewhere. (Businesses with credit available elsewhere are not eligible.)
• 2.75 percent for nonprofits

Repayment Terms

EIDL loan repayment terms are determined on a case-by-case basis. A borrower’s ability to repay is considered when deciding on the term. To keep payments affordable for small businesses, the SBA offers loans with long-term repayments, up to a maximum of 30 years.

How to Apply

Business owners in those designated states may apply for a low-interest loan online through the site. They will also be able to track the status of their application there.

Businesses that are in areas not yet designated as Coronavirus disaster zones can become well-informed and better prepared to apply by reviewing information about the SBA’s disaster loan assistance.

Additional SBA Programs through the CARES Act

The CARES Act, signed by the President on March 28, offers several new temporary programs, in addition to traditional SBA funding programs, to help businesses experiencing hardship due to COVID-19.

EIDL Loan Advance

Small business owners may apply for a cash advance of up to $10,000 to be funded within three days. According to the SBA, whether or not a small business is granted an EIDL Loan, it will not have to pay back the $10,000 advance. The advance will be considered an Emergency EIDL Grant, which doesn’t require repayment.

Paycheck Protection Program (PPP)

The PPP authorizes up to $349 billion in loans designed to give small business owners incentive to keep their employees on payroll. The loan term is two years with a fixed annual rate of one percent; loan payments will be deferred for six months. The SBA will forgive loans for small businesses that keep all of their employees on their payroll for eight weeks and that use the funds for payroll, rent, utilities, or mortgage interest.

SBA Express Bridge Loans

This program allows small businesses with a current business relationship with an SBA Express Lender to access up to $25,000 quickly. As a business is waiting for a decision on or disbursement on an EIDL, they may qualify for an SBA Express Bridge Loan if they are in urgent need of cash.

SBA Debt Relief

As part of its debt relief efforts, the SBA is also helping small businesses with existing SBA loans. The agency will automatically pay, for a period of six months, the principal interest, and fees of current 7(a), 504, and microloans. Also, the SBA will automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.

Free Business Counseling Services

The SBA continues to assist small businesses through its district offices and its many resource partners across the country. Free business counseling services are available to help small business owners navigate through this period.

You can find local assistance through the SBA website. Note that organizations have suspended in-person counseling, but online and phone support continues to be available.

U.S. Chamber of Commerce Coronavirus Assistance

The U.S. Chamber of Commerce offers a Disaster Help Desk to assist small businesses with disaster readiness, relief, and recovery. It advises small businesses on relief options (including federal resources) for the days and months immediately following when a disaster strikes their companies. It also provides advice to help businesses recover long-term and connects business owners with others who can guide them in their plans to re-open and stay open after a disaster.

State Unemployment Insurance Programs and COVID-19

Some states have been amending their laws to provide unemployment insurance benefits modifications as businesses and their employees face the economic impact of the Coronavirus.

The federal government has given states more flexibility and allows them to pay benefits in situations where:

• An employer temporarily stops operations due to COVID-19, and its employees are prevented from coming to work.
• An individual is quarantined and expected to return to work after the quarantine period is completed.
• An individual leaves employment because of the risk of Coronavirus infection or exposure or to take care of a family member.

Also, under federal law, an employee does not have to quit employment to receive unemployment benefits due to the impact of COVID-19.

Details about the unemployment insurance programs in individual states can be found by using the search feature on the U.S. Department of Labor’s CareerOneStop website.

California’s Economic Development Department Work Sharing Program

In my home state of California, employers who have experienced reduced production, services, or other issues that want an alternative to laying off employees may be eligible to apply for the State’s Work Sharing Program.

How Does “Work Sharing” Work?

The California Work Sharing Program gives relief to employees who have had their hours and wages reduced. It helps them avoid financial hardship by keeping their current job and receiving unemployment insurance benefits.

It helps business owners by minimizing the need to lay off their employees, thus allowing them to avoid the costs of recruiting, hiring, and training new employees when conditions improve.

Work Sharing gives employers flexibility in managing difficult financial circumstances during a disaster. Instead of laying off employees completely, eligible employers can reduce the hours and wages of all or some employees to avoid layoffs. Employees’ work schedules may be adjusted so that different employees have reduced hours and wages each week. The employer determines which employees will participate and have hour and wage reductions. The employees that have reduced hours and wages are then eligible to apply for unemployment benefits for the percentage of the hours and wage reductions they experience. In the event of a difference between the percentage of wage reduction and the percentage of hour reduction, the unemployment benefit amount is based on the lesser percentage. If an employee earns additional wages during the week by working for one or more employers other than the Work Sharing employer, that income will be deducted (dollar for dollar) from their Work Sharing benefits.

According to the California EDD website, employers must meet all of the below requirements to participate in the Work Sharing Program:

• Be a legally registered business in California.
• Have an active California State Employer Account Number.
• At least 10 percent of the employer’s regular workforce or a unit of the workforce, and a minimum of two employees, must be affected by a reduction in hours and wages.
• Hours and wages must be reduced by at least 10 percent and not exceed 60 percent.
• Health benefits must remain the same as before, or they must meet the same standards as other employees who are not participating in Work Sharing.
• Retirement benefits must meet the same terms and conditions as before, or they must meet the same terms and conditions as other employees not participating in Work Sharing.
• The collective bargaining agent of employees in a bargaining unit must agree to voluntarily participate and sign the application for Work Sharing.
• Identify the affected work units to be covered by the Work Sharing plan and identify each participating employee by their full name and Social Security number.
• Notify employees in advance of the intent to participate in the Work Sharing program.
• Identify how many layoffs will be avoided by participating in the Work Sharing program.
• Provide the EDD with any necessary reports or documents relating to the Work Sharing plan.

The following individuals are not eligible to participate in the Work Sharing Program:

• Leased, intermittent, seasonal, or temporary service employees
• Corporate officers or major stockholders with investment in the company

Also, be aware that the EDD has stated, “The Work Sharing Program may not be used as a transition to a layoff.”

Businesses are encouraged to contact the EDD Special Claims Office at 916-464-3343 with questions about the program. Visit the EDD website for additional details about Work Sharing and its eligibility requirements.

How to Apply for the California Work Sharing Program

Employers should complete and mail the Work Sharing (WS) Unemployment Insurance Plan Application (DE 8686) (PDF) to apply.

When Will a Work Sharing Plan Be Effective?

According to the EDD, the earliest a plan will be effective is the Sunday before the first date that a business contacts the EDD. Approved plans will be effective for one year.

Renewing a Work Sharing Plan

To renew a Work Sharing plan, a business should complete and mail the Work Sharing (WS) Unemployment Insurance Plan Application (DE 8686) (PDF) no more than ten days after their previous plan has expired. Renewals will be effective the day after their previous plan expires.

If a business submits its application later than the ten days after its previous plan expired, the plan will be effective the Sunday before the EDD receives the application.

California Rapid Response Program

California’s Rapid Response program is available for employers planning a closure or major layoffs as a result of the coronavirus. You can find more information on the EDD’s Rapid Response Fact Sheet.

