Corporate Law Blog

Businesses – Loans and Tax Relief for the COVID-19 Crisis Are Available

After the passage of the CARES Act stimulus package, there are more than a few current items of relief available to businesses impacted by the crisis, outlined below.

• Small Business Administration Loans – Kentucky has applied for and received approval for an economic injury disaster loan declaration from the United States Small Business Administration (SBA). Kentucky small businesses may now apply for loans in a total state amount of up to $2 million at a maximum fixed interest rate of 3.75% (2.75% for nonprofits), and with a term of up to 30 years. These loans are available on a case-by-case basis and other requirements apply, such as acceptable credit history, collateral, and a showing of the ability to repay the loan. UPDATE: Paycheck Protection Program loans are also now available to small businesses. For more on these loans, read our blog on the new provisions here.
• Tax Deferral –
  • Filing - IRS and the Treasury Department announced that the federal income tax filing deadline for all filers has been extended from April 15, 2020, to July 15, 2020, and Kentucky has followed suit. Tax payments that are due may also be deferred for the same period, with no interest or penalties. This deadline extension also applies to payments of federal estimated tax.
  • Payroll taxes – The CARES Act allows employers and self-employed individuals to defer payment of the employer share of payroll taxes owed on wages paid for the period ending on December 31, 2020. These taxes will be due in two 50% installments on by December 31 of each of the following two years.
• Tax Credits –
  • Tax Credit – the CARES Act allows employers to take a refundable tax credit against any employment taxes paid by employers that is equal to half of the first $10,000 of wages paid per employee if (a) that employer has operations at least partially suspended due government orders related to COVID-19 OR (b) that employer sees a decline in gross receipts of more than 50% compared to the same quarter last year. Businesses who receive Paycheck Protection Program loans are not able to take advantage of this tax credit, and your McBrayer attorney can help you analyze which steps are best for your business.
  • Paid Leave – we’ve addressed this elsewhere, but it’s important to note that businesses expending resources to cover the costs of the new leave requirements mandated by the Families First Coronavirus Response Act are entitled to a payroll tax credit for the sums paid for the leave itself and related health insurance expenditures.

Need help with determining the best course for your business and applying for the relief outlined above? Contact your McBrayer attorney today.

• Small Business Administration Loans – Kentucky has applied for and received approval for an economic injury disaster loan declaration from the United States Small Business Administration (SBA). Kentucky small businesses may now apply for loans in a total state amount of up to $2 million at a maximum fixed interest rate of 3.75% (2.75% for nonprofits), and with a term of up to 30 years. These loans are available on a case-by-case basis and other requirements apply, such as acceptable credit history, collateral, and a showing of the ability to repay the loan.
• Tax Deferral – IRS and the Treasury Department announced that the federal income tax filing deadline for all filers has been extended from April 15, 2020, to July 15, 2020, and Kentucky has followed suit. Tax payments that are due may also be deferred for the same period, with no interest or penalties. This deadline extension also applies to payments of federal estimated tax.
• Tax Credits for Paid Leave – we’ve addressed this elsewhere, but it’s important to note that businesses expending resources to cover the costs of the new leave requirements mandated by the Families First Coronavirus Response Act are entitled to a payroll tax credit for the sums paid for the leave itself and related health insurance expenditures.