There are a number of relief options for businesses under the CARES Act but these measures are limited. Businesses need to act quickly if they need financial help to cover payroll expenses and other business expenses.
Paycheck Protection Program Update
The Paycheck Protection Program (PPP) has been a very popular relief program for many businesses. So much so that it has used the funds set aside for it in the first round. The Small Business Administration (SBA) has approved 1.6 million loans worth more than $339 billion and many businesses have already received their money. A bill that added $320 billion to provide additional appropriations has passed. With PPP being made available again, businesses must jump on the opportunity if they need to take advantage of this relief option. If you have already submitted a PPP application, we are advising clients to check back with their lender on the status. The PPP application does not allow for multiple applications at different banks, so be careful about applying for round 2 of funding without first addressing options with your current lender.
Options Beyond PPP
If your business did not get approved for the PPP, you can still apply for the Economic Impact Disaster Loan (EIDL). While the EIDL program also exhausted its initial funding, the Senate version of the bill adds $60 billion in new appropriations. Business can receive up to $10,000 in advance of loan approval. EDIL advance funds will be made available within days of a successful application, and this loan advance will not have to be repaid.
Note: If you applied for EIDL prior to April 1, 2020 via email or through the mail, you need to reapply through the new SBA portal to receive the $10,000 advance. In an effort to streamline the process and improve security for applicants, the SBA updated the process so business owners can apply directly online.
Even if your business already submitted an EIDL application via mail or through email, the SBA is asking for them to apply for the advance online. Applying online for the advance will not slow or impact the status of their EIDL applications and you will maintain your position in the queue. However, in order to receive the advance, you must apply again.
There are options for businesses but there are some tax implications and other tax planning considerations to be aware of. Be sure to talk to your tax advisors about relief options that are right for your business.
Whether you apply for PPP, EIDL, or both, you must also consider other benefits in the CARES Act that may apply to you. We are here to guide you through these options.
If you are looking for guidance how your business should proceed with the relief measures provided, Anglin’s Tax Advisory Services is working hard to understand these new relief options and the impacts they will have on businesses. Contact us if you need help.
You can stay up to date on tax and relief issues related to the pandemic through our Coronavirus resource page.