COVID-19 Small Business Resources

We’ve compiled a list of resources for small businesses–especially restaurants in Archuleta County, Colorado–to use in response to the worldwide COVID-19 novel coronavirus pandemic. These resources can help small businesses cope with loss of revenue as well as provide support for employees during this stressful time.

Much of the information below comes from the best analysis we’ve seen of the impact of the 2020 CARES (Coronavirus Response, Aid and Economic Security) Act. You can access other resources we’ve compiled for more general COVID-19 information for small businesses. The CORONAVIRUS
EMERGENCY LOANS Small Business Guide and Checklist
offers an excellent reference for helping understand the programs available to help small businesses respond to the pandemic.

Additional Small Business Resources

Click here to check out Riff Raff Brewing Company’s document showing many COVID-19 small business resources. Refer to the Southwest Colorado Disaster Assistance website for a ton of business resources in many different practice areas. Check out the U.S. Chamber of Commerce for a CliffsNotes version of small business loans and resources available to help aid recovery from the COVID-19 pandemic.

Small Business Administration and State of Colorado Assistance Programs for COVID-19 Damages

Economic Injury Disaster Loans (EIDL)

The SBA has provided a great resource to get capital very quickly for help with payroll or rent and mortgage liabilities. The EIDL loan program allows up to a $10,000 grant in advance of a full loan. The program includes the following provisions.

  • A lender may approve an applicant based solely on the applicant’s credit score and does not require the applicant to submit a tax return
  • An eligible entity that applies for an emergency loan may request an advance (grant), not to exceed $10,000, within 3 days after the SBA receives the application
  • Applicants will not be required to repay any amounts of the advance provided, even if subsequently denied a SBA disaster loan
  • An eligible entity may use the loan for:
    • Providing paid sick leave to employees unable to work due to COVID-19
    • Maintaining payroll to retain employees
    • Meeting increased costs to obtain materials unavailable due to interrupted supply chains;
    • Making rent or mortgage payments; and
    • Repaying obligations that cannot be met due to revenue losses
  1. Go to https://www.sba.gov/disaster
  2. On the Disaster assistance page, click Apply for Assistance.
  3. Click the Economic Injury Disaster Loans and Loan Advance link.
  4. Click on the link after “To apply for a COVID-19 Economic Injury Disaster Loan.”
  5. The “COVID-19 ECONOMIC INJURY DISASTER LOAN APPLICATION” page will load. Follow the instructions and submit away!
SBA Disaster Assistance
EIDL Disaster Loan Application

EIDL Documentation Requirements

After your application submission for an EIDL loan, make sure to put together the following documents in case an SBA loan agent asks for additional support for your application.

  • Business tax returns (previous three years)
  • Business certificate or license
  • Business leases (rent lease, equipment, etc.)
  • Payroll information for the last 12 months

Paycheck Protection Program

This forgivable loan program–the biggest and most important for small businesses included with the CARES Act–covers many businesses injured by effects of the novel coronavirus pandemic as a result of COVID-19 impacts, especially restaurants that have had to suspend dine-in service because of state executive orders. Eligible businesses that incur supply chain disruptions, staffing challenges, a decrease in customer sales or business closure can apply for this program in April 2020 once the Small Business Administration finalizes rules for the application process. You will apply for this program through a local bank so be proactive and reach out to your banker in advance.

Your small business may seek a maximum of 250 percent of your average monthly payroll and use the loans for the following expenses.

  • Payroll costs;
  • Costs related to health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
  • Employee salaries;
  • Mortgage payments;
  • Rent and utilities; and
  • Interest on any other debt obligations that were incurred before the covered period

The legislation waives both borrower and lender fees and no collateral or personal guarantees is required. You can seek complete deferment of SBA loan payments for not less than six months and not more than one year.

Loan Forgiveness for Payroll Protection Program Loans

This piece is huge and allows your business to get back on its feet with the peace of mind that you can have your loan forgiven if you simply meet the employee number requirements below.

  • Total forgiveness will be allowed if the borrower maintains the same average number of FTEs (Full-time Equivalents) per month as:
    • The average monthly employees in the period between February 15, 2019 and ending on June 30, 2019; or
    • The average monthly employees in the period between January 1, 2020 and ending on February 29, 2020
  • Total forgiveness will be allowed if–-in addition to staff level requirements–employers maintain total wages and salary for employees making less than $100,000 at 75% of the wages and salary paid to the employee for the most recent full quarter during which the employee was employed before the covered period.
  • Forgiveness amounts will not be included in taxable income
  • For any tipped employee, the language states borrowers “may receive forgiveness for additional wages paid to those employees.”

Payroll Protection Program Documentation Requirements

You’ll want to have the following documents ready to apply for the Payroll Protection Program once the SBA completes rule making and opens the application process through your local bank in April 2020.

  • Documentation verifying the number of full-time employees on payroll and pay rates;
  • Documentation verifying payments on covered mortgage obligations and utility payments; and
  • Certification that the documentation is valid

Individual & Employee Assistance

This section highlights a few new programs that individuals will have available if their employment and/or financial situation is impacted by COVID-19. In particular, notice the new unemployment insurance benefits, the rebate checks to individuals under a certain income, changes to retirement plan distributions, educational assistance and finally, corrections to the previously-passed paid leave provisions.

Note: Most of these programs will come through state-level unemployment agencies and access the State of Colorado Unemployment Office for information in Colorado.

