We Can Help Your Business with COVID-19 Relief
The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was just signed into law are intended to assist business owners with whatever needs they have right now. When implemented, there will be many new resources available for small businesses, as well as certain non-profits and other employers.
What Do You Need Help With?
Do you need capital to cover the cost of retaining employees?
Then the Paycheck Protection Program might be right for you.
Need to ease your fears about keeping up with payments on your current or potential SBA loan?
The Small Business Debt Relief Program could help.
Do you need a quick infusion of a smaller amount of cash to cover you right now?
You might want to look into an Emergency Economic Injury Grant.
Just some quality, free counseling to help you navigate this uncertain economic time?
Paycheck Protection Program (PPP)
The “Paycheck Protection Program” is an emergency lending facility, administered by the Small Business Administration (SBA) under its 7(a) lending program, to provide small business loans on favorable terms to borrowers impacted by the current state of economic uncertainty. At $349 billion in new lending capacity, it accounts for the vast majority of the small business assistance provided in the Phase III legislation, and is one of the most important — if somewhat overlooked — aspects of the Congressional response to the pandemic thus far.
Congress intended the Paycheck Protection Program to accomplish two fundamental goals: 1) help small businesses cover their near-term operating expenses during the worst of the crisis, and 2) provide a strong incentive for employers to retain their employees.
How Does the Paycheck Protection Program Work?
The program generally targets businesses, nonprofits, Tribal businesses, and veteran’s organizations with 500 employees or less as eligible for federally insured, partially forgivable loans that can be used to cover short-term operating expenses during the economic crisis. The maximum loan size is equivalent to 250 percent of the employer’s average monthly payroll costs over the past 12 months or $10 million, whichever is less. Payroll costs are defined broadly to include wages, salaries, retirement contributions, healthcare benefits, covered leave, and other expenses.
The program includes a number of generous features for borrowers, including six months to one year of deferred repayment and fee waivers. Most importantly, borrowers are eligible for loan forgiveness equivalent to the sum spent on covered expenses during the eight-week period after the loan is originated. Those covered expenses include the bulk of a typical business’s fixed operating costs: payroll, group health care benefits, rent, utilities, mortgage interest obligations and interest on any other debt obligations that were incurred before the covered period. The forgivable nature of these loans in effect turns them into grants, meaning that qualifying businesses will not see a significant increase in their debt burdens. But to qualify for forgiveness, employers must maintain the same level of full-time equivalent employees during the period of 2/15/19-6/3019 or 1/1/20-2/29/20 (election of the borrower), or else face a reduction in forgiveness proportional to the reduction in headcount. Since many businesses have already been forced to make staffing reductions in response to vanishing customers and lost revenues, the legislation includes a clause that allows them to qualify for loan forgiveness if they have re-hired back to pre-crisis levels by June 30, 2020.
What Types of Businesses are Eligible?
Businesses and entities must have been in operation on February 15, 2020.
- Small business concerns, as well as any business concern, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or Tribal business concern described in section 31(b)(2)(C) that has fewer than 500 employees, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher.
- Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals.
- Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a NAICS code beginning with 72, for which the affiliation rules are waived.
- Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company.
What Costs are Eligible for Payroll?
- Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
- Payment for vacation, parental, family, medical, or sick leave
- Allowance for dismissal or separation
- Payment required for the provisions of group health care benefits, including insurance premiums
- Payment of any retirement benefit
- Payment of State or local tax assessed on the compensation of employees (State unemployment and related taxes)
What Costs are Not Eligible for Payroll?
- Employee/owner compensation over $100,000
- Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
- Compensation of employees whose principal place of residence is outside of the U.S.
- Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act
What Can the Loan Proceeds be Used For?
- Payroll costs
- Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
- Employee salaries, commissions, or similar compensations (see exclusions above)
- Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation)
- Rent (including rent under a lease agreement)
- Interest on any other debt obligations that were incurred before the covered period
What are the PPP Loan Amounts, Interest Rates, and Fees?
For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is 4 percent, zero loan fees, zero prepayment fee (SBA will establish application fees caps for lenders that charge).
How is Forgiveness Amount Calculated?
Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000):
Payroll costs plus any payment of interest on any covered mortgage obligation (not including any prepayment or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation plus and any covered utility payment.
How Do I Apply for Forgiveness on My PPP Loan?
You must apply through your lender for forgiveness on your loan. In this application, you must include:
- Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings.
- Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.
- Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.
How Does the PPP Loan Work with SBA Loans or EIDL?
Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). However, you cannot use your PPP loan for the same purpose as your other SBA loan(s). For example, if you use your PPP to cover payroll for the 8-week covered period, you cannot use a different SBA loan product for payroll for those same costs in that period, although you could use it for payroll not during that period or for different workers.
Emergency Economic Injury Grant and Economic Injury Disaster Loan (EIDL) recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan as long as there is no duplication in the uses of funds.
Small Business Debt Relief Program
This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
Which SBA Loans are Eligible for Debt Relief Under This Program?
7(a) loans not made under the Paycheck Protection Program (PPP), 504 loans, and microloans. Disaster loans are not eligible.
How Does Debt Relief Under This Program Work with a PPP Loan?
Borrowers may separately apply for and take out a PPP loan, but debt relief under this program will not apply to a PPP loan.
How Do I Know if I'm Eligible for a 7(a), 504, or Microloan?
In general, businesses must meet size standards, be based in the U.S., be able to repay, and have a sound business purpose. Each program has different requirements, see https://www.sba.gov/funding-programs/loans for more details.
What is a 7(a) Loan and How Do I Apply?
7(a) loans are an affordable loan product of up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing, providing short-term or long-term working capital and to purchase an existing business, refinance current business debt, or purchase furniture, fixtures and supplies. In the program, banks share a portion of the risk of the loan with SBA. There are many different types of 7(a) loans, you can visit this site to find the one that’s best for you. You apply for a 7(a) loan with a bank or a mission-based lender. SBA has a free referral service tool called Lender Match to help find a lender near you.
What is a 504 Loan and How Do I Apply?
The 504 Loan Program provides loans of up to $5.5 million to approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. It is a good option if you need to purchase real estate, buildings, and machinery. You apply through a Certified Development Company, which is a nonprofit corporation that promotes economic development. SBA has a free referral service tool called Lender Match to help find a lender near you.
What is a Microloan and How Do I Apply?
The Microloan Program provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers to start up and expand. The average microloan is about $13,000. These loans are delivered through mission-based lenders who are also able to provide business counseling. SBA has a free referral service tool called Lender Match to help find a microlender near you.
Economic Injury Disaster Loans (EIDL) and Emergency Economic Injury Grant
These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you must first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
Are Businesses and Private Non-Profits in my State Eligible for an EIDL Related to COVID-19?
Yes, those suffering substantial economic injury in all 50 states, DC, and the territories may apply for an EIDL.
What is an EIDL and What is it Used For?
EIDLs are lower interest loans of up to $2 million, with principal and interest deferment available for up to 4 years, that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.
Who is Eligible for an EIDL?
Those eligible are the following with 500 or fewer employees:
- Small business concerns (including sole proprietorships, with or without employees)
- Independent contractors
- Cooperatives and employee-owned businesses
- Private non-profits
- Tribal small businesses
My Private Non-Profit is Not a 501(c)(3). Is it Still Eligible for an EIDL and a Grant?
Yes, if you are a private non-profit with an effective ruling letter from the IRS, granting tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, or if you can provide satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law.
Who is Eligible for an Emergency Economic Injury Grant?
Those eligible for an EIDL and who have been in operation since January 31, 2020.
How Long are Emergency Economic Injury Grants Available?
January 31, 2020 – December 31, 2020. The grants are backdated to January 31, 2020 to allow those who have already applied for EIDLs to be eligible to also receive a grant.
If I Get an EIDL and/or an Emergency Economic Injury Grant, Can I Get a PPP Loan?
Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP.
How Do I Know if My Business is a Small Business?
Please visit https://www.sba.gov/size-standards/ to find out if your business meets SBA’s small business size standards. You will need the 6-digit North American Industry Classification Code for your business and your business’ 3-year average annual revenue.
