COVID-19 SMALL BUSINESS FINANCIAL RESOURCES
HBA COVID-19 Small Business
Resources and Information
HBA remains committed to representing our members and working with our community partners during the COVID-19 pandemic. Through this pandemic we will provide up-to-date industry information, alerts and community resources to help your businesses continue working as productively as possible. Keep in mind that HBA’s response to COVID-19 is fluid and circumstances regarding programs and events could change rapidly.
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Key Tax Provisions in COVID-19 Relief Package
• Paycheck Protection Program
• Low-Income Housing Tax Credit
• Employee Retention Tax Credit
• Tax extenders
• Multifamily depreciation
• Disaster tax relief
• Family Medical and Sick Leave credits
payroll tax holiday
Congress Extends PPP Application Deadline to May 31
With a March 31 deadline looming, the Senate voted 92-7 today to approve the PPP Extension Act. The legislation will extend the filing deadline for Paycheck Protection Program (PPP) applications by 60 days and provide an additional 30 days for the U.S. Small Business Administration to finish processing applications received by the new May 31 deadline. Read More
Small Business Guidance & Loan Resources
This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.
Enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.
Colorado small businesses impacted by COVID-19 can seek individual small business loans up to $2M as part of the Small Business Administration’s Economic Injury Disaster Loan program. Small businesses throughout all 64 counties may seek SBA Economic Injury Disaster Loans. Governor Jared Polis announced that Colorado’s application for federal disaster area designation has been approved.
The CARES Act provides a number of tax provisions aimed at providing financial relief to most American taxpayers as well as new tools to aid struggling businesses. The centerpiece of the bill is a $1,200 “recovery rebate” that will be distributed to all eligible Americans. But the bill also includes needed tax relief to small businesses, including an employee retention tax credit; the ability to delay certain payroll tax payments; providing advance refunds of the new sick and medical leave tax credits; and relaxing rules related to net operating losses. More detail is provided below
***NOTE: NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such.***
New Tax Benefits for Individuals
Recovery Rebates: The tax-related centerpiece of the third economic stimulus bill consists of “recovery rebates” — a $1,200 one-time payment (plus $500 per child) — mailed (or direct deposited) to every eligible taxpayer in the coming weeks.
- Eligible recipients include taxpayers with adjusted gross income up to $75,000 (single)/$112,500 (head of household)/$150,000 (joint filers). Joint filers will receive $2,400.
- The rebate is phased out for taxpayers with higher incomes and is completely phased out for single filers, heads of household, and joint filers with incomes above $99,000, $136,500, and $198,000, respectively.
- All eligible taxpayers will receive a check, which will be processed automatically based on the taxpayers’ 2019 tax returns. If the taxpayer has not yet filed a 2019 tax return, the IRS will use their 2018 tax return.
- This is structured as a tax credit that is refunded in advance. Taxpayers will have to account next year for any “recovery rebate” on their 2020 tax returns.
Taxpayers will not have to pay the 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts.
- Taxpayers will have three years to pay taxes on income from such a distribution, and
- The taxpayer may re-contribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions.
- This provision is only applicable for coronavirus-related purposes. To qualify, the taxpayer must:
- Be diagnosed with COVID-19;
- Have a spouse or dependent diagnosed with COVID-19; or
- Experience adverse financial consequences as a result of:
- Being quarantined, furloughed, laid off, having work hours reduced;
- Being unable to work due to COVID-19 related child care issues;
- Closing or reducing hours of a business operated by the taxpayer; or
- Other factors as determined by the Secretary of Treasury.
Temporary Waiver for Required Minimum Distribution Rules for Certain Retirement Accounts
For 2020, this waives the required minimum distribution rules for certain defined contribution plans and individual retirement accounts.
Non-itemizing taxpayers will be eligible for a deduction up to $300 for cash contributions to churches and certain other charitable organizations. This applies for contributions made in 2020 and becomes a permanent feature of the tax code for subsequent years.
New Tax Benefits for Individuals and Corporations
Prior to the CARES Act, individuals and corporations could only deduct charitable contributions up to 50% (individuals) or 10% (corporations) of their adjusted gross income (AGI). To encourage charitable giving in 2020:
• The individual deduction limit is suspended.
• For corporations, the limit is increased to 25% of adjusted gross income
New Tax Benefits for Businesses
Employee Retention Credit – Reversed on 5/8/2020
In response to concerns raised by a bipartisan group of lawmakers, the IRS has reversed guidance to allow employer-paid health insurance costs to be eligible for the employee retention tax credit, even if the employer has furloughed workers and is not otherwise paying wages.
The IRS has updated its FAQ to state that “[e]ligible employers may treat health plan expenses allocable to the applicable periods as qualified wages even if the employees are not working and the eligible employers does not pay the employees any wages for the time they are not working.”
The tax credit is designed to support eligible employers whose businesses are disrupted due to COVID-19 and was included in the CARES Act that was recently enacted into law. Details
Employers and self-employed individuals may defer payment of the employer share of Social Security taxes they are responsible for paying.
- This allows employers and self-employed to save temporarily on the 6.2% Social Security tax on wages.
- These deferred taxes must be repaid over the following two years.
- Half of the amount will be due by Dec. 31, 2021 and the other half by Dec. 31, 2022.
Under the Family First Coronavirus Response Act, employers are required to provide paid sick leave and paid family and medical leave under specific circumstances resulting from COVID-19. The law created new tax credits to offset the employer cost of providing this leave. The CARES Act will allow employers to quickly claim credits to reduce financial strain from this new mandate.
Net Operating Loss (NOL) Modifications
For income tax purposes, NOLs arise when allowable deductions of a business exceed their taxable income. Under current law, businesses can carry forward NOLs indefinitely to offset against future taxable income, but losses may not exceed 80% of taxable income in any tax period. NOLs may no longer be carried back and used to offset tax liability in prior years.