California Payroll Tax Relief

Employers experiencing a financial hardship related to COVID-19 may request the EDD to grant them up to a 60-day extension to file their state payroll reports and deposit state payroll taxes without penalty or interest. The EDD must receive the written request for an extension within 60 days from the original delinquent date of the payment or return. More information is available on the Coronavirus 2019 page of the EDD website.

Business Interruption Insurance

If your company has a business insurance policy, consider reaching out to your agent to ask if your policy covers business interruption caused by the Coronavirus. Since the 2006 SARS outbreak, many insurance providers now exclude coverage for losses due to viruses or bacteria. However, many legislators are working on getting that exclusion removed, so it can be worth asking your representative to find out where you stand.

Additional Resources for Coronavirus Relief, Aid, and News

I encourage you to keep the following list of websites and social media accounts handy. These resources will help you stay on top of COVID-19 updates and other Coronavirus relief and aid information that can help you weather the challenges of these unprecedented times.

• Small Business Administration
• Internal Revenue Service
• Centers for Disease Contro
• U.S. Chamber of Commerce
• United States Department of Labor
• Environmental Protection Agency (Provides a list of disinfectants for use against COVID-19)
• OSHA (Includes links to interim guidance and other resources for preventing exposure to and infection from the coronavirus).
• USAGov (Provides a full list of what the U.S. Government is doing in response to the COVID-19 pandemic. The information is also available in Spanish.

CorpNet Is Here to Help

CorpNet remains open and in full operation Monday through Friday from 7 a.m. until 5:00 p.m. PST to help. Our team is safely self-distanced and set up to work remotely with all of the necessary tools and resources to serve you. Contact us today at 1-888-449-2638 to discuss how we can help you.

The post Coronavirus Relief & Aid for Small Businesses appeared first on CorpNet.

Here are five post-COVID marketing strategies for accountants to win and keep clients for the long-term.

Establish the Business as Post COVID-19 Experts

As the economy struggles to get back on track and clients have specific questions on how to file taxes, apply for relief funding and provide documentation for loan forgiveness, accountants need to secure their clients’ trust by providing quick answers. Accountants should be familiar with all aspects of the issues their clients will face and then use focused post COVID marketing strategies to position themselves as the experts, such as:

• Create a list of FAQs regarding coronavirus and accounting related issues, then post it on your websites and social media platforms and include it in your email marketing newsletters.
• Send personalized email reminders related to government-postponed filing deadlines and business compliance concerns.
• Offer to byline blog posts for other websites offering advice for post-COVID-19 issues and always link back to the business’ website and social media platforms.

By positioning the accounting business as experts, current customers will remain loyal and new customers will be attracted to come on board.

Pivot to a New Way of Doing Business

Most businesses in the pandemic were required to pivot their focus to stay afloat while consumers and businesses alike sheltered in place and scaled down operations. Accounting businesses with large staffs were also required to ask employees to work remotely to ensure safety. One thing that may not change as safer-at-home policies are lifted is the business/client comfort level with virtual consultations. People who hadn’t participated in online meetings before, quickly became familiar and comfortable with the technology and may want to continue to meet virtually—at least for a while.

Virtual capabilities are appealing for clients still feeling nervous about in-person meetings, which may last well into 2021. Accountants marketing their virtual services to new and old clients will likely do well and show they are making accommodations for all their clients’ needs.

Pivot to a New Clientele

Now is a good time to assess your clientele and determine if your accounting firm would be more successful focusing on working with a new type of client or clients in specific industries, such as restaurant owners or the gig entrepreneurs. To figure out whether the business should pivot to a new focus, ask the following questions:

• Are some customer relationships more lucrative than others?
• Do you already have a cluster of clients from a particular industry and will they refer their colleagues?
• Did your business acquire clients out of your immediate geographic area? Perhaps you can focus on attracting more out-of-town clients and transform into a virtual accounting business.

Keep in mind, the more focused the clientele, the more focused your marketing strategy needs to be to cover key points important to the industry of your clients.

Strategize and Bootstrap

As business starts ramping up again it’s important to develop an effective and cost-smart marketing strategy. Fortunately, there are many free or low-cost ways to get the message out about your accounting services.

• Social Media – Social media’s contribution to brand awareness cannot be discounted. Besides the business’s own Facebook or LinkedIn pages, accountants could stand out by answering questions on other people’s social pages. You should also look into joining group social media pages with like-minded businesses to make connections and find new sources of clients.
• Community Involvement – People like to do business with companies that give back to their communities. Although volunteering in person may not be possible for a while, accountants can still offer their services for free or at a discounted fee to customers or organizations in need.
• Referral Program – Offering clients a reward or discount for referrals is a great way to increase your clientele without having to spend a lot of money. Also, it’s important to ask satisfied clients to give your business a positive review on referral websites like Yelp. Finally, consider joining a business referral group, also called a business referral network or lead club. Basically, these groups are networking organizations with an emphasis on giving and getting referrals.

Be the Solution

Customers in the wake of the pandemic crisis are looking for reassurance and stability. Yes, everyone wants to get back to business, but what the new normal will look like is anyone’s guess. That’s why it’s important for accounting business owners to be a consistent presence in the lives of their clients.

Think of all the ways customers currently communicate with their accountants and then think of new innovative ways. In addition to phone calls and email, the “always-online” world is communicating through chatbots, chat boxes, Facebook messages, Twitter direct messages, Zoom meetings and Google Hangouts (just to name a few). When customers have problems, they want solutions and they want them fast. Be the solution.

Become a One-Stop Shop

Accountants who want to grow their practices should consider broadening their service offerings. Many of your current and potential clients are looking for more than just accounting advice.

For example, you can target people who may be considering starting a business—or growing their current companies. You can help them do that by adding corporate compliance services, such as incorporation guidance, trademark research, and documentation filings—services that can make your accounting practice a one-stop partner.

To make adding incorporation services seamless and cost effective, accountants can sign up with the CorpNet Partner program. CorpNet acts as a “silent partner” and takes care of clients’ compliance issues, so your business can focus on other important tasks.

As I just said, here at CorpNet we want to be your solution. We understand how stressful and challenging it is for so many small business owners today. We are here to help so you don’t get overwhelmed. Call our business consultants at 888.449.2638 for help with starting a business, obtaining business licenses, or staying in compliance.

The post Post-COVID Marketing Strategies for Accountants appeared first on CorpNet.

Pivoting business focus is not something unique to the time of coronavirus. Being able to quickly change or redirect a business is one of the hallmarks of entrepreneurship. Fortunately, smart business owners are excellent “pivoteurs,” able to recognize change and meet it head-on with ingenuity and adaptability.

Meet some enterprising entrepreneurs who smartly pivoted their businesses in the midst of COVID-19.

Pivoting Products and Services

Back in March, when federal and many state governments decided only “essential” businesses could remain open to the public, businesses across the world had to make significant changes to survive. Distilleries such as Traverse City Whiskey and Mammoth Distilling in Michigan quickly redirected their efforts to making hand sanitizer and transformed their tasting rooms into quick service sanitizer refill stations. Likewise, when Milwaukee Food & City Tours, was suddenly prohibited from loading up busloads of visitors to tour Milwaukee, the company pivoted to create and deliver boxes of care packages to local customers’ doors.

