Every business in the world has been impacted by the worst health crisis since 1918 when the so-called Spanish Flu decimated the planet. Eventually, the pandemic from a century earlier claimed between 50 and 100 million lives. As of March 27th, 2020 the coronavirus has caused almost 30,000 deaths worldwide. These tragic and terrible epidemics affect everyone. They especially disrupt businesses around the world.
How the Virus is Affecting Businesses Worldwide
Even if your business hasn’t been shut down by government order, it’s probably suffering from supply chain disruptions, absenteeism and slowed consumer spending. Supply chains have been disrupted worldwide from the base materials for tech companies to parts for electric vehicles, solar panels and wind turbines. Absenteeism occurs when workers will not go to work, a reality for those afraid of contracting the coronavirus. One of the worst impacts the coronavirus is having on the world economies is slamming consumer spending. When people are afraid of losing their jobs they lack the confidence to spend regularly and this impacts all business sectors.
Federal Government Allocates Funds for Businesses During Coronovirus
The federal government is beginning to take this problem seriously, passing legislation to assist small business owners. Inside of the $2 trillion relief package, the U.S. Senate has offered as much as $367 billion in loans to small businesses impacted by the coronavirus crisis. If you own a small business it’s crucial to take steps to help it survive this crisis. It’s a good idea to consult with an attorney experienced in business law to discuss applying for the programs that would be most helpful for your particular business.
Here are some of the relief options for small businesses that have passed or are proposed:
Mandatory Sick Leave With Employer Tax Credit
On March 18th, a bill was signed into law that will provide income tax deferment for small businesses. In an effort to help businesses keep their workers on the payroll during the crisis, the law requires small businesses to pay employees sick leave at 100% of their pay (up to $511 a day) for two weeks. These payments will reduce a business’ tax liability dollar for dollar, functioning as a tax credit. However, there are both stipulations and limitations on this tax credit. First, the credit will only apply for sick leave payments made during certain dates (likely April to December, 2020). Second, the credit is not available to those businesses already benefiting from tax credit for paid medical leave. An experienced business attorney or accountant will be able to guide you through this process so that you are able to achieve the highest savings possible from this tax credit.
Low Interest Loans / Emergency Loans for Businesses
The Small Business Administration (SBA) will also be offering Economic Injury Disaster Loans for businesses that qualify with low interest rates (3.75% for most businesses and $2.75% for non-profits). However, businesses that have access to credit elsewhere, at any rate, do not qualify for these loans. Also, a business must show that they were “severely impacted” by the current coronavirus crisis. There are also proposals for zero interest loans and grants, so it might be prudent to wait to see if these options become available.
Proposed Payroll Tax Cut
FICA (Federal Insurance Contributions Act) is currently taxed at 15.3%, with employees and employers sharing the cost equally. The proposed relief package would also help self-employed workers that are currently paying the 15.3% tax on their own. Currently, it’s unclear how large the cut would be. This proposal has received a great deal of criticism from opponents who say it doesn’t address the crucial needs of the unemployed and that it might lead to a reduction in Social Security benefits.
Business Attorneys Are Busy Helping Small Businesses
An experienced business attorney can help you stay on top of all the options to help your business survive. Safe virtual consultations are available.
Contact us today so we can discuss the best ways to take advantage of the economic relief options available for your business.