How Do I Apply?
We are available and ready to assist with applying for any SBA assistance.
COVID-19 Tax Updates
Due to the COVID-19 pandemic, the IRS announced that the deadline file federal taxes has been postponed to July 15, 2020.
Below, you will find a list of frequently asked questions in reference to the Internal Revenue Service’s (IRS) Notice 2020-18 (PDF). In this Notice, the Treasury Department and the IRS announced special Federal income tax return filing and payment relief in response to the ongoing COVID-19 emergency.
You can review the IRS page for additional information here:
Who is Eligible for Relief Under the Notice?
Any person with a Federal income tax return or payment due on April 15, 2020 is eligible for relief under the Notice. “Person” includes any type of taxpayer such as an individual, a trust, an estate, a corporation or any type of unincorporated business entity. The payment due refers to both 2019 Federal income tax payments (including payments of tax on self-employment income) and 2020 estimated Federal income tax payments (including payments of tax on self-employment income)—regardless of the amount owed. The return or payment must be due on April 15, 2020—this relief does not apply to Federal income tax returns and payments due on any other date.
Do I Have to Actually Be Sick, Quarantined or Have Any Other Impact From COVID-19 to Qualify for Payment Relief?
No, you do not have to be sick, quarantined or have any other impact from COVID-19 to qualify for relief. You only need to have a Federal income tax return or payment due on April 15, 2020 as described above.
I am a Fiscal Year Filer. My Federal Income Tax Return for Fiscal Year 2019 is Due on April 15, 2020. Am I an "Affected Taxpayer" Eligible for Relief Under the Notice?
Yes, the relief provided in the Notice applies to Federal income tax returns and payments in respect of an Affected Taxpayer’s 2019 taxable year and postpones those 2019 return filings and payments due on April 15, 2020 until July 15, 2020. If your Federal income tax return for your fiscal year ending during 2019 is due on April 15, 2020, whether that is the original due date or the due date on extension, your due date is postponed to July 15, 2020.
Does This Relief Apply to State Tax Liabilities?
No, this relief applies only to Federal income tax payments. State filing and payment deadlines vary and are not always the same as the Federal filing and payment deadline. We urge you to check with your state tax agencies for those details. More information is available at https://www.taxadmin.org/state-tax-agencies.
I Haven't Filed My 2019 Income Tax Return Yet (That Would Have Been Due on April 15th), But I Expect to File by July 15th. What Do I Need to Do?
Nothing, except file and pay any tax due with your return by July 15. You don’t need to file any additional forms or call the IRS to qualify for this automatic Federal tax filing and payment relief. If you expect a refund, you are encouraged to file your return as soon as you can so that you can receive your refund. Filing electronically with direct deposit is the quickest way to get refunds. If you need more time beyond July 15 to file your return, request an automatic extension of time to file as described next.
What if I am Unable to File My 2019 Income Tax Return (That Would Have Been Due on April 15th) by July 15, 2020?
If you are an individual, you can request an automatic extension to file your Federal income tax return if you can’t file by the July 15, 2020 deadline. The easiest and fastest way to request a filing extension is to electronically file Form 4868 through your tax professional, tax software or using the Free File link on IRS.gov. Businesses, including trusts, must file Form 7004.
You must request the automatic extension by July 15, 2020. If you properly estimate your 2019 tax liability using the information available to you and file an extension form by July 15, 2020, your tax return will be due on October 15, 2020. To avoid interest and penalties when filing your tax return after July 15, 2020, pay the tax you estimate as due with your extension request.
I Already Filed My 2019 Income Tax Return (That Would Have Been Due on April 15th) and I Owe Taxes, But I Haven't Paid Yet. What Do I Need to do to Avoid Interest and Penalties?
To avoid interest and penalties, pay your taxes in full by July 15, 2020. If you filed Form 1040 or Form 1040-SR, the tax payment amount can be found on line 23. If you filed Form 1040-NR, the tax payment amount can be found on line 75. For a corporation filing Form 1120, the tax payment amount can be found on line 35.