Pivoting in the time of coronavirus is often temporary. Got Print quickly shifted from printing signage for trade shows to making signs for businesses about closures, social distancing, and new hours of business and is now pivoting again to print reopening signage.

Of course, it helps to have good relationships with your suppliers, manufacturing, and design teams. Even if you’re ready to pivot your efforts, if you can’t find the support, your ideas will go nowhere. If anything, this crisis has taught business owners to be prepared for anything. Be sure to check with your city’s business development office and industry experts for any new permits or business licenses you may need to produce alternate products.

Pivoting to Online

Once social distancing guidelines were put in place, smart business owners knew they needed to come up with virtual experiences immediately—not only to keep some kind of revenue coming in, but also to keep customers engaged and loyal. When Mika Leah, founder of corporate wellness company Goomi Group, could no longer supply her clients with onsite classes, she quickly pivoted to delivering classes virtually. Goomi now offers everything from cooking classes to meditation online as well as in-person when people return to their offices.

Maine Alpaca Experience was forced to close its farm and retail stores due to COVID-19, but the owners didn’t want to stop showcasing the animals to current customers and new fans. The farm owners created virtual tours to show their 35 alpacas grazing and just hanging out in the barn and pasture.

More and more consumers discovered the convenience and simple usability of virtual meeting platforms when safer-at-home orders were put in place. Zoom, a leader in video conferencing, saw its numbers skyrocket from 10 million daily meeting participants in December 2019 to 300 million in April 2020. To top it off, video technology has come a long way in terms of user-friendliness, making it a no-brainer for businesses to rely on. Professional businesses such as doctors, attorneys, and accountants have added virtual consulting sessions to their services as well. And going forward the continued use of video conferencing, instead of traveling, will help small businesses save money so this is likely to be a permanent pivot.

Pivoting to a Virtual Business

For some businesses, working remotely will become a permanent part of their operations. According to a survey by Gartner, 74 percent of businesses surveyed expect some of their employees who were forced to work from home because of the pandemic to continue working remotely after the pandemic ends.

And then there are those businesses for which working virtually will be the only option. Before the virus crisis, Dave and Stacy Dockins owned and operated three Yoga Project studios in the Forth Worth, Texas area. Because they were not eligible to get PPP funding since most of their employees were independent contractors, the couple made the difficult decision to close their studios and become an online business only. The Dockins and some of their staff will teach yoga (and also instructor training courses) exclusively through a virtual class format.

For businesses like the Dockins’ making the move to online not only substantially cuts down on operating costs, it also can broaden your audience since your reach is literally global. The key is how you market the virtual business, making sure your business gets lots of traffic through both organic and paid SEO tactics. Be sure to post frequently across all your social media channels, email past customers with discount incentives to bring them aboard virtually and ask happy customers to spread the word to friends.

Lots of businesses are rethinking the need for an office. Twitter told its employees they could continue to work remotely permanently. Many other tech companies followed suit. If you had no problems with working remotely during the safer-at-home months, consider making the switch on a permanent basis, which will save you money and likely increase employee productivity.

Pivoting Delivery Options

People always have to eat. Couple that with the shortage of supplies and long lines to get into the grocery stores made restaurant pickup and delivery a happy alternative for hungry patrons. Restaurants big and small around the world shifted from in-person dining to carry-out and delivery with impressive results.

As of May, statistics show:

• 51% of consumers have downloaded at least one new app to purchase food and essentials since the onset of COVID-19
• The average online ordering check size is 23% larger than in-store checks
• 33% of consumers say they’re getting more takeout than before the pandemic
• 50% of Gen Z consumers are willing to try out a new restaurant if curbside pickup is an option
• During this health crisis, grocery delivery apps are in demand more than ever, with daily downloads surging by up to 218% for companies like Instacart, Walmart Grocery and Shipt

So how can restaurants pivot to the still-growing popularity of off-premise dining? Try these tips from MustHaveMenus’ “Coronavirus Response Kit”:

1. Create a takeout-specific menu of your most popular items.
2. Institute an efficient ordering system, whether that’s ordering by phone, email, text, or website. Also, make sure you give customers an expected pickup/delivery time and ask if that works for them.
3. Offer curbside pickup (some customers may actually want to get out of the house!)
4. Offer grab-and-go products for customers who want to see their options.
5. Decide on self-delivery or working with a third-party delivery company. Weigh the costs of using current employees or outsourcing.
6. Prioritize sanitation and limit how many people come in contact with the food.
7. Communicate the options of food takeout on social media, your website, Yelp, etc.

Executing a successful pivot takes careful planning, but also the ability to be flexible, patient, and willing to cooperate with vendors, suppliers, employees, and customers. Remember to spread the word of any changes in your business no matter how small or seemingly insignificant. Your customers are watching to see how your business is ready to meet any crisis head-on.

We’re Here to Help Your Pivot!

As a business-to-business company, here at CorpNet we are used to pivoting and innovating to meet our customers’ changing needs. When virus-related solutions were needed, our team pivoted to provide informative articles on everything from funding relief to how to safely reopen. We also redirected our efforts to help customers with the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) applications.

We’re here to help. If you need to set up a new LLC or create a DBA, we can help make that happen so you can focus on pivoting your business and staying focused on serving your customers.

The post How Smart Businesses are Pivoting to Find Success in the Midst of COVID-19 appeared first on CorpNet.

So while we all adapt to the “new normal”, the messages we send to our customers will have to change. Our customers’ needs have changed, and they have understandably rearranged their priorities over the past few months. They’re more patient and have learned how to do without some things. They are also more skeptical of information bandied about and seek out authentic brands. And, finally, the post-COVID-19 consumer may need more reassurance before he or she jumps back into the buyer/seller relationship.

All these changes mean your business needs to consider several new factors in your marketing messages. Here are three elements important to your post-coronavirus marketing strategy.

1. Transparency

More than ever customers want information, direction, and honesty. You can’t pretend it’s business as usual. If you try, your customers will see right through your deception.

Keep your customers informed about the changes in your business, even if you think they’re so small they won’t be noticed. Use your website, social media channels and send emails to make sure customers know if you’ve reduced open hours, if they’ll have to wait longer for delivery wait time and if you’ve reduced the size of your staff to accommodate social distancing guidelines. Inform your customers about the best ways to communicate with you.

You may even need to redirect staff to customer service roles to make sure customers are responded to quickly. For example, Bank of America reassigned the roles of mortgage lenders to answer customers’ questions about small business loans so they could better handle the influx of inquiries.

2. Awareness

Whether your business shifted focus to supply an essential need during the outbreak, volunteered staff to help essential workers, added a free delivery service, or turned to video conferencing in lieu of face-to-face meetings, you need to let your customers know what will remain intact and what will change again.

At CorpNet, we knew our customers needed solutions to the problems they were facing due to the coronavirus. Fortunately, our team jumped into action to provide informative articles on everything from sick leave to loan forgiveness. We also redirected our efforts to help customers with the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) applications.

However, you choose to pivot your business, make sure you let customers know about your efforts. Sharing these changes on social media is an effective marketing tactic.

