Impact to Businesses
Tax Measures for Businesses
Business Loan Programs
SBA 7(a) Loan Program Expansion
The loan programs below all fall under the Federal 7(a) loan program administered by the SBA. PPP, SBA Express, and EIDL Loans would give private banking institutions the ability to loan directly to businesses, thus side-stepping the current process to more quickly provide funding to businesses.
The Act provides delegated authority, which is the ability for lenders to make determinations on borrower eligibility and creditworthiness without going through all of SBA’s channels, to all current 7(a) lenders who make these loans to small businesses and provides that same authority to lenders who join the program and make these loans. For eligibility purposes, the Act requires lenders to, instead of determining repayment ability, which is not possible during this crisis, to determine whether a business was operational on February 15, 2020, and had employees for whom it paid salaries and payroll taxes, or a paid independent contractor.
The Program provides forgivable Small Business Administration loans to businesses with 500 or fewer employees (generally), including sole proprietors and other self-employed individuals. Total authorization level of $349 billion for the 7(a) program through December 31, 2020. The Act defines eligibility for loans as a small business, 501(c)(3) nonprofit, a 501(c)(19) veteran’s organization, or Tribal business concern described in section 31(b)(2)(C) of the Small Business Act with not more than 500 employees, or the applicable size standard for the industry as provided by SBA, if higher. Businesses in the hospitality and restaurant industry and certain other businesses are excused from the employee limitation. Loan amounts are determined by a formula tied to the business’s payroll costs. The maximum loan amount is $10 million. Allowable loan uses include payroll, insurance premiums, mortgage, rent and utility payments.
The SBA Express Loan Program provides an accelerated turnaround time for SBA review the Act increases the maximum loan for a SBA Express loan from $350,000 to $1 million through December 31, 2020. SBA Express loans are a simple way to receive expedited, amortized government-guaranteed financing for your small business. Entrepreneurs can be granted up to $350,000 of capital in the form of either a term loan or line of credit. Once received, this capital may be used for various business purposes. The true value of an SBA Express loan lies not only in the remarkably fast turnaround time for an approval, but also in the willingness of lenders to advance funds. The interest rate is negotiated but cannot exceed the SBA maximum.
The Act expands eligibility for access to Economic Injury Disaster Loans (EIDL) to include Tribal businesses, cooperatives, and ESOPs with fewer than 500 employees or any individual operating as a sole proprietor or an independent contractor during the covered period (January 31, 2020 to December 31, 2020). Private nonprofits are also eligible for both grants and EIDLs.
Cash and Retirement Plans
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