- Under the CARES Act, losses from 2018, 2019 and 2020 may be carried back five years from the year in which the loss was incurred.
- This will allow businesses with NOLs to amend prior year tax returns and obtain refunds to provide additional liquidity.
- The bill also repeals the 80% of income limitation so that NOLs from 2018, 2019 and 2020 may be carried forward to fully offset taxable income in years after the loss.
Modifications on Limitation of Business Interest
For businesses subject to the 30% of income limitation on deducting business interest expenses, the CARES Act increases the limit to 50% for 2019 and 2020. For more information on the tax component of the CARES Act, contact J.P Delmore at NAHB at 1-800-368-5242 x8412 or David Logan at x8448.
Allow the Federal Deposit Insurance Corporation to fully guarantee business transaction accounts and provide banks with additional flexibility and streamlined capital requirements to ensure liquidity during the crisis.
Permit banks to postpone compliance with the Current Expected Credit Losses (CECL) standard, which requires lenders to immediately account for potential losses when they issue loans, potentially tying up much-needed capital.
Encourage all financial institutions to work with borrowers to modify or restructure existing loans, including forbearance arrangements, interest rate modifications, repayment plans and any other similar arrangements that defer or delay the payment of principal or interest before borrowers are experiencing payment difficulties. The bill would suspend accounting rules so such modifications would not be categorized as troubled debt restructurings.
Single Family Mortgage Relief:
The CARES Act will permit anyone with a loan backed by Fannie Mae, Freddie Mac, FHA, VA or Rural Housing to receive forbearance up to one year on their mortgage by calling their servicer and reporting that they have a COVID-19 related financial hardship.
The legislation also temporarily bars foreclosures on government-backed mortgages for not less than 60 days beginning March 18, 2020.
Finally, the CARES Act gives credit scoring relief to those impacted by the COVID-19 crisis, including those taking advantage of government forbearance programs.
The CARES Act includes multifamily mortgage forbearance for all federally backed mortgages (Fannie Mae, Freddie Mac or FHA). Owners may request forbearance for 30 days, with the option of two additional 30 days as needed for a total of 90 days. During that time frame (by the end of the termination of the national emergency or Dec. 31, 2020, whichever comes first) owners will be unable to evict tenants or charge late fees.
The legislation also calls for an immediate 120-day moratorium on evictions and associated fees for non-payment of rent for all properties insured, guaranteed, supplemented, protected or assisted in anyway by HUD, Fannie Mae, Freddie Mac, the rural housing voucher program, or the Violence Against Women Act. After the 120 days, owners must give 30 days written notice of an eviction. The eviction is specifically only for non-payment. At the end of this period, the tenants will be required to pay all rent due.
Tenant-Based Rental Assistance (Housing Choice Vouchers) — $1.25 billion. This will allow tenants who have had a significant loss of income apply for vouchers and it will assist the tenant in paying their rent in market rate housing.
Project-Based Rental Assistance (PBS8) — $1 billion. For multifamily developers who currently have PBS8 projects, this will provide additional funds to help maintain and run operations of these properties.
Community Development Fund (CDBG) — $5 billion. CDBG is a flexible block grant program, commonly used by communities for a wide-range of needs. CDBG is primarily used for activities that benefit low- and moderate-income individuals.
Section 202 Housing for the Elderly — $50 million
Section 811 Housing for those with disabilities — $15 million
Homelessness Assistance Grants — $4 billion. This funding is for homeless individuals, shelter, and Public Housing Authorities (PHAs).
Fair Housing Act initiatives — $2.5 million. Of this total, $1 million will go for education and outreach and $1.5 million is for enforcement.
There is no funding included for multifamily rural housing assistance.
The CARES Act contains a significant expansion of unemployment benefits to support workers who have lost their jobs as a result of the COVID-19 health pandemic. Specifically, the measure:
Creates a temporary Pandemic Unemployment Assistance (PUA) program to provide payment to those not traditionally eligible for unemployment benefits — such as the self-employed and independent contractors — who are unable to work as a direct result of the coronavirus pandemic. Payments through the PUA program are authorized for a maximum of 39 weeks, ending Dec. 31, 2020. This will be a huge economic relief to a large segment of NAHB’s membership.
Extends traditional unemployment insurance (UI) benefits for another 13 weeks and provides for an additional $600 per week for each recipient of traditional UI or PUA for up to four months.
Authorizes federal funds to cover the usual one-week waiting period before an individual gets their first unemployment benefits so that they can start receiving payments immediately.
Funds short-term compensation (STC) programs and allows states to create new programs for employers that are having to choose between laying off or furloughing their employees to receive funding to keep those workers on their payroll. The STC program funding will be available for coverage of weeks of unemployment through December 31, 2020. Temporary, seasonal or intermittent workers are not eligible for those types of benefits.
Authorizes payments to states to reimburse government agencies, tribes and nonprofits for half the payments they are required to make into the state unemployment fund.
The CARES Act includes some limiting language on the paid leave provisions in the second coronavirus bill. These include an explicit limitation on the weekly and total amounts that can be paid to a worker for sick leave and family leave related to the COVID-19 health pandemic.
Further, the bill extends access to paid family and medical leave for an employee who was laid off by an employer March 1, 2020, or later in certain instances if they are rehired by that employer. To be eligible, an employee would have had to work for the employer at least 30 days prior to being laid off.
The legislation also allows employers to receive an advance tax credit from Treasury for providing paid leave benefits instead of waiting to be reimbursed on the back-end. This will require a rulemaking or guidance to establish a process for how these advance tax credits can be issued to employers.
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