Also consider asking your social followers for referrals or testimonials. According to Social Media Today, user-generated content should be at the heart of marketers’ post-COVID-19 playbooks. With the world in various stages of lockdown, people live, breathe, shop, and share online, and therefore marketers need to focus more on social activity online to promote their brands.

3. Reassurance

Like it or not, customers are going to have a hard time walking back through your store or office doors. Whether you’re an accountant or run a retail store, your efforts at opening safely in the time of Covid-19 is going to be paramount in the minds of consumers. If your customers don’t feel comfortable doing business with you, any marketing idea will fall on deaf ears. You have to address the elephant in the room.

Sam Zietz, CEO of GRUBBRR, believes retailers will need to use extensive marketing to demonstrate to their customers the steps they have taken to make their stores safe to return to. And they’ll need to continue or expand their omnichannel approaches to ordering (in-store, online, curbside pickup, lockers, etc.).

Marketers should share the tactics they have implemented such as social distancing, masks, plexiglass, and self-ordering technology. If you’ve stopped accepting cash (many businesses have) you need to let your customers know.

You should be prepared to keep current social distancing efforts in place for those public- wary consumers. According to the Association of National Advertisers (ANA), the post-COVID-19 era will be one of A-commerce, which is artificial intelligence (AI) commerce. From contactless delivery to contactless checkout to ordering via text messaging and smart devices, COVID consumers learned and accepted a new method of commerce and will be hesitant to give it up (e.g. ordering via Amazon Alexa).

Consumers also learned to be more comfortable using chatbots and virtual conferencing for everything from health concerns to customer service inquiries, which makes your company’s use of technology a must to reach today’s more tech-knowledgeable consumer.

In addition, reassurance means you let consumers know their voices are being heard. When Cottonelle found itself at the center of a panic-buying shortage, the company let consumers know it was ramping up production to satisfy demand. It also teamed up with the United Way charity to discourage bulk buying and instead emphasize “Stock up on generosity,” with a campaign called #ShareASquare.

Not sure what your customers want? Just ask them how you can help them. Run a poll on your social media platforms and your website or send an email to your customer list.

Adapt for Maximum Marketing Benefit

Like a bear trying to coax the cubs out of their den after a long winter hibernation, your marketing efforts are going to have to focus on coaxing customers back into your business. Hopefully, we’ve given you some helpful tips on how to do that. Pay attention to the overall marketing environment and what messages are successful businesses (even major corporations) using to see if you can adapt the concept to work for your small business.

The post Marketing in the New Normal of COVID-19 appeared first on CorpNet.

Here are nine tax breaks and benefits you and your employees can take advantage of today.

Tax Benefits For Your Business

1. Delayed Payroll Tax Payment

As an employer, you can choose to defer payment of the business’s share of the Social Security tax on wages during the period from March 27 through December 31, 2020. This is not a break, but the deferral can help with a business’s cash flow. The employer must pay half of the deferred amount by December 31, 2021, and the other half by December 31, 2022. The self-employed can also defer 50 percent of the self-employment tax they owe.

Take note: Any employer who receives a notification of PPP loan forgiveness must immediately stop deferring the Social Security payroll tax.

2. Employee Retention Tax Credit

To take advantage of this fully refundable tax credit, your business must have had to fully or partly suspend business operations during any quarter in 2020 because of the pandemic or the business’s gross receipts have significantly declined because of the pandemic. The tax credit is equal to 50 percent of employee wages from March 12, 2020 to before January 1, 2021. Self-employed persons are not eligible for this tax credit.

Take note: You can not take the employee retention tax credit if your business received PPP funding.

3. Expansion of Charitable Gift Deductions

C Corps are the only business entity allowed to take a tax deduction for donating to charities and under normal circumstances, the amount is limited to 10 percent of its annual taxable income. The CARES Act has temporarily raised the limit for cash donations to 25 percent in 2020. Food inventory contributions have also been raised from 15 percent to 25 percent.

4. Net Operating Loss (NOL) Carrybacks

Under the 2017 Tax Cuts and Jobs Act, businesses with a net operating loss were no longer allowed to carryback NOLs from a current taxable year to the two previous taxable years and also could no longer carry NOLs forward. The CARES Act has temporarily lifted the NOL exclusion. NOLs occurring in 2018, 2019, and 2020 are now allowed to be carried back up to five years, however, NOLs still cannot be carried forward. There is also no longer an 80 percent taxable income limit for using NOLs for 2018 through 2020.

5. Expanded Interest Deduction

The amount of deductible business interest expenses allowed has been increased under the CARES Act to 50 percent of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the 2019 and 2020 tax years. Businesses can also elect to use their 2019 EBITDA to calculate their 2020 business interest deduction. Business interest expenses not allowed as deductions can be carried forward.

6. Individual Business Loss Deduction

For taxpayers claiming business losses on their individual returns, the previous limitations ($500,000 for couples and $250,000 for other filers) have been suspended for 2018-2020.

Tax Benefits For Your Employees

7. Retirement Plan Penalties

For employees needing to withdraw money from their retirement plans to make up for losses due to the pandemic, the 10 percent penalty is waived for 2020 distributions.

8. Employer-paid Student Loans

Employees receiving money from employers to pay student loan debt can exclude up to $5,250 of the payments as income (in the March 2020-December 31, 2020 time period).

9. Charitable Donations

Individual taxpayers can deduct up to $300 for charitable contributions without itemization.

Getting Help

There are several ways to apply for the various government programs. You can complete the SBA form yourself; find out if your bank offers the SBA loans or work with your accountant.

Like you, CorpNet is a small business facing many of the challenges you face each day; these are challenging times for all of us and we are all in this together. To equip you with some alternative funding sources, please note that the following financial institutions recently started offering PPP Loan Programs to the public. As such, below are the links to other PPP resources where you can apply for PPP once government funding becomes available again:

• • SBA.gov
  • PayPal
  • Intuit Aid Assist
  • Square

Assuming Federal Funds are available, we strongly urge you to reach out to one of the institutions listed above or to your primary financial institution to inquire whether you can qualify for a PPP Loan through one of these sources.

We understand how stressful and challenging it is for so many small business owners today. We are here to help so you don’t get overwhelmed. Please contact us if we can be of assistance to you in any way as we are committed to serving you in any way that we can.

Stay tuned for more information. We’ll provide updates here on the CorpNet blog as we receive them.

Stay Healthy. Stay Strong.

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According to the Small Business Administration (SBA), there will be additional guidance on loan forgiveness within 30 days of March 27, 2020—the date the CARES Act was enacted. Here’s what we know now.

Paycheck Protection Program (PPP) Loan Forgiveness

Per the SBA.gov website on April 16, 2020, the SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. The United States government is in discussions about providing further funding for this program. As with the PPP loan, the United States government is in discussions about providing further funding for this program.

The PPP provides small businesses with the funds to pay up to eight weeks of payroll costs including benefits. Borrowers can apply for two months of average monthly payroll costs from the previous year plus an additional 25% of that amount. The loan amount is capped at $10 million.

PPP loans are 100% forgivable as long as the business meets the following requirements:

• From the date “when the first disbursement occurs,” the funds are used to cover 8 weeks of payroll costs including salary, wages, commissions, tips, employee benefits (health care, retirement, vacation pay, family leave (capped at $100K per employee)
• Employee headcounts and salaries are retained. Independent contractors (ICs) do not count as employees for purposes of PPP loan forgiveness. Independent contractors have the ability to apply for a PPP loan on their own, so they do not count for purposes of a borrower’s PPP loan forgiveness.
• No more than 25% of the loan is used for non-payroll costs including rent, mortgage interest, and business utilities. Any utilities, rent, and mortgage must have originated or been in service before February 15, 2020.

The forgiven portion of the PPP loan is not taxable income.

The qualifying expenses for business entities formed to buy property or properties are still unclear.

Scenarios where the business is not qualified to have 100% of the PPP loan forgiven include:

• If the employee headcount is reduced during the 8-week benefit period. The SBA will compare the average headcount during the benefit period to the average headcount during the months you averaged payroll (e.g. 2019 or the first 2 months of 2020). As long as you restore the average headcount by the end of the 8-week period, the loan can still be forgiven.
• If salaries are reduced by more than 25% (based on every employee). The SBA will look at each employee’s salary reduction and reduce the amount of loan forgiveness based on the percentage of reduction. If the borrower restores salaries by the end of the 8-week benefit period, the reduction will be forgiven.
• At least 75% of the PPP disbursement must be used for payroll costs, with the remaining 25% used for qualifying expenses as state above. If any portion does not fall within these guidelines, that portion is not forgivable. You must use all the disbursements within the 8-week benefit period.

Your lender will base the numbers on what you submitted as payroll costs whether your business is a corporation, LLC, sole proprietor or independent contractor. Nonpayroll expenses eligible are also the same for all entities. Workers’ Compensation costs are not considered eligible as payroll or nonpayroll expenses.

Based on the CARES Act guidelines, any portion of the loan not in compliance with the above is considered not forgiven. The difference must be paid in full within two years at the interest rate of 1%. The loan is eligible for a 6-month deferment, however, it will still accrue interest.

To receive loan forgiveness, borrowers will need to provide proof to their lenders the funds were used appropriately. The details have yet to be released but borrowers will likely have to provide documentation showing payroll rates, additional payroll costs, any unemployment insurance filings, payment receipts for rent, mortgage and utilities and possibly more.

Economic Injury Disaster Program (EIDL) Loan Forgiveness

Small businesses may also apply for an EIDL loan of up to $2 million from the federal government through December 31, 2020. Applicants can also apply for up a $10,000 Economic Injury Disaster Loan Emergency Advance. The amount of the Advance is determined by the number of employees you had before the onset of the coronavirus (i.e., as of January 31, 2020). The advance will provide $1,000 per employee up to a maximum of $10,000. Only the EIDL advance monies are eligible for forgiveness. The actual EIDL loan is a 30-year term loan at 3.75% (nonprofits 2.75%).

Per the SBA.gov website on April 16, 2020, the SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.

Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

If you have already applied for and/or received the EIDL advance, EIDL advances are 100% forgivable. Here are the terms for forgiveness.

Grant must only be used for the following expenses:

• Providing paid sick leave to employees unable to work due to the direct effect of the coronavirus
• Maintaining payroll to retain employees during business disruptions or substantial slowdowns
• Payments on mortgage interest, rent, utilities
• Increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains.
• Repaying obligations that cannot be met due to revenue losses.

Similar to the PPP, loan forgiveness will be reduced if salaries and wages are reduced by more than 25% or if used for noneligible expenses.

Noneligible expenses include:

• Dividends and bonuses
• Disbursements to owners
• Repayment of stockholder/ principal loans
• Expansion of facilities or acquisition of fixed assets
• Repair or replacement of physical damages
• Refinancing long term debt
• Relocation

Applying for both the PPP and the EIDL

According to the SBA, the EIDL emergency grant was enacted to get “money into your hands as soon as possible.” Because the grant is based on how many employees you have, you should use the Advance for payroll. You can be granted both the PPP and the EIDL Advance, however, the proceeds from any Advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.

As an example, let’s say you receive an EIDL emergency grant for $3,000. Subsequently, you receive the PPP loan for $25,000. As long as you use all of the PPP within the 8-week benefit period, $22,000 of the PPP will be forgiven and the $3,000 EIDL emergency grant will need to be paid back within two years at 1% interest rate.

Loan Forgiveness for Self-Employed Individuals and Independent Contractors

You are eligible to apply for the PPP and EIDL loans as a self-employed person and/or an independent contractor. Here are the details for each.

You are eligible to apply for the PPP, if you meet all these conditions:

• You were in operation on February 15, 2020
• Your primary place of residence is the United States
• You filed or will file a Form 1040 Schedule C for 2019 showing self-employment income.

The SBA will issue additional guidance for those individuals with self-employment income who were not in business in 2019 but were in operation on February 15, 2020.

You need to supply all of the following:

• Your 2019 1040 Schedule C (even if you haven’t filed it with the IRS yet)
• A 2019 1099-MISC, invoice, bank statement, or book of record that shows you were self-employed in 2019
• A 2020 invoice, bank statement, or book of record establishing that you were in operation on or around February 15, 2020.

Below are examples on how to calculate how much you can borrow.

For most independent contractors, calculating your PPP borrowing limit is a 3-step process:

• Step 1: Find line 31 on your 2019 IRS Form 1040 Schedule C. (If you haven’t filed yet for 2019, go ahead and fill it out). If the amount on Line 31 is over $100,000, write $100,000.
• Step 2: Divide the amount from Step 1 by 12.
• Step 3: Multiply the amount from Step 2 by 2.5. For most borrowers, this will be your maximum PPP loan amount

To have your PPP loan forgiven, you must use the funds to:

1. Replace your compensation (based on your 2019 income) but cannot exceed eight weeks of your 2019 compensation up to $100,000- 75% of the loan must go towards this
2. Pay interest payments on a mortgage or loan (such as an auto loan) you use to perform your business*
3. Make business rent payments*
4. Make business utility payments*
5. Make interest payments on any other debt incurred before February 15, 2020 (but such amounts are not eligible for loan forgiveness)

* You must have claimed a deduction on your 2019 taxes for expenses described in 2, 3, and 4 above

You are eligible to apply for the EIDL Grant Advance when you apply for the EIDL loan. Applicants who are denied the EIDL loan, are still eligible to keep the grant. There is no obligation to repay the grant, however, if you secure a PPP loan the amount of the grant you receive will be subtracted from the PPP forgiveness amount.

When (if) the EIDL becomes available again, the preliminary application process takes only a few minutes. On the initial EIDL application you can check a box asking to be considered for the grant. If the lender deems you are eligible to continue applying for EIDL, you will be contacted by the lender and guided through the process by a loan officer.

Pandemic Unemployment Assistance (PUA)

Although self-employed persons and independent contractors are normally not eligible to receive unemployment insurance, under the CARES Act, such individuals can receive benefits under a special Pandemic Unemployment Assistance (PUA) program if they qualify.

