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Small business: Higgins provides details on Paycheck Protection Program, employee retention tax credit


Wed, Apr 1st 2020 01:15 pm

The COVID-19 pandemic has led to a complete halt of community and business activity for many in Western New York. Until the pandemic risk subsides, many businesses will continue to be interrupted.

Congressman Brian Higgins supported relief to small businesses through emergency legislation, the Coronavirus Aid, Relief, and Economy Security (CARES) Act, and is providing details to help local businesses access available resources.

A summary of federal relief is available in a small business fact sheet on Higgins’ website at: https://higgins.house.gov/issues/coronavirus-disease.

Extended details are also below:

Paycheck Protection Program

The CARES Act included $350 billion in financial assistance called the Paycheck Protection Program, which acts as a bridge for businesses that retain employees and their salaries.

•Who is eligible for the Paycheck Protection Program? Small Business, 501(c)(3) nonprofit organizations, 501(c)(19) veterans organizations, tribal businesses, sole proprietors, independent contractors, self-employed individuals.

•What are the terms of the program? Zero-fee loans of up to $10 million. The loan will be eligible for forgiveness for expenses of up to eight weeks of average payroll and related costs if the organization retains employees and their salary levels.

Further guidance on the Paycheck Protection Program from the Treasury Department is available at: https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf

Economic Injury Disaster Loans & Emergency Economic Injury Grants

The CARES Act included $10 billion for economic injury disaster loans (EIDL) and emergency economic injury grants, programs for small businesses that experienced significant economic injury and are located in a declared disaster area, which includes the entire state of New York.

•Who is eligible for an economic injury disaster loan? The following entities with 500 or fewer employees: small businesses, sole proprietorships (with or without employees), independent contractors, cooperatives and employee-owned businesses, tribal small businesses, small business concerns and small agricultural cooperatives that meet the applicable size standard for SBA, as well as most private nonprofits of any size.

•What is the difference between an economic injury disaster loan and an emergency economic grant? An economic injury disaster loan (EIDL) is a 30-year loan of up to $2 million with an interest rate up to 3.75% for businesses and 2.75% for nonprofits to help pay for disaster-related expenses. An emergency economic injury grant is an immediate advance of up to $10,000 received within three days of applying for an EIDL that does not need to be repaid, even if the business fails to qualify for the EIDL.

•Can my business qualify for both programs? Business may qualify for both the Paycheck Protection Program and economic injury disaster loans/grants. However, they must be used for different purposes, and any advance amount received under the emergency economic injury grant program would be subtracted from the amount forgiven in the Paycheck Protection Program.

Local small business development centers can provide Western New York businesses with additional guidance. For Erie County, visit https://sbdc.buffalostate.edu/ or call 716-878-4030. In Niagara County, go to http://niagarasbdc.org or call 716-210-2515.

Employee Retention Tax Credit

The CARES Act created an employee retention tax credit, a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 crisis.

•Who is eligible for the employee retention tax credit? Employers, including nonprofits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50% reduction in quarterly receipts, measured on a year-over-year basis. The credit is not available to employers receiving assistance through the Paycheck Protection Program. The credit is provided through Dec. 31, 2020.

•Which wages are eligible to apply to the credit? Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship. For employers with 100 or fewer full-time employees, all employee wages are eligible, regardless of whether an employee is furloughed. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee. Wages do not include those taken into account for purposes of the payroll credits for required paid sick leave or required paid family leave, nor for wages taken into account for the employer credit for paid family and medical leave.

Additional information on the employee retention tax credit will be available at: www.irs.gov/coronavirus.

For more information, contact Higgins’ office at 716-852-3501.

Click HERE for a larger version (PDF).


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