How to keep your small business healthy during pandemic

2020 Employee Retention Credit

The Employee Retention Credit was designed to make it easier for businesses that choose to keep employees on the payroll during the challenges of COVID-19.

The 2020 Employee Retention Credit is a refundable payroll tax credit of 50% of up to $10,000 per year in qualified wages paid to an employee by an eligible employer experiencing economic hardship related to COVID-19.

This credit is for wages, including qualified health plan expenses, paid between March 13, 2020, and Dec. 31, 2020.

Eligible employers must fall into one of these categories:

• Your business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
• You had a significant decline in gross receipts. This begins with the first quarter in 2020 when your gross receipts are below 50% of the same quarter in 2019.

Eligible employers that received a Paycheck Protection Program loan can now also claim this credit, the Internal Revenue Service said March 1, 2021. But the same wages can’t be counted both for seeking forgiveness of the PPP loan and calculating the employee retention credit.

The IRS provides more information here.

2021 Employee Retention Credit

The Employee Retention Credit was extended through Dec. 31, 2021, and will include more favorable rules for 2021.

Eligible employers can now claim a refundable tax credit against your employer share of Social Security tax equal to 70% of the qualified wages you pay to employees after Dec. 31, 2020, through June 30, 2021.

Qualified wages are limited to $10,000 per employee per calendar quarter in 2021.

Effective Jan. 1, 2021, you’re eligible if you operate a trade or business between Jan. 1, 2021, and June 30, 2021, and experience either:

• A full or partial suspension of the operation of your trade or business during this period because of governmental orders limiting commerce, travel or group meetings due to COVID-19.
• A decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that quarter are less than 80% of the gross receipts in the same calendar quarter in 2019.

The IRS provides more information about the 2021 Employee Retention Credit rules through June 30, 2021, here. The agency plans to release additional guidance soon to address the extension that goes through December.

Paycheck Protection Program

Dupaco is a participating lender for the U.S. Small Business Administration’s Paycheck Protection Program.

The loan program has aimed to help small- and mid-sized businesses maintain cash flow during this challenging financial time. While the loan application window has closed, eligible borrowers can still apply for loan forgiveness.

Learn how to apply for PPP loan forgiveness here.

COVID-19 Economic Injury Disaster Loan

The SBA’s COVID-19 Economic Injury Disaster Loan provides economic relief to small businesses, including agricultural businesses and nonprofit organizations, experiencing a temporary loss of revenue.

The loans are intended to help your business meet financial obligations and operating expenses that could have been met had the pandemic not occurred.

Starting the week of April 6, 2021, the SBA raised the loan limit for the COVID-19 EIDL program:

• Original limit: Six months of economic injury with a maximum loan amount of $150,000.
• New limit: Up to 24 months of economic injury with a maximum loan amount of $500,000.

If you received a loan under the previous smaller limit, the SBA will reach out you directly via email and provide details about how to request an increase.

Shuttered Venue Operators Grant

The SBA’s Shuttered Venue Operators Grant provides emergency assistance for eligible venues affected by COVID-19, including:

• Live venue operators or promoters
• Theatrical producers
• Live performing arts organization operators
• Relevant museum operators, zoos and aquariums who meet specific criteria
• Motion picture theater operators
• Talent representatives
• Each business entity owned by an eligible entity that also meets the eligibility requirements

Coronavirus Food Assistance Program 2

The U.S. Department of Agriculture is providing additional financial assistance to farmers, ranchers and producers impacted by COVID-19 market disruptions.

The original application period for CFAP 2 ended Dec. 11, 2020. But the USDA reopened CFAP 2 signup for all eligible producers April 5, 2021. A deadline for signup will be announced later.

The financial assistance gives producers the ability to absorb some of the increased marketing costs associated with the pandemic.

Learn more here.