According to the Department of Labor, “An individual who works as an independent contractor with reportable income also may qualify for PUA benefits if he or she is unemployed, partially employed, or unable or unavailable to work because the COVID-19 public health emergency has severely limited his or her ability to continue performing his or her customary work activities, and has thereby forced the individual to suspend such activities” is eligible.

Unemployment insurance is regulated by the state you live in and PUA pays the same weekly benefits, but the benefits are 100% federally funded. PUA benefits are available for 39 weeks. The PUA program also awards an extra $600 per week on top of the state-calculated benefit through July 31, 2020. The PUA programs will end December 31, 2020. If you receive a PPP loan, you cannot collect unemployment insurance.

CorpNet Is Here to Help

CorpNet remains open and in full operation Monday through Friday from 7 a.m. until 5:00 p.m. PST to help. Our team is safely self-distanced and set up to work remotely with all of the necessary tools and resources to serve you.

The post How Loan Forgiveness Works for the PPP and the EIDL Loan Programs appeared first on CorpNet.

Below is a list of some COVID-19 funding options that are still available.

SBA Express Bridge Loans (EBL)

Eligibility: Small businesses that currently have a business relationship with an SBA Express Lender.

Loan Amount: Up to $25,000.

Purpose: Support for small businesses experiencing a temporary loss of revenue due to the coronavirus pandemic. The SBA Express Bridge Loans can be used as a term loan or to bridge the gap while waiting on a decision on other relief loans.

Loan Terms: EBL program runs until March 31, 2021. Currently, the EBL is only available to small businesses that were in business before March 13, 2020 and had a business relationship with an SBA Express Lender prior to the disaster. The applicant must also demonstrate they have been adversely impacted by the COVID-19 emergency.

• • Applicants can only apply for one EBL.
  • EBL must be structured as a term loan (revolving lines of credit are not permitted).
  • The maximum EBL loan term is 7 years.
  • The lender may require the EBL borrower to pay the EBL loan in part or in full if the borrower is approved for other long-term disaster financing.
  • EBL proceeds must be used exclusively to support the survival and/or reopening of the small business.
  • An EBL loan may have a fixed or variable interest rate. Because an EBL is limited to $25,000, a lender may charge up to 6.5 percent + Prime rate.
  • No lender fees.
  • Application fees allowed. The maximum permissible application fee is 2 percent of the loan amount or $250, whichever is greater.
  • No collateral needed.

SBA Debt Relief

Eligibility: The SBA Debt Relief is available to small businesses that currently have an SBA loan.

Loan Amount: The SBA will automatically pay the principal, interest, and fees of current 7(a) and 504 loans, and microloans for a period of six months. The SBA will also automatically pay the principal, interest, and fees of new 7(a) and 504 loans, and microloans issued prior to September 27, 2020.

Purpose: To ease the financial burden on small businesses already making payments for SBA loans.

Loan Terms: SBA loan borrowers will receive automatic deferral; however, interest will still accrue during the referral period. Borrowers preferring to continue making regular payments during the deferment period may continue remitting payments. SBA will apply those payments normally as if there was no deferment.

U.S. Chamber of Commerce: Save Small Business Fund

The Save Small Business Fund is a grantmaking initiative led by the U.S. Chamber of Commerce Foundation.

Eligibility: Small businesses that employ between 3 and 20 people, located in an economically vulnerable community, and have been harmed financially by the COVID-19 pandemic.

Grant Amount: $5,000

Terms: Application for the grants will be available on April 20, 2020. All applicants will need is their business’s W-9. Applying businesses must be in the bottom 80 percent of the most economically distressed zip codes in the U.S., as ranked by the Distressed Communities Index. Grants will be awarded weekly until all funds have been used.

Nav: Small Business Grant Contest

Small business financing company, Nav is awarding grants to small businesses that tell a story of preservation and opportunity in the face of a past or ongoing challenge.

Eligibility: Must sign up for a free Nav account and post answers to contest questions on Facebook, Instagram or LinkedIn.

Must answer:

• What your business does and a challenge you overcame or continue to struggle within your business.
• What you would do with the grant funds
• Bonus points: include a photo of you in action at work.

Entries accepted until May 30th, 2020.

Prize Amounts:

• $10,000 Grand Prize
• $2,000 First runner up
• $1,000 Second runner up

Facebook Grants for Small Business

Facebook is offering $100 million in grants and ad credits to support over 30,000 small businesses in the countries where Facebook operates. Applications available on April 22, 2020.

Eligibility:

• Must be a for-profit company
• Must have between 2 and 50 employees
• Must have been in business for over a year
• Must have experienced challenges from COVID-19
• Must be in or near a location where Facebook operates

Regional Assistance

Communities and states across the country are also offering relief for small businesses. Check your local business development offices for more information.

Here are a few location-specific resources for finding COVID-19 relief funding:

• Amazon Neighborhood Small Business Relief Fund – Small businesses with fewer than 50 employees or less than $7 million in annual revenue in Seattle (South Lake Union and Regrade neighborhoods) and Bellevue.
• California Disaster Relief Loan Guarantee Program for COVID-19 – Small businesses located in California with 1-750 employees that have been negatively impacted or experienced disruption by COVID-19 and some nonprofits.
• Goldman Sachs Small Business Initiatives
  • Global Small Business Stimulus Package: $525 million in emergency loans for small businesses with fewer than 100 employees.
  • Goldman Sachs COVID-19 Relief Fund: A $25 million commitment through Goldman Sachs Gives to support healthcare organizations, frontline responders, and the hardest-hit communities.

CorpNet Is Here to Help

CorpNet remains open and in full operation Monday through Friday from 7 a.m. until 5:00 p.m. PST to help. Our team is safely self-distanced and set up to work remotely with all of the necessary tools and resources to serve you. Contact us today at 1-888-449-2638 to discuss how we can help you.

The post COVID-19 Relief Funding Alternatives appeared first on CorpNet.

Paycheck Protection Program (PPP)

You probably already know the basics of the PPP, but it bears going over again for comparison to your other relief options.

Established by the CARES Act, the PPP provides small businesses with the funds to pay up to eight weeks of payroll costs including benefits. The funds can also be used to pay interest on rent, mortgage interest, utility costs for the business and interest on “any other debt obligations that were incurred before February 15, 2020. If the right conditions are met, the entire loan amount may be forgiven. The PPP is available through June 30, 2020. As of April 13, 2020, the SBA has guaranteed 1,035,086 loans under the PPP.

The maximum PPP loan amount is 2.5 times your business’s average monthly payroll costs, up to $10 million. Business owners can receive only one PPP loan.

Eligible Businesses

• Must be a small business with fewer than 500 employees including independent contractors, sole proprietors, self-employed, LLCs, S Corps, C Corps and partnerships.
• Eligible non-profits (501c3), veteran organizations (501c19) and tribal businesses (31b2C) are also eligible.

Details of the Loan

• Provides eight weeks of average monthly payroll costs including salary, wages, commissions, tips, employee benefits including costs for vacation, parental, family medical or sick leave (capped at $100K per employee)
• Sole proprietors will calculate their “payroll” based on wages, commissions, income, or net earnings from self-employment (capped at $100K)
• Seasonal businesses will calculate based on average monthly payroll costs between February 15, 2019, or March 1, 2019, and June 30, 2019 (capped at $100K per employee).
• New 2020 businesses will calculate based on average monthly payroll costs from January 1, 2020 to February 29, 2020 (capped at $100K per employee).
• 75 percent of the loan must be used for payroll costs; 25 percent can be used for rent, interest and business utilities.

