Since the coronavirus became a pandemic, small businesses face mandatory closures. Hefty safety measures help “flatten the curve.” While unprecedented, this is certainly not a time to panic. Thanks to the stimulus package passed by the United States Congress and the work completed by the Maine Legislature. There are many resources and options available to small businesses in Maine.
- The Paycheck Protection Program
- Disaster Loans
- SBA Economic Injury Disaster Loan Emergency Grant
- SBA Express Bridge Loan Pilot Program
- Federal income tax filing payment deadline extension
- The Employee Retention Credit
- COVID-19 Relief Interim SBA Finance Loan Program
- COVID-19 Relief Business Direct Loan Program.
Each of these programs is described below.
Paycheck Protection Program
The Paycheck Protection program, offered by the Small Business Administration. Specifically designed to allow small businesses to keep their workers on the payroll. The SBA forgives the loan if all employees stay on the payroll for eight weeks.
They can use the money for payroll, rent, mortgage interest, or utilities. Available through June 30, 2020. Last week, Rudman Winchell attorney Mark K. Laverdiere, Esq. wrote an article detailing the program. To read more, please click here. For more information, or to apply for this loan, please visit the SBA website.
SBA Disaster Loans
The Small Business Administration offers another program in the form of disaster loans. A low-interest loan available to businesses located in a region affected by a declared disaster. As all U.S. States and territories declared a disaster area, businesses in Maine may apply for this loan. It may assist with working capital to small businesses suffering substantial economic injury as a result of COVID-19.
The loan may pay fixed debts, payroll, accounts payable and other bills that can’t be paid due to the impact of the virus. The SBA offers loans with long-term repayments, up to 30 years, to allow affordable payments for the borrower. For more information, or to apply for this loan, please visit the SBA website.
SBA Economic Injury Disaster Loan Emergency Grant
Small businesses with fewer than 500 employees who applied for a Disaster Loan qualify for an emergency grant from the SBA up to $10,000. This advance may provide economic relief to small businesses currently experiencing a temporary loss of revenue.
It will not have to be repaid. Once the application is submitted and deemed successful, the advanced funds will be made within days. For more information, or to apply for this loan, please visit the SBA website.
SBA Express Bridge Loan Pilot Program
A small business with an existing business relationship with a Small Business Administration Express Lender may access $25,000 quickly under the SBA Express Bridge Loan Pilot Program. This loan may be either a term loan.
It bridges the gap while applying for a direct SBA Economic Injury Disaster Loan. It provides economic support to help overcome a temporary loss of revenue the small business may experience. For more information, or to apply for this loan, please visit the SBA website.
Federal Income Tax Filing Payment Deadline Extension
Part of the stimulus package extended the deadline to file federal income taxes from April 15, 2020, to July 15, 2020. Additionally, taxpayers may defer their federal income tax payments due on April 15, 2020, to July 15, 2020. Regardless of the amount owed, without penalties and interest.
This applies to all taxpayers, including:
- Those who pay self-employment tax
The qualification for this deferment is automatic relief. Taxpayers need not file any additional forms or contact the IRS. If you are due a refund, the IRS urges you to file as soon as possible. For more information, please contact your tax professional or visit the IRS website.
Employee Retention Credit
To help small businesses combat COVID-19, the IRS launched the Employee Retention Credit. Like the Paycheck Protection Program, it encourages businesses to keep employees on the payroll. This refundable tax credit is up to 50% of up to $10,000 in wages paid by an eligible employer.
To be eligible, a small business must fall into one of two categories:
- Business fully or partially suspended by government order due to coronavirus during the calendar quarter.
- The employer’s gross receipts are below 50% of the comparable quarter in 2019.
If a small business falls into the second category, it no longer qualifies once gross receipts go above 80% of a comparable quarter. Measured at the end of each calendar quarter. Qualifying wages determined based on the number of employees employed by the small business.
For an employer with less than an average of 100 employees in 2019, the credit is based on wages paid to all employees. Regardless of whether the employee worked or not during the calendar quarter. For employers with more than an average of 100 employees in 2019, the credit only allows for wages paid to employees who did not work during the calendar quarter.
Eligible employers may be immediately reimbursed for the credit by reducing required deposits of payroll taxes withheld from employees’ wages by the amount of the credit. These employers report their total qualified wages and health insurance costs for each quarter on their quarterly tax returns or Form 941.
Beginning with the second calendar quarter of 2020. If the tax deposits do not cover the credit, the employer may receive an advanced payment from the IRS by submitting Form 7200. For more information, please contact your tax professional or visit the IRS website.
COVID-19 Relief Interim SBA Finance Loan Program
In Maine, the Small Business Administration provides Finance Authority of Maine (FAME) direct loans up to $100,000. These loans have special terms for eligible borrowers who provide proof of a commitment to SBA financing. This FAME loan would be used by the business owner until the SBA loan is funded. The SBA loan could then pay off the loan from FAME.
To qualify for this program, the business must be Maine-based. They must apply for an SBA loan for COVID-19. Then, provide FAME with evidence of a commitment of funding from the SBA. Available for a 90-day term with a fixed interest rate of 2% over the Wall Street Journal Prime Rate.
Additionally, the business must have assets available to secure the loan. They must pledge the receipt of SBA loan funds paid directly to FAME. The principals of the business must guarantee the loan. For more information, or to apply for this loan, please visit the FAME website.
COVID-19 Relief Business Direct Loan Program
Through this program, FAME may provide Direct Loans of up to $50,000 with special terms available to Maine-based businesses experiencing interruption or hardship due to the coronavirus. To be eligible for this loan, the business must be a Maine-based business experiencing interruption or hardship due to COVID-19. They must demonstrate that other sources of capital have been exhausted.
Available for a 12-month term with a fixed interest rate of 1% less than the Wall Street Journal Prime Rate. Additionally, the business must have assets available to secure the loan. The principals of the business must guarantee the loan. FAME set aside $5,000,000 for this program. The loans available on a first-come, first-served basis. For more information, or to apply, please visit the FAME website.
FAME Direct Loan
If your business is not selected for a loan under this program, you may qualify for a FAME Direct Loan in an amount of up to $1,000,000.
To be eligible, the business must:
- Be Maine-based.
- Exhibit reasonable ability to repay the loan.
- Demonstrate that other sources of capital have been exhausted.
Available for a term of a maximum of five years at a fixed interest rate of 2% over the Wall Street Journal Prime Rate. Owners of at least 51% of the business borrower must guarantee the loan. Except for non-profit borrowers and those owned by 20 or more shareholders. For more information, or to apply for this loan, please visit the FAME website.
As of today, there is no eviction moratorium in place in the State of Maine. The Maine courts closed for eviction hearings until at least May 1. The courts still issue writs of possession. If you struggle to make mortgage loan payments, please contact your mortgage lender.
The Coronavirus is causing hardship for many. You are certainly not alone in this. If you would like further information on any of the above programs, please contact Rudman Winchell’s Corporate Practice Group today. We are standing by ready to assist you.