Businesses and the Self-Employed

Resources available for small businesses

There are several measures aimed at assisting small businesses through this time.  Our workers and small businesses are bearing the brunt of this crisis.  Our aim is to make sure businesses can stay solvent during this unprecedented time and, to the extent possible, keep their workers on payroll.  You can find Senator Casey's detailed guide to small business assistance HERE.  Measures to assist in that objective include:

  • Direct assistance through SBA: $350 billion in Small Business Administration (SBA) loans that can become grants if small businesses retain their employees.  These loans will be offered through banks and other lending intermediaries to assist small businesses as quickly as possible, and help cover payroll, rent, mortgage, and utilities.
  • The Treasury Department has released guidance on the Paycheck Protection Program.  To view it, please see the links below.
    • For a top-line overview of the program, click HERE
    • If you’re a lender, more information can be found HERE
    • If you’re a borrower, more information can be found HERE
    • The application for borrowers can be found HERE
  • Refundable tax credits for employee retention: An employee retention tax credit is available for struggling businesses that are not eligible or choose not to participate in the new SBA Paycheck Protection Program.  Any business that has been forced to fully or partially suspend operations or has seen a significant drop in revenues is eligible for a 50-percent credit for wages paid to furloughed or reduced-hour employees.  For businesses with 100 employees or less, the credit is based on all wages paid, regardless of whether an employee is furloughed.  There is an overall limit on wages per employee of $10,000.  The credit will first be claimed against the business’s quarterly payroll tax liability and can then be recouped through a refundable tax credit.  There will also be options to receive advance payments.  More information about the Employee Retention Credit can be found HERE.
  • Deferral on payroll tax liability: This measure allows businesses to defer paying payroll tax until 2021.  The effective date is following enactment, meaning quarterly payroll due on April 15 can be deferred to 2021.  Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date.  Any business that does not have a loan forgiven under the new SBA Paycheck Protection Program is eligible for the payroll tax deferral.
  • Emergency Loans: Recent legislation also allocates $10 billion for Small Business Administration (SBA) emergency loan grants of up to $10,000 to provide immediate relief for small business operating costs.
  • SBA Loan Payment Relief: This legislation allows the SBA to cover 6 months of payments for small businesses with existing SBA loans through an additional $17 billion in funds.

 

I am a self-employed worker or an independent contractor

If you are self-employed or an independent contractor, you are broadly eligible for the same assistance being provided to small businesses (see above). This includes access to the SBA Paycheck Protection Program.

In addition, if you are self-employed, an independent contractor, or a gig worker and have reduced hours or lost work on account of the economic crisis, you may be eligible to receive unemployment benefits under legislation enacted by Congress.  Visit the unemployment compensation page for more information.

 

Resources available for medium-sized enterprises

Low-interest loans to cover expenses: Non-profits that do not qualify for SBA grants may be eligible to receive direct loans available through the U.S. Treasury and the Federal Reserve.  Qualifying medium-sized enterprises and non-profits are entities with 500-10,000 employees.  The Treasury Department and Federal Reserve will have a degree of flexibility in designing the new program, but the expectation is for loan terms to last for no more than five years and to cover up to 100% of payroll over the previous 180 days, or 50% of revenues for the past year, for eligible organizations.

Underwriting requirements should be kept simple, based on employer size, creditworthiness as of January 2020, and the ability to produce recent tax returns or audited financial statements.  The law prescribes that the loans must carry an interest rate of no greater than 2% and to provide forbearance on principal and interest for at least the first 6 months.  Borrowers will also be required to protect workers.  Any loan recipient will have to attest that they’ll use the money to keep workers employed – at least to 90% of their payroll – and keep workers paid at close to full compensation and benefits.  Borrowers will also commit to rehiring their workforce back to preexisting levels upon the end of the COVID-19 health emergency.

The most efficient way to deliver fast credit to eligible organizations is through existing relationships with local lenders.  Under the program, any qualified organization should be able to receive financing at a local bank, credit union, CDFI, or qualified nonbank lender.

 

Additional assistance to medium-sized firms include:

  • Refundable tax credits for employee retention: An employee retention tax credit is available for struggling businesses that are not eligible or choose not to participate in the new SBA Paycheck Protection Program.  Any business that has been forced to fully or partially suspend operations or has seen a significant drop in revenues is eligible for a 50-percent credit for wages paid to furloughed or reduced-hour employees.  For businesses with 100 employees or less, the credit is based on all wages paid, regardless of whether an employee is furloughed.
  • There is an overall limit on wages per employee of $10,000.  The credit will first be claimed against the business’s quarterly payroll tax liability and can then be recouped through a refundable tax credit.  There will also be options to receive advance payments.  More information about the Employee Retention Credit can be found HERE.
  • Deferral on payroll tax liability: This measure allows businesses to defer paying payroll tax until 2021.  The effective date is following enactment, meaning quarterly payroll due on April 15 can be deferred to 2021.  Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date.  Any business that does not have a loan forgiven under the new SBA Paycheck Protection Program is eligible for the payroll tax deferral.

 

For small business guidance and loan resources, please visit:  https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

For Center for Disease Control COVID-19 guidance for businesses and employers, please visit:  https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html

To request a waiver to keep a small business’s physical location open in Pennsylvania, please visit:  https://expressforms.pa.gov/apps/pa/DCED/Waiver-process-keeping-physical-locations-open

For more resources from the Pennsylvania Department of Community and Economic Development:  https://dced.pa.gov/businesses/

Last Updated: April 2, 2020

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