Documentation Required

• Proof your business was in operation on February 15, 2020.
• Proof your business had employees (or in the case of self-employment, income)
• Verification of average monthly payroll costs (such as tax forms, payroll statements, etc.)

Not Needed

• No collateral required
• No personal guarantee required
• No SBA Fees
• No agent fees

To Have a PPP Loan Forgiven

• 75 percent of loan must be used for payroll costs; 25 percent can be used for rent, interest and business utilities.
• Number of employees must be maintained
• Salaries must be maintained
• Borrowers must submit a written request for forgiveness from a lender and provide documents verifying employee retention, salaries, payments on rent, interest, and utilities. Lenders have 60 days to respond.

To repay portion not forgiven, borrowers have a 2-year repayment term at a 1 percent interest rate.

How to Apply

Through an SBA approved lender.

Economic Injury Disaster Loan (EIDL)

Previously granted to those affected by major natural disasters, the Economic Injury Disaster Loan (EIDL) is now available, with relaxed restrictions, for those affected by the coronavirus pandemic. Small businesses may now apply for an EIDL loan of up to $2 million from the federal government through December 31, 2020. Applicants can also apply for a $10,000 Economic Injury Disaster Loan Emergency Advance.

To ensure that the greatest number of applicants can receive assistance, the amount of your Advance will be determined by the number of employees you had before the onset of the coronavirus (i.e., as of January 31, 2020). The Advance will provide $1,000 per employee up to a maximum of $10,000.

Eligible Businesses

• Must be a small business with fewer than 500 employees including independent contractors, sole proprietors, self-employed, LLCs, S Corps, C Corps and partnerships, cooperatives and ESOPs.
• Eligible non-profits (501c3), veteran organizations (501c19) and tribal businesses (31b2C) are also eligible.

EIDL Details

• Loan maximum is $2 million
• Interest rate for small businesses is 3.75 percent, for nonprofits 2.75 percent.
• Terms up to 30 years
• Funds must be used for fixed debts (rent, etc.), payroll, accounts payable and other bills unpaid due to disaster.
• Until December 31, 2020 there is no requirement for personal guarantees on EIDL loans less than $200,000.
• Until December 31, 2020 there is no requirement for the borrower to have been in business for at least a year.
• Until December 31, 2020 there is no requirement that borrowers are unable to obtain credit from other sources.
• The loan cannot be used for dividends, bonuses, disbursements to owners, repayment of stockholder/principal loans (with exceptions), expansion of facilities or acquisition of fixed assets, repairs or replacement of physical damages, refinancing long-term debt, repaying loans, relocation.
• A business must define its loss in comparison to its 2019 operations.

Documentation Required

• Borrowers will need to provide documentation showing gross revenues, cost of goods sold, lost rents (for rental property owners), cost of operating expenses (for nonprofits), other reimbursements such as business interruption insurance, number of employees
• SBA Loan Application (SBA Form 5 or 5C)
• Personal Financial Statement (SBA Form 413)
• Schedule of Liabilities (SBA Form 2202)
• Tax Information Authorization (IRS Form 4506T)
• The lender may also ask for federal income tax returns (with schedules) for principals, general partners or managing member, and affiliates for 3 years, profit and loss statement and balance sheet.

EIDL FAQs

What if I am self-employed and have no employees on payroll?

You can still apply for the EIDL. List yourself as the sole employee. You will be capped at $1000  for the EIDL Loan Advance according to the SBA. And note, in order to qualify for even the $1000 loan advance you must be filing as a Schedule C on your tax return.

What if I am a self-employed independent contractor with no employees on payroll?

You can still apply for the EIDL. List yourself as an IC on the application. You will be capped at $1000 for the EIDL Loan Advance according to the SBA.  And note, in order to qualify for the $1000 loan advance, you must be filing as a Schedule C on your tax return.

What if I have fewer employees on payroll than I had before the coronavirus outbreak?

A:  You can still apply for the EIDL and the amount of your Advance will be determined by the number of employees you had before the outbreak of the coronavirus (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.

What if I am self-employed with no employees on payroll and I’m showing a loss on my schedule C?

According to the SBA, you would not qualify.

Summing up, according to the SBA business owners, which includes C Corporations. S Corporations, LLCs, Sole Proprietors, and Partnerships are eligible to apply for the EIDL and the EIDL Loan Advance as long as they were in business prior to January 31, 2020 and had employees as of January 31, 2020.

If they are a Sole Proprietor, IC, Single Member LLC, C Corp, S Corp, or in a partnership with no employees on payroll, they should list themselves as the only employee and will be capped at $1000 for the loan advance.

To Have an EIDL Loan Forgiven

Only the $10,000 EIDL advance is eligible to be completely forgiven, if the borrower spends the money on payroll costs, higher costs for supplies due to supply chain disruption, mortgage and rent costs.

If the borrower already has an SBA loan, they can ask the lender to defer principal and interest payments for up to six months. The SBA will pay the principal, interest, and fees owed to lenders.

How to Apply

Through the SBA.

PPP or EIDL?

You can apply for both the PPP and the EIDL, however, you are restricted from using the program funds for the same purpose, for example, payroll. Also, if you use the money for payroll then you cannot later take the tax credit for those costs under the Families First Coronavirus Response Act.

The differences between the PPP and the EIDL have to do with the amount of money you need and what you plan on using the money for. The PPP helps you cover payroll costs for eight weeks so you can maintain your staff and keep people working. The EIDL is a loan meant to cover six months of operational expenditures.

If you have already collected the EIDL advance grant, you are still eligible to apply for a PPP loan (to use for different expenses). If you want to use part or all of the EIDL for payroll costs, you can refinance the EIDL loan into the PPP loan. However, once you add that amount to the PPP loan any funds above what you received for the original PPP would not be forgiven.

Also, important to note: If you receive finds from the EIDL advance grant and do not get approved for the EIDL loan, you still can keep the grant.

CorpNet Is Here to Help

CorpNet remains open and in full operation Monday through Friday from 7 a.m. until 5:00 p.m. PST to help. Our team is safely self-distanced and set up to work remotely with all of the necessary tools and resources to serve you. Contact us today at 1-888-449-2638 to discuss how we can help you.

The post What Government Loan Program Should You Apply For? appeared first on CorpNet.

Under the program, the loans will be forgiven if the business only uses the money for payroll, rent, mortgage interest and utilities. Businesses must keep paying their employees for eight weeks.

The PPP loans are 2.5 times a company’s average monthly payroll, however, it remains to be seen if two months is long enough to cover the financial distress small businesses are experiencing. Sounds good, but many small business owners are confused about how to actually calculate how much money their businesses are expected to receive.

