Given these unprecedented events surrounding the COVID-19 pandemic, many small businesses are left wondering how they will deal with a number of issues. In all likelihood, the two most pressing issues facing small businesses are their employees and their liquidity. In light of recent federal legislation, there are certain actions you can take now to ease the pain caused by the economic downturn.
For employees who are working in a non-essential industry and employed by a business with fewer than 500 employees, there is immediate relief available as a result of the Families First Coronavirus Response Act signed into law by President Trump on March 18, 2020 (“Act”). Employees who are forced out of their employment as a result of COVID-19 will receive 80 hours of paid sick leave and expanded paid childcare leave if their child’s school is closed and/or childcare is unavailable. Employers will receive 100% reimbursement for paid leave taken per the Act, which includes health insurance costs. Additionally, there will be no payroll tax liability for these payments. The funds will be paid by way of a dollar-for-dollar offset against payroll taxes, and/or a refund directly from the IRS. (www.congress.gov/bill/116th-congress/house-bill/6201/text.)
For relatively quick business liquidity, the SBA is offering disaster loans for businesses in eligible disaster areas. (disasterloan.sba.gov/ela/.) Presently, all of California is classified as a disaster area in light of Governor Newsom’s Executive Order N-33-20 whereby a stay at home order was issued. Per an SBA disaster loan, business may be eligible for up to $2 million at rates of 3.75% for small businesses with repayment terms of up to 30 years. Given the limited funds available for these loans, businesses should act quickly to attempt to take advantage of this opportunity.
While these are certainly unnerving events, there are actions that can be taken today which will have long lasting, positive, results in the future. Please feel free to contact us to discuss how to protect your business.