During this uncertain time, the federal government and many state governments have provided resources, funds, loans, extensions, and more to help small businesses overcome the temporary loss of revenue.
US Small Business Administration Loans
These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%. The SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
The following are a few programs announced by the US Small Business Administration (SBA).
Paycheck Protection Program
- 8 weeks of prior average payroll plus an additional 25% of that amount.
- Loan payments will be deferred for six months.
- If you maintain your workforce, SBA will forgive the portion of the loan proceeds that are used to cover the first 8 weeks of payroll and certain other expenses following loan origination.
Economic Injury Disaster Loans and Loan Advance
- Economic Injury Disaster Loan advance of up to $10,000.
- Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.
SBA Debt Relief
- The SBA will also pay the principal and interest of new 7(a) loans issued prior to September 27, 2020.
- The SBA will pay the principal and interest of current 7(a) loans for a period of six months.
- 7(a) Loans can be found at https://www.sba.gov/funding-programs/loans
SBA Express Bridge Loans
- Allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork.
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Federal Income Tax Filing and Payment Deadline Extension
The federal tax return filing deadline is now July 15, 2020. For tax payments of up to $10 million, the IRS has also extended the deadline for both individuals and businesses to July 15, 2020. Estimated tax payments for 2020 originally due on April 15 will now be due on July 15.
California Income Tax Filing and Payment Deadline Extension
The Franchise Tax Board (FTB) announced special tax relief for California taxpayers affected by the COVID-19 pandemic. Affected taxpayers are granted an extension to file 2019 California tax returns and make certain payments until June 15, 2020.
This includes:
- Partnerships and LLCs who are taxed as partnerships whose tax returns are due on March 15 now have a 90-day extension to file and pay by June 15.
- Individual filers whose tax returns are due on April 15 now have a 60-day extension to file and pay by June 15.
- Quarterly estimated tax payments due on April 15 now have a 60-day extension to pay by June 15.
The FTB’s June 15 extended due date may be pushed back even further if the Internal Revenue Service grants a longer relief period.
Taxpayers claiming the special COVID-19 relief should write the name of the state of emergency (for example, COVID-19) in black ink at the top of the tax return to alert FTB of the special extension period. If taxpayers are e-filing, they should follow the software instructions to enter disaster information.
The FTB will also waive interest and any late filing or late payment penalties that would otherwise apply.
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City of Los Angeles Small Business Emergency Microloan Program
Businesses in Los Angeles that are responsible for providing low-income jobs can get an emergency microloan of $5,000 to $20,000. Loans with repayment terms of six months to one year carry an interest rate of 0% and five-year loans have interest rates of 3% to 5%.
Who’s eligible
To get a loan, you must meet requirements including:
- having “reasonable and responsible” individual credit history,
- committing to use the loan for working capital only and ensuring your business is located within the City of Los Angeles.
- If you own 20% or more of the business, you must guarantee the loan.
How to apply
Apply online and provide supporting documentation including business and personal tax returns, three months of bank statements and business and personal financial statements.
Moratorium on Evictions
Los Angeles has also instituted a moratorium on evictions of businesses impacted by the coronavirus through March 31.
CONTACT US
Gallinger Law specializes in business and nonprofit advisement including restructuring, contracts, and formations. If you have any questions, contact us at info@gallingerlaw.com or call (888) 255-9147.