Here’s How PPP Loans are Calculated

Businesses apply for PPP loans through an SBA-approved lender, but it is up to the borrower to calculate the amount of the loan. Because the purpose of the loan is to retain workers during the coronavirus crisis, the amount is based on the average monthly costs of payroll expenses including the salaries of the business owners, the employees and other payroll costs such as health and retirement benefits.

Some payroll cost variables include:

• Your business entity and how you pay your business taxes
• Number of W2 employees
• Benefits the business pays, such as health insurance, retirement contributions, vacation pay, sick pay and any severance payments.
• Start date of business and/or income
• Maximum salary of $100,000 per employee
• Owner draws do not count as payroll
• Dividends paid to shareholders do not count a payroll

Let’s Get into the Nitty-gritty by Entity Type

Independent Contractor

Where to get the payroll information:

• Gather data from each 1099 you received in 2019 and reported on 2019 1099-MISC forms.  This is the amount you paid self-employment taxes on.
• If you received income before June 30, 2019, divide the 1099 income paid by 12.
• If you didn’t receive income until after June 30, 2019, you can still divide income paid by 12, or you can choose to use income made from January to February 2020 and divide by 2. Choose the higher amount.

Step-by-step example:

1. Add up the totals of all your 2019 1099s, let’s say $45,000
2. Divide by 12 = $3,750 This is the amount you enter for Monthly Average Payroll on the application.
3. Multiply by 2.5 = $9,375 This is the amount you enter under Loan Request.

Sole Proprietorship

Where to get the payroll information:

• You need your 2019 net profit, as self-employment taxes are based on the business’s net profit only. You can find this amount on your 2019 income statement or Schedule C, line 31.
• If you have W2 employees, you also include all employee wages, commissions, tips, and all payroll taxes. Remember, you and each employee are capped at $100,000.

Step-by-step example:

If you received income and paid wages before June 30, 2019, divide the amount by 12. If you didn’t receive income or pay wages until after June 30, 2019, you can still divide that amount by by 12, or you can choose to use net profits from January to February 2020 and divide by 2. Choose the higher amount. Single-member LLCs are considered sole proprietors.

Example 1: Started receiving net profits, May 2019.

1. Amount from May 2019-December 2019 is $48,000
2. Divide by 12 = $4,000 Monthly Average Payroll
3. Multiply by 2.5 = $10,000 Loan Request

Example 2: Did not start receiving net profits until September 2019, so you can use net profits from January to February 2020.

1. Payroll costs are $12,000
2. Divide by 2 = $6,000 Monthly Average Payroll
3. Multiply by 2.5 = $15,000 Loan Request

Partnership

Where to get the payroll information:

• Partnerships, and multi-member LLCs that file taxes as partnerships, will use numbers from Tax Form 1065 or each partners’ Schedule K-1, line 14.
• If you have W2 employees, you should also include all employee wages, commissions, tips, and all payroll taxes. Remember, you and each employee are capped at $100,000.

Step-by-step example:

1. Add together each partner’s 2019 Schedule K-1 self-employment income. Let’s say a total of $180,000.
2. Divide by 12 = $15,000 Monthly Average Payroll
3. Multiply by 2.5 = $37,500 Loan Request

S Corporations

As an S Corp, your business elects to have its profits and losses flow through to its shareholders (owners), who then report them on their personal income tax returns. If your S Corp does not pay salaries through payroll and therefore does not pay employment taxes, your business is not eligible for the PPP loan. Also, shareholder distributions are not considered payroll, because again even though the shareholder pays income taxes on the amount distributed, no payroll taxes have been paid.

Where to get the payroll information:

• If you use a payroll service to pay yourself and your employees, you can get a report for 2019 from your payroll provider.
• If you have W2 employees, you should also include all employee wages, commissions, tips, and all payroll taxes. Remember, you and each employee are capped at $100,000.

Step-by-step example:

1. Take total payroll costs for 2019, let’s say $120,000
2. Divide by 12 = $10,000 Monthly Average Payroll
3. Multiply by 2.5 = $25,000 Loan Request

C Corporation

Where to get the payroll information:

• As a C Corp, you are considered an employee of the corporation, along with your employees. Owner draws and shareholder dividends and loans to shareholders do not count as payroll monies and cannot be calculated in your costs. You can use your 2019 Tax Form 940 for totals or ask your payroll provider to give you the statement.
• If you have W2 employees, you should also include all employee wages, commissions, tips, and all payroll taxes. Remember, you and each employee are capped at $100,000.

Step-by-step example:

1. Take total payroll costs for 2019, let’s say $240,000.
2. Divide by 12 = $20,000 Monthly Average Payroll.
3. Multiply by 2.5 = $50,000 Loan Request.

In All the Scenarios

• If you started your business or received income before June 30, 2019, you must divide the amount by 12.
• If you didn’t start your business or receive income until after June 30, 2019, you can still divide the amount by 12, or you can choose to use the amount from January to February 2020 and divide by 2.
• You can choose the amount that is most beneficial for you.
• As long as you use 75 percent of the loan for payroll and the remaining 25 percent for rent, utilities and mortgage interest, you are eligible for loan forgiveness.

CorpNet Is Here to Help

CorpNet remains open and in full operation Monday through Friday from 7 a.m. until 5:00 p.m. PST to help. Our team is safely self-distanced and set up to work remotely with all of the necessary tools and resources to serve you. Contact us today at 1-888-449-2638 to discuss how we can help you.

The post How to Calculate Your Payroll Protection Program Loan Amount appeared first on CorpNet.

If you’ve locked your credit profile at Experian, Equifax, TransUnion, or another credit reporting agency, you could be in for an unpleasant surprise.

By locking your credit profile you are prohibiting banks from doing the due diligence related to the Payroll Protection Program loan or other funding options provided under Coronavirus relief programs.

The SBA, and their authorized banks, will be running credit checks and any mechanisms preventing this will delay loan approval and funding. No one wants that to happen!

Here is a list of the most popular credit reporting agencies:

• Equifax
• TransUnion
• Experian

If you are unsure if your credit report is locked, now is the time to double-check and make sure the SBA and their authorized banks can view your credit history and score.

CARES Act Funding Options

On March 29, 2020, following the passage of the CARES Act, the SBA provided small business owners and non-profits impacted by COVID-19 with the opportunity to obtain up to a $10,000 Advance on their Economic Injury Disaster Loan (EIDL). The Advance is available as part of the full EIDL application and will be transferred into the account you provide shortly after your application is submitted. To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.

CorpNet Is Here to Help

CorpNet remains open and in full operation Monday through Friday from 7 a.m. until 5:00 p.m. PST to help. Our team is safely self-distanced and set up to work remotely with all of the necessary tools and resources to serve you. Contact us today at 1-888-449-2638 to discuss how we can help you.

Additional Resources & Links

• Overview of Coronavirus Relief & Aid for Small Businesses
• SBA Paycheck Protection Program: Loan FAQs for Small Business
• How to Calculate Your Payroll Protection Program Loan Amount
• How the COVID-19 and the CARES Act Affects Your Small Business and Employees
• What Employers Need to Know About Sick Leave During the Coronavirus Crisis
• SBA Coronavirus Relief Option Information

The post Don’t Lock Your Credit if You’re Applying for a CARES Act Loan appeared first on CorpNet.