Let's Review Stimulus Programs
Family First Coronavirus Response Act
Pay leave type: Under FFCRA, there are three different types of paid leave.
Employee National Paid Sick Leave: Your employee is sick and under quarantine with COVID-19.
Family National Paid Sick Leave: Your employee is taking care of a family member who is sick or impacted with COVID-19.
Family Medical Leave Act Expansion Paid Leave: Your employee is taking leave under the Family Medical Leave Act (FMLA) to care for children under 18 whose school or child care is closed because of COVID-19.
Under the FFCRA, you’ll get 100% credit towards your Federal Tax deposit for the wages paid under this act.
With the passage of the Consolidated Appropriations Act, 2021, the credits provided are extended until March 31, 2021. The paid sick leave and family leave for employees were not extended, but if employers elect to offer the paid leave, they can use the credits until March 31, 2021.
Employer Social Security Deferral
Employers are allowed to defer the payment of employer FICA taxes to December 31, 2022.
The Employee Retention Credit
Under the CARES Act, and now expanded by the December 2020 CAA, an eligible employer may be able to offset the impact of COVID-19 with an Employee Retention Credit. You must continue to pay employees during a COVID-19 related closure and carry on a business at some point (now it is before June 30, 2021 under the recent CAA legislation) to be eligible for the credit.
A qualifying closure occurs during any calendar quarter of 2020 in which:
The operation of your trade or business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19); or
Your gross receipts are less than 50% of your gross receipts for the corresponding quarter in 2019
This means that just about everyone qualified who paid wages while closed, or paid employees more than the actual hours worked.
Under CARES, the credit is 50% of $10,000 in wages and benefits annually per employee.
Under the recent CAA (passed Dec 2020), the credit is expanded to 70% of employee wages and benefits based on $10,000 per quarter per employee.
Another change under the recent CAA law is the tax credit is now available to businesses that took a loan under the Paycheck Protection Program (PPP), including borrowers from the initial round of PPP who originally were ineligible to claim the tax credit.
First Draw and Second Draw Forgivable PPP Loan Funding
First Draw forgivable PPP loans are still available for nearly all businesses with less than 500 employees
The Second Draw PPP loan is available to nearly all businesses of under 300 employees that had a decrease in gross receipts in any 2020 quarter compared to 2019. The definition of ‘gross receipts’ is somewhat flexible and could be adjusted for actual billings versus collections, and for one-time collections that do not relate to the 2020 quarter in question.
State of CA Relief Grant Program
California State finally came out with something seemingly real, providing funding from $5000 to $25000 for affected businesses, with an emphasis on minorities and underserved entities. However, the applications submitted by my office in the First Round of applications have been deferred to the Second Round. The time frame for applications within the Second Round has yet to be announced.
Federal EIDL Funding
For businesses in need of financing at 3.75% repaid over 30 years, the SBA is again funding businesses to keep them open, or to expand their operations – generally, with loans up to $150,000 or about 1/3 of gross receipts, whichever is lower. Go to SBA.gov to apply.