In addition to the grants and funding identified in Pullano & Farrow’s prior Legal Briefings, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provides additional support to small businesses.
Entrepreneurial Development ($265 million) [Section 1103 of the CARES Act]
o Authorizes the provision of grants to small business development centers (to be awarded 80% of eligible grants) and women’s business centers (to be awarded 20% of eligible grants) so that these partners can provide education, training, and advising to small businesses and their employees on:
Accessing and applying for Federal resources;
The hazards and prevention of COVID-19 and its impact on the supply chain, distribution, and sale of products;
Management and practice of telework;
Management of remote customer service;
Risks of (and mitigation) of cyberthreats;
Mitigation of the effects of reduced travel; and
Other business topics.
o Associations representing small business development centers and women’s business centers are also authorized to receive grant funding to establish a centralized online platform for resources and a training program for education.
Statewide Trade Expansion Program [Section 1104 of the CARES Act]
o Extends the availability of federal grant funding for the State Trade Expansion Program from fiscal years 2018 and 2019 through the end of fiscal year 2021.
Minority Business Development Agency ($10 million) [Section 1108 of the CARES Act]
o Provides grants to minority business centers and minority chambers of commerce to provide education, training, and advising to for-profit business enterprises that are owned 51% or more by one or more socially disadvantaged individuals and management and daily control of the business operations are by one or more socially disadvantaged individuals.
o Similar to the Entrepreneurial Development Program, grants are to be used for: education, training, and advising on certain topics.
Employee Retention Credit for Employers [Section 2301 of the CARES Act]
o Eligible employers are allowed a credit against employment taxes for each calendar quarter in an amount equal to 50% of the qualified wages per employee. The amount of qualified wages per employee, however, is limited to $10,000 per calendar quarter.
o However, if an employer receives a small business interruption loan, then the employer is not eligible for the retention credit.
o Eligible employers include:
-those carrying on a trade or business during 2020, and
-with respect to any calendar quarter, for which:
the operation or business is fully or partially suspended during the calendar quarter, or
the calendar quarter is within the period (1) beginning with the first calendar quarter after December 31, 2019 for which gross receives for the calendar quarter are less than 50% of the gross receipts for the same calendar quarter in the prior year; and (2) ending with the calendar quarter following the first calendar quarter beginning after a calendar quarter described in (1) for which gross receipts are less than 80% for the same calendar quarter in the prior year.
Delay of Payment of Employer Payroll Taxes [Section 2302 of the CARES Act]
o Employers may defer payment of employment taxes from the enactment of the CARES Act until January 1, 2021.
o 50% of the deferred amount is due by December 31, 2021 and the other 50% is due by December 31, 2022.
Modifications For Net Operating Losses [Section 2303 of the CARES Act]
o Employers may deduct losses incurred in 2018, 2019, or 2020 and carryback for 5 years, applying the losses against 100% of the prior years’ income.
Modifications on Limitation of Business Interest [Section 2304 of the CARES Act]
o The net business interest deduction limitation is raised from 30% to 50% of adjusted taxable income for 2019 and 2020.
o Special rules apply with respect to partnerships.
o Adjusted taxable income from 2019 may be substituted for 2020 when determining the deduction limitation.
Payroll Credits for Sick Leave [Section 3606 of the CARES Act]
o Employers can apply for payroll credits in an amount up to 100% of the qualified sick leave wages paid by an employer with respect to a calendar quarter, subject to certain limitations
The full text of the CARES Act can be found at https://www.congress.gov/bil