The COVID-19 public health crisis and resulting economic downturn have created a variety of challenges for small and solo businesses across the country.
Many small business owners and self-employed consumers keep on facing pressure and are demanded to adjust to new lockdown rules.
They have to adapt to constantly developing new practices to make their employees and customers safe. The new relief package was signed by Congress to grant a second stimulus payment.
Besides, it offers extra lending options and remission of debts for self-employed and small business owners. Keep on reading to learn about the modifications to relief programs.
Debt Forgiveness for Payroll and Operational Costs
Not every borrower can afford to make regular payments and get rid of debt on time. Sometimes, online loans same day deposit are helpful for consumers who urgently need additional cash for their needs. But also you should not forget about the high-interest rates for repayment of the loan.
It’s convenient to get funded on the web and receive the funds within one business day. If you are a business owner, you may qualify for special relief programs. Paycheck Protection Program loans are 100% forgivable.
The demand is to use the proceeds on allowable expenses during a period of eight and 24 weeks following origination.
The loan funds don’t have to be paid off if the applicant spends at least 60% on payroll and 40% on other covered expenditures, including rent, mortgage payments, software costs, utilities, and supplier expenses.
Access to Loans and Additional Funding
The COVID-19 pandemic is having a serious influence on the American economy. The federal and state governments are taking some actions, while those who own small businesses and are members of the ASHA organization can qualify for emergency resources.
You may visit their web platform to find additional information about forgivable loans and emergency grants for small business owners including Economic Injury Disaster Loan Emergency Advance and Paycheck Protection Program.
The U.S. Department of the Treasury provides crucial assistance to small businesses and self-employed consumers across the country. It helps these companies to recover on solid footing and facilitates the immediate deployment of support and capital.
Distribution of financial assistance sources received by small businesses during the COVID-19 pandemic in the United States as of April 2022
The Treasury Department offers small business tax credit programs. The American Rescue Plan extends several critical tax benefits, especially the Employee Retention Credit and Paid Leave Credit, to small ventures.
The Emergency Capital Investment Programs support the needs of low-income community financial institutions. The Paycheck Protection Program offers additional resources to small businesses to hire back employees who may have been laid off and maintain their payroll.
Independent contractors, self-employed workers, and sole proprietors are eligible for first and second PPP loans.
These lending options don’t need collateral, personal guarantees, and other fees. Such loans have to be utilized for health care benefits, payroll and compensation expenses, rent, utilities, mortgage payments, etc.
The relief bill allows borrowers to cover expenses for supplier and software costs, workplace modifications, and protective equipment.
Recruiter Tax Credits
The CARES Act came into action in March 2020. This document established the “employee retention credit”. Originally, this option offered a payroll tax deduction of about half of the wages.
The Act serves for income up to $10,000 per worker for ventures that shut down to obey the orders given by the government. The conditions and eligibility criteria were broadened later in the next coronavirus relief bill issued in December 2020.
The paycheck credit went up to 70% at the beginning of 2021. Nowadays, it’s available to ventures and companies that have a 20% incidence in gross revenue.
Besides, small businesses that take out a PPP loan may also call for credit retention on the wages that aren’t covered by the PPP loan.
- Employees who are unable to work as they need to care for a quarantined relative are offered 14 days of paid leave, capped at two-thirds of the employee’s average income or two-thirds lowest salary permitted by law, whichever is higher. It can be up to $200 daily and $2,000 for two weeks.
- Quarantined employees and those awaiting a diagnosis are offered 14 days of paid leave, capped at 100% of their average income or the lowest salary permitted by law, whichever is higher. It can be up to $511 daily or $5,110 for two weeks.
- Workers who have to care for their kids whose child care or school shut down due to the pandemic may qualify for a maximum of 12 weeks. These payments are limited to two-thirds of their average income or two-thirds lowest salary permitted by law, whichever is higher. The maximum sum is $200 daily.
Small ventures, businesses, and self-employed people have the right to an exemption from speaking about sick leave in relationship with school shutdowns.
It is applicable in case the venture might be put in jeopardy if it’s issued this paid leave. Such demands are quite expensive, so self-employed and recruiters have the right to compensation for these bills to maintain worker health insurance.
Delayed Tax Payments
Payroll tax payments normally due can be delayed due through January 1, 2021. Fifty percent of the delayed taxes would be due on December 31, 2021, and the rest by December 31, 2022.
Postponement of Existing SBA Loans
Postponement of payments for current small business loans is extended by the relief bill for three months. This period began in February 2021.
These payments are limited to $9,000 for each applicant a month. In other words, the borrowers don’t need to pay these bills. The SBA is to pay the creditor starting with the upcoming bill due.
What if the present loan is already on postponement? In this case, the loan will enter a grace period for the next six months after the present deferment ends.
Resources for Self-Employed and Sole Proprietors
A few changes have been made to the CARES Act to provide support for contractors, self-employed, and sole proprietors. Here are the most recent changes:
- The SBA’s Economic Injury Disaster Loan (EIDL) program has been expanded to include contractors, sole proprietors, and self-employed as eligible applicants.
- Programs like the Paycheck Protection Program include contractors, sole proprietors, and self-employed as eligible applicants.
- The Families First Coronavirus Relief Act states that self-employed people can be entitled to tax credits for lost wages.
The Bottom Line
Many small business owners, contractors, sole proprietors, and self-employed individuals still need to adapt to changes caused by the global pandemic.
Luckily, a new relief bill expands access to forgivable loans and disaster loans while also providing more funding.
Explore your options and learn about relevant changes to relief programs.