Coronavirus Aid, Relief & Economic Security Act On March 27 th , - PDF document

COVID-19 & CARES Act Relief Last Updated April 3 rd , 2020 Coronavirus Aid, Relief & Economic Security Act On March 27 th , 2020 the Coronavirus Aid, Relief & Economic Security (CARES) Act was signed into law, providing $2.2 bn in emergency aid. More specifically, $349bn of these funds will provide critical relief to small businesses. The CARES Act includes multiple small business loan programs: the Paycheck Protection Program (PPP), that includes a loan forgiveness provision, the Economic Injury Disaster Loan Assistance program (EIDL) which covers a broader range of business expenses and an expansion of the SBA 7(a) program. The CARES Act includes many other items that can help your small business with cash needs and adjustments to tax handling for 2019 and 2020: Employee Retention Credits, Payroll Tax Deferrals, Net Operating Loss carryback changes, increased Interest Deductions, and increased depreciation deductions on Qualified Improvement Property. The two items with the greatest impact for many small businesses are the two loan programs: The Payc ychec eck Prot otecti ction on Prog rogram m (P (PPP) PP) and the Economi omic In Injury ry Disaster er Loa oan n (E (EID IDL) L) assistance program, designed to allow businesses to continue making payroll and paying operating expenses in times of reduced cash flows and sales. Both loans are Federally backed through the Small Business Administration. The CARES Act allows businesses to be enrolled in only one loan program. Our team of experts is available to assist you with your specific needs: understand your options, decide on a strategy, apply to a program. Contact Us Opus Consulting Group, LLC. opuscg.com info@opuscg.com 207-619-1899 This document is subject to changes and for information purposes only. Opus Consulting Group | opuscg.com | info@opuscg.com 1

COVID-19 & CARES Act Relief Last Updated April 3 rd , 2020 Coronavirus Aid, Relief & Economic Security Act CARES ARES ACT ACT, the Coronavirus Aid, Relief, Economic Security Act includes two ▪ programs administered through the Smal all Bus Business iness Adm Administ nistration geared towards small businesses to stay economically afloat during the Coronavirus Pandemic. PPP, the Paycheck Protection Program is a forgivable loan program up to $10M to PPP ▪ cover 2.5x the average payroll costs for small businesses. EIDL IDL, Economic Injury Disaster Loan Assistance is a loan program up to $2M to ▪ cover normal operating expenses had the Coronavirus disaster not occurred. Loans are fixed rate with terms of 10-30 years. ▪ Bus Businesses inesses at all points of the economic chain are eligible including manufacturers, ▪ distributors, retailers, and service providers. Sma mall Bus usine inesse ses either directly or indirectly affected may apply. The business must ▪ have a physical presence in a declared disaster area. Applicant’s credit history must be acceptable to the SBA, who will determine the ▪ business’s ability to repay. A business can apply for both loans and it is possible to refinance an EIDL loan with ▪ a PPP loan. What should a small business owner do now? Opus us can assist in det eterm ermin ining ing which loan p progra gram m is right for your business ness and hel elp p you apply. ly. Paycheck Protection Economic Injury Other Program (PPP) Disaster Loan (EIDL) Opus Consulting Group | opuscg.com | info@opuscg.com 2

COVID-19 & CARES Act Relief Last Updated April 3 rd , 2020 Paycheck Protection Program vs. Economic Injury Disaster Loan (1/2) Paycheck Protection Program Economic Injury Disaster Loan (PPP) (EIDL) ▪ Small businesses with 500 or ▪ Small businesses with 500 or fewer employees fewer employees ▪ Accommodation and Food ▪ Private non-profit organizations Services industry (NAICS Code ▪ Tribal business concerns 72) with 500 or fewer employees ▪ Sole proprietors Eligibl ble e per physical location ▪ Independent contractors entities en es ▪ Non-profit organizations ▪ Tribal business concerns ▪ Veterans organizations ▪ Sole proprietors ▪ Independent contractors ▪ Eligible self-employed individuals SBA registered lending institutions, Len ender der Small Business Administration (SBA) also underwriting 7(a) loans Amount up to $10,000,000 up to $2,000,000 Maturity 2 years up to 30 years 3.75% for small businesses Inter eres est Rate 1.00% 2.75% for non-profits Fee ees None None Prep epaymen ayment No No Pen enalty Collater eral None UCC lien against business assets Yes, for owners of > 20% of the business, managing members of Per ersonal No LLCs, managing partners of LPs. No Guarantee ee liens taken against real estate owned by the guarantor 2.5x average monthly payroll costs Loan Size Varies over the last 12 months Opus Consulting Group | opuscg.com | info@opuscg.com 3

