Employee Retention Tax Credit
Does my business qualify to receive the Employee Retention Credit?
The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions:
- State and local governments and their instrumentalities
- Small businesses who take small business loans
Qualifying employers must fall into one of two categories:
- The employer's business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
- The employer's gross receipts are below 50% of the comparable quarter in 2019.
Once the employer's gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter. These measures are calculated each calendar quarter.
How is the credit calculated?
The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.
Unemployment Due to COVID-19
Payroll Tax Credits Related to Covid-19
Eligible Employers are entitled to refundable tax credits for qualified sick leave wages and qualified family leave wages. Keep track of Paid Sick Leave and Family Leave you if:
- Your business is paying employees Sick Leave because they are sick with the virus or caring for a family member who is
- Paying employees who must stay home to care for family members due to closing of schools, daycares, etc. because of COVID-19
Coronavirus SBA Relief Options:
Payroll Protection Program (PPP)
Your business may be eligible for a "forgivable" loan at 2.5 times your 2019 average monthly payroll cost to cover hardships related to COVID-19. In order to be eligible for forgiveness, at least 75% of the loan must be used for payroll and the remaining 25% must be used for rent/mortgage interest or utilities incurred during the 8 week hardship period.
For more information:
PPP Question and Answers - https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp
Economic Injury Disaster Loan and Emergency Advance
Part A. Emergency Advance
This loan will provide up to $10,000 in economic relief to businesses that are currently experiencing temporary difficulties due to COVID-19. These funds will be made available within days of successful application and (according to the SBA) will not have to be repaid.
The Emergency Advance requires a brief online *application, and you will need to know your gross revenue and cost of goods from Feb 2019 through Jan 2020.
*Applying for Part A automatically includes applying for Part B.
Part B. Economic Injury Disaster Loan
This loan is also based on "payroll costs" and must be paid back, with terms of 7-15 years and around 3.75%.
How to Apply:
A. The first stage of applying for Part B is included in applying for Part A.
B. In 3-4 weeks, you will be contacted by the SBA for more information and a lengthy application process. This will include:
- Loan Application (Form 5) - Business
- Loan Application (SBA Form 5C) - Sole Proprietor
- Fee Disclosure Statement (Form 159D)
- Form 4506-T (IRS Transcript request from lender)
- Schedule of Liabilities (Form 2202)
- Personal Financial Statement (Form 412D)
- Financial Statements - Balance Sheet & Profit and Loss
- Monthly Sales Reports
How Cocheran and Associates Can Help
Cocheran and Associates is offering assistance with the Economic Injury Disaster
Loan application process, both parts A and B.
**Economic Injury Disaster Loan Application Process Fee - $1,500.00
**Additional Fees may apply if your business needs prior period books and financial
If you have any questions about the aid you may be eligible for, how to apply, or how we
can help, let us know. We're here to help.
The Cocheran and Associates Team