Congress passed three major bills in March and two of those impact businesses, churches and not for profits. Here is what you need to know to take legal steps to support your business, church or not for profit.
The Families First Coronavirus Response Act
The Act passed on March 18 and went into effect on April 1. The Act applies to all employers with less than 500 employees including churches and not for profits. A new poster is required to be posted. Here is the poster. The Act creates emergency paid sick leave for employees and immediate family members impacted by COVID-19. The Act also expands existing family and medical leave. In the past such laws did not apply to churches or small employers. This Act does. While the Department of Labor may still make some exceptions for small employers as of April 1, the only exception is for employees staying home for child care or for school aged children. Impacted employers can receive refundable tax credits to offset the cost of paying leave. Our friends at Mauck & Baker have created a helpful guide you can download here.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act
The CARES Act became law on March 26. The 2.2 trillion dollar relief bill has several provisions for individuals, businesses, churches and not for profits. For individuals see last week’s blog, What do I need to know about the new stimulus law? If you own a business with under 500 employees, a church, or not for profit, then this guidance is for you.
Paycheck Protection Program (PPP)
Section 1102 provides for a loan with 1% interest payable in two years with forgiveness after 8 weeks (sec. 1106). The loan is calculated on average monthly payroll for the year prior to the loan application.
Here is a helpful calculator.
Payroll includes health and retirement benefits. It also includes a housing allowance. Payroll for any single employee is capped at $100,000. The loan amount is for 2.5 times your average monthly payroll. Most FDIC insured banks, credit unions and SBA lenders are processing the loan beginning Friday, April 3 for everyone except solo entrepreneurs and independent contractors who can apply Friday, April 10. More information and guidance is available on the SBA site.
You can obtain a copy of the application here.
The loan can be used for payroll, including benefits, rent, utilities and mortgage interest. 75% of the funds should be used for payroll protection. If all employees remain on the payroll at the end of June, the verified amount of expenditures will be forgiven. The loan requires no collateral or personal guarantees. As long as you have been impacted adversely by the Coronavirus you are eligible and should apply. You can find more helpful information from a webinar I did with Christian Business Fellowship here:
Economic Injury Disaster Loans (EIDL)
Sec. 1110 provides for an emergency loan. This loan can be for more expansive business purposes. You can receive an advance on the loan of $10,000 within 3 days. For those needing a quick infusion of cash, this loan should be considered. The loan has a 10 year term at 4% interest. The advance is not required to be repaid but will be offset by any PPP loan forgