U.S. Senator Brian Schatz released a resource guide for small businesses in Hawaii to help them navigate new programs in the federal $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act signed Friday.
The act provides relief for small businesses struggling during the ongoing COVID-19 pandemic.
“This new law will help Hawai‘i small businesses meet their payroll and provide people with paychecks for up to eight weeks,” Schatz said in a news release this afternoon. “As more federal help becomes available, we’ll continue to work to provide more information about how Hawai‘i families and businesses can access these new resources.”
The act includes:
>>The Small Business Administration (SBA) Paycheck Protection Program (PPP): The PPP provides small businesses with zero-fee loans as large as $10 million to help with payroll and operating expenses. Up to two months of payroll, mortgage interest, rent and utility costs can be forgiven, and payments on principal and interest are deferred for one year.
>> SBA Economic Injury Disaster Loan (EIDL): The EIDL grant is a new emergency grant of $10,000 for small businesses that have applied for an SBA EIDL. EIDLs are meant for expenses like payroll and operating expenses that could have been made if not for a disaster. The EIDL grant does not need to be repaid even if a business is denied an EIDL. A small business can apply for both an EIDL grant and a paycheck protection loan. The EIDL grant will be subtracted from the amount from the paycheck protection loan that is forgivable.
>> Debt relief for new and existing SBA Borrowers: For six months, the SBA will pay all loan costs — including principal, interest and fees — for borrowers that already have an SBA loan or take one out within 6 months after the CARES Act effective date. SBA borrowers can also extend the duration of the loan and delay some reporting requirements.
>> Relief for small business government contractors: Government agencies can modify terms and conditions of a contract and reimburse contractors at a billing rate of up to 40 hours per week of any paid leave, including sick leave. Eligible contractors have employees or subcontractors who cannot perform work on site and cannot telework because of federal facilities that closed because of the COVID-19 outbreak.
>> Employee retention tax credit: Employers that keep their employees during the COVID-19 pandemic are eligible for a refundable payroll tax credit. Eligible businesses have been fully or partially suspended because of a government order or have experienced a 50% reduction in quarterly receipts because of the crisis. Employers with up to 100 full-time employees can claim a credit for the wages paid to all of their employees. The credit is worth up to $10,000 a person. Employers with a larger workforce can claim a credit for employees who are furloughed or have had their reduced hours as a result of the employer’s closure or economic hardship. Employers who take an SBA paycheck protection loan are not eligible for the tax credit.
>>Payroll tax delay: Employers can to delay paying the employer-portion of payroll taxes through the end of the year. Half of the deferred amount will be due before Dec. 31, 2021, while the other half will be due before Dec. 31, 2022. Employers who take an SBA paycheck protection loan are not eligible for the deferral.
>> Advance payment of tax credits for paid leave: The Department of the Treasury can send advance payments of tax credits available to employers required to provide employees with up to 12 weeks of coronavirus-related paid leave.
>>Business tax relief: The CARES Act loosens requirements for net operating losses and limitations on business interest deductions. It also permanently fixes the qualified improvement property (QIP) error in the 2017 tax law so that QIP investments are entitled to 100% recovery over 15 years. Distillers are exempt from excise taxes on undenatured alcohol used to produce hand sanitizer.
>>Delay for single employer pension plans: Single employer pension plans are allowed to delay quarterly contributions for 2020 until the end of the year. Employers can use 2019 funded status for the purposes of determining funding-based limits on plan benefits for the plan years that include 2020.