Ice-cream shops, bookstores, and coffee shops are among people’s top favorite places to visit, probably because they create such valuable, personalized experiences each time we visit. Many of them are built from the ground up by small business owners, sole proprietors, who are following a lifelong dream. These dreams are woven into the fabric of the American story, the American dream.
According to a 2018 report by the U.S. Small Business Administration (SBA), there are 30.2 million small businesses in the United States employing more than 58.9 million employees.
With the spread of the pandemic in recent months, small businesses recently came to a screeching halt; many of them closing their doors completely. Some of our favorite places will be there to greet us with arms wide open when all of this is over—others may not. This is why it is so vitally important to get the financial help you need to keep following your dream.
Embedded in the CARES Act is a substantial $350 billion lending program that is directed toward helping small businesses owners during this financially difficult time. The Paycheck Protection Program (PPP) is a loan structured to help small businesses stay up and running and keep their workers employed. Loans are 100 percent guaranteed by the SBA and are generally available to businesses with fewer than 500 employees for up to 2.5 times the business’s average monthly payroll over the prior 12 months.
The PPP loans can be used for the following expenses:
- Payroll costs (up to $100,000 per employee),
- Group health coverage,
- Business occupancy costs (mortgage interest, rent, and utilities), and
- Interest on other loan obligations.
Businesses may have the loans completely forgiven for amounts used for these expenses for up to eight weeks from the date of the loan. Loan forgiveness will be limited to no more than 25% of non-payroll costs and will be reduced by reductions in employee compensation or layoffs of employees during the period of February 15, 2020 through June 30, 2020.
There are other SBA loans available to meet working capital needs and normal operating expenses under the Economic Injury Disaster Loan program available directly through the SBA. These loans are capped at $2M with low interest rates and extended repayment terms. Part of this program includes up to a $10,000 emergency grant to pay sick leave, maintain payroll, meet increased costs of materials, make rent or mortgage payments, or repay obligations.
We understand that being an owner of a small business is not easy. We work nights, weekends, and every time in between. Because we love what we do. Many of us work can work an average of 60 hours per week, especially if it’s a seasonal business.
Contact us to help you access the resources you need, so you can continue being the lifeblood in the community. We can help you find a solution and plan a tax + financial strategy to get you through the financial hardship and out onto the other side, swinging your doors open wide to greet your happy customers when this has all blown over.
Please reach out if you have questions. You can call our office at (781) 247-5569, text the office line at (781) 790-4504, or email me at stu@erocktax.com.
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About Stu: With more than 30 years of experience as a tax professional, Stu Steinberg brings a broad depth of knowledge to his work with his clients. Stu founded Erock Tax to help provide tax and financial planning strategies to individuals, families and small businesses and is passionate about empowering his clients through education about their money health. Stu is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.