COVID-19 & CARES Act Relief Last Updated April 3 rd , 2020 Paycheck Protection Program vs. Economic Injury Disaster Loan (2/2) Paycheck Protection Program Economic Injury Disaster Loan (PPP) (EIDL) Forgivable ivable Yes (conditions apply) No (except for $10,000 advance) ▪ Payroll continuity costs spent over 8 weeks from origination date Forgive ivenes ness ▪ Amount forgiven based on N/A Calculation ability/failure to maintain the number of employees on payroll ▪ Up to principal amount ▪ Six months after origination and ▪ One year after origination First up to one year ▪ Interests accrue during Paymen ent ▪ Interests accrue during deferment deferment ▪ Salaries, Wages, Commissions ▪ Payroll ▪ Healthcare benefits ▪ Accounts payable ▪ Insurances premiums ▪ Fixed debts Per ermitted ed ▪ Mortgage Interest ▪ Expenses that cannot be paid for Uses es ▪ Rent due to COVID-19 ▪ Utilities, other debt incurred prior to February 15, 2020 ▪ Specifics to be determined (SBA has 15 days to provide guidance to registered SBA lenders) ▪ Online: ▪ Eligible borrower should contact https://covid19relief.sba.gov/ How to a registered SBA lender. ▪ Currently online form is Apply ply ▪ Application Form: experiencing disruptions. https://www.sba.gov/document/s Download fillable PDF forms and ba-form--paycheck-protection- upload upon completion program-borrower-application- form Proces essing ng 2-3 weeks plus an additional 5 days Currently unknown Time for funding $10,000 advance within 3 days Fundin ding g Anticipated same day (repayment not required if Time application denied) Opus Consulting Group | opuscg.com | info@opuscg.com 4

COVID-19 & CARES Act Relief Last Updated April 3 rd , 2020 Other CARES Relief Provisions Mechanisms Employee yee Ret eten ention Cred edits A credit for payroll taxes if an employer closed due to COVID-19 and retained its workforce, 50% refundable tax credit up to $10,000 in wages per employee. [CARES Act Section 2301] Payroll Tax Def efer errals Deferral of employer portion of Social Security payroll taxes (6.2%) through the remainder of 2020. The deferred taxes are due in two 50% increments on December 31, 2021 and December 31, 2022. [CARES Act Section 2302] Net et O Oper erat ating g Losses es Temporary repeal of taxable income limitations for C Corporations resulting from Net Operating Losses. Losses from 2018, 2019, and 2020 can be carried forward indefinitely. [CARES Act Section 2303] Inter eres est Ded educ uction Increase of interest deduction for tax years 2019 and 2020 by increasing the deduction limitation from 30% of EBITDA to 50% of EBITDA. [CARES Act Section 2306] Dep epre reciat ation Retroactively fixed the “Retail Glitch” of the 2017 Tax Cuts and Jobs Act, allowing Qualified Improvement Property, i.e. improvements to building interiors to have a 15-year depreciation timeframe and allows for the full 100% bonus depreciation. [CARES Act Section 2307] Eligibil bility ity Small businesses with fewer than 500 employees or hospitality businesses with a NAICS code of 72 are eligible to apply for the loan programs. Ineligible businesses include agricultural entities, religious organizations, charitable organizations, and gambling or gaming entities. Expres ess Loans The limit of SBA Express Loans is raised from $350,000 to $1 million to help provide additional working capital to businesses. Opus Consulting Group | opuscg.com | info@opuscg.com 5