Pandemic Unemployment Assistance

  • Creates a temporary Pandemic Unemployment Assistance program through December 31, 2020 to provide payment to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of the coronavirus public health emergency.
  • May provide up to 39 weeks of unemployment insurance to people not otherwise eligible for regular unemployment compensation (including the self-employed and those who have exhausted their regular and extended benefits)

Emergency Increase in Unemployment Compensation Benefits

  • Provides an additional $600 per week payment to each recipient of unemployment insurance or Pandemic Unemployment Assistance for up to four months.
  • This increased benefit will be fully funded by the federal government and available from the date a state enters into an agreement until July 31, 2020.
  • The state must agree not to decrease the generosity of their existing unemployment benefits.
    • This section will be important to pay attention to. Anyone (need clarification here) claiming unemployment benefits due to involuntary separation will receive this additional, weekly payment.
    • The weekly benefit amount varies by state. The national average is $364 per week. Due to archaic UI technology at the state level, the $600 benefit will be added on top of the state’s weekly benefit amount for every beneficiary to ease distribution.
    • As an example, an individual receiving $364 from the state per week, will now receive $964 per week or roughly $24 per hour for an FTE.
    • Given the staffing requirements in the Paycheck Protection Program, borrowers will want to monitor the potential for past employees to remain unemployed in order to take advantage of the larger per hour payments allowed by the unemployment insurance program through July 31, 2020.

Temporary Full Federal Funding of the First Week of Compensable Regular Unemployment for States with No Waiting Week

The federal government will pay the cost of the first week of unemployment benefits through December 31, 2020 for states that choose to pay recipients as soon as they become unemployed instead of waiting one week before the individual is eligible to receive benefits.

Pandemic Emergency Unemployment Compensation

The bill will provide an additional 13 weeks of unemployment benefits through December 31, 2020 to help those who remain unemployed after weeks of state unemployment benefits are no longer available.

Temporary Financing of Short-Time Compensation Payments in States with Programs in Law

The bill will support “short-time compensation” programs, where employers reduce employee hours instead of laying off workers and the employees with reduced hours receive a pro-rated unemployment benefit. This provision would pay 100 percent of the costs’ states incur in providing this short-time compensation through December 31, 2020.

2020 Recovery Rebates for Individuals

  • All U.S. residents with adjusted gross income up to $75,000 ($150,000 married), who are not a dependent of another taxpayer and have a work eligible social security number, are eligible for the full $1,200 ($2,400 married) rebate.
  • In addition, they are eligible for an additional $500 per child. This is true even for those who have no income, as well as those whose income comes entirely from non-taxable means-tested benefit programs, such as SSI benefits.
  • For the vast majority of Americans, no action on their part will be required in order to receive a rebate check as IRS will use a taxpayer’s 2019 tax return if filed, or in the alternative their 2018 return.
  • This includes many low-income individuals who file a tax return in order to take advantage of the refundable Earned Income Tax Credit and Child Tax Credit.
  • The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold.
  • The amount is completely phased-out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child, and $198,000 for joint filers with no children.

Business Tax Changes

The final bucket of major provisions focuses on business tax changes, including credits for retaining employees. Businesses will be able to delay the payment of payroll taxes and then spread the payment out over two years if needed. Impacted employers will be able to carryback losses from this year or the previous two years for up to five years with no income limitation. Interest expenses will be allowed to be deducted at 50% instead of the previous rate of 30%. And finally, we have the correction to the Qualified Improvement Property language, so you should be able to depreciate 100% of the costs of eligible improvements since September 27th, 2017.

Employee Retention Tax Credit for Employers Subject to Closure due to COVID-19

  • The provision provides a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis.
  • The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.
  • The credit is based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above.
  • For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order.
  • The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee.
  • The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.
  • If an eligible employer receives a covered loan under the Paycheck Protection Program, such employer shall not be eligible for the credit under this section.

Delay of payment of employer payroll taxes

  • This provision allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees.
  • Employers generally are responsible for paying a 6.2-percent Social Security tax on employee wages.
  • The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022.

Modifications for net operating losses

  • This provision relaxes the limitations on a company’s use of losses.
  • Net operating losses (NOL) are currently subject to a taxable-income limitation, and they cannot be carried back to reduce income in a prior tax year.
  • This provision provides that an NOL arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years.
  • The provision also temporarily removes the taxable income limitation to allow an NOL to fully offset income. These changes will allow companies to utilize losses and amend prior year returns, which will provide critical cash flow and liquidity during the COVID-19 emergency.

Modification of limitation on losses for taxpayers other than corporations

The provision modifies the loss limitation applicable to pass-through businesses and sole proprietors, so they can utilize excess business losses and access critical cash flow to maintain operations and payroll for their employees.

Modification of credit for prior year minimum tax liability of corporations

The corporate alternative minimum tax (AMT) was repealed as part of the Tax Cuts and Jobs Act, but corporate AMT credits were made available as refundable credits over several years, ending in 2021. The provision accelerates the ability of companies to recover those AMT credits, permitting companies to claim a refund now and obtain additional cash flow during the COVID-19 emergency.

Modification of limitation on business interest

  • This provision temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30-percent limitation to 50 percent of taxable income (with adjustments) for 2019 and 2020.
  • As businesses look to weather the storm of the current crisis, this provision will allow them to increase liquidity with a reduced cost of capital, so that they are able to continue operations and keep employees on payroll.

Technical amendment regarding qualified improvement property

  • The provision enables businesses, especially in the hospitality industry, to write off immediately costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of the building.
  • The provision, which corrects an error in the Tax Cuts and Jobs Act, not only increases companies’ access to cash flow by allowing them to amend a prior year return, but also incentivizes them to continue to invest in improvements as the country recovers from the COVID-19 emergency.
  • This has been a top priority for the restaurant industry since the error was made in the Tax Cuts and Jobs Act.