Interest and penalties will begin to be charged after July 15 for any amount remaining unpaid by that date.
I Already Filed My 2019 Income Tax Return That Would Have Been Due on April 15th and Scheduled a Payment of Taxes For April 15, 2020. Will This Payment be Automatically Rescheduled to July 15, 2020?
No, the payment will not be automatically rescheduled to July 15, 2020. If you do nothing, the payment will be made on the date you chose. Here is information on how to cancel and reschedule your payment:
- If you scheduled a payment through IRS Direct Pay, you can use your confirmation number from the payment to access the “Look Up a Payment” feature. You can modify or cancel a scheduled payment until two business days before the payment date. The email notification you received when you scheduled the payment will contain the confirmation number.
- If you scheduled a payment through the Electronic Federal Tax Payment System (EFTPS), click on “Payments” from the EFTPS home page, login, click “Cancel a Tax Payment” from the left menu and follow the instructions. You must do so at least two business days before the scheduled payment date.
- If you scheduled a payment as part of filing your tax return (authorizing an electronic funds withdrawal), you may revoke (cancel) your payment by contacting the U.S. Treasury Financial Agent at 888-353-4537. You must call to make a payment cancellation request no later than 11:59 p.m. ET two business days prior to the scheduled payment date.
- If you scheduled a payment by credit card or debit card, contact the card processor to cancel the payment.
The Notice Postpones the Deadline for First Quarter 2020 Estimated Income Tax Payments Due on April 15, 2020. What About Second Quarter Estimated Tax Payments Due on June 15th? Have They Been Postponed As Well?
No, second quarter 2020 estimated income tax payments are still due on June 15, 2020. First quarter 2020 estimated income tax payments are postponed from April 15 to July 15, 2020.
Does This Relief Provide Me More Time to Contribute Money to My IRA for 2019?
Yes. Contributions can be made to your IRA for a particular year at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns has been postponed to July 15, 2020, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020. For more details on IRA contributions, see Publication 590-A – Contributions to Individual Retirement Arrangements (IRAs).
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What Our Clients Are Saying
As a client with Knight CPA Group since April 2016, I have found their services to be extremely professional, provided by knowledgeable, competent, service-oriented staff. The owner, Amy Knight, CPA, understands the post-acute industry and strives to support her clients based on this overarching knowledge. Utilizing Knight CPA as a one-stop-shop has taken the sleepless nights out of home health ownership. From weekly bill pay, to monthly financial reporting, annual corporate tax preparation, and yearly cost reports, Knight CPA has provided me with confidence that my organization’s financials will be managed in the best possible way.
We were referred to Knight CPA Group (formerly Amy L. Taylor & Company) in 2005 by TAHC&H (Texas Association for Home Care & Hospice). Our payroll, reports, books, and taxes were in a mess, and Amy’s team stepped right in and had everything up and organized quickly. Our experience with Knight CPA Group has been superb. What sets Amy’s firm apart is their wealth of knowledge about home health care providers and the financial implications of our business. Additionally, they stay on top of changes by attending seminars and continuing education so they can make sure we are up-to-date and in compliance. They know what they are doing.
Working with Knight CPA Group (formerly Amy L. Taylor & Company) allows our business to have a comprehensive solution for payroll, tax, and accounting, which makes the financial management of our agency seamless, and saves us time and money. As a single business owner, I appreciate not having to worry about late payments or getting in trouble because something wasn’t handled correctly. Additionally, we’ve reduced our payroll costs because we no longer need to have an employee on staff to handle all of our back office work—and I don’t have to worry about it. Instead, I can focus on running our agency, with the assurance that everything will get done accurately and on time.
Initially, we engaged with Knight CPA Group (formerly Amy L. Taylor & Company) to handle our cost reports while we attempted to handle the bookkeeping and other essential accounting tasks. We quickly discovered that we needed deeper knowledge as well as a more efficient process to handle things effectively and engaged in Amy’s group to handle all our back office financial tasks, including payroll. Now everything is streamlined, which saves us both time and money. I highly recommend Knight CPA Group to any small business owner/administrator. They’re friendly, caring, and always willing and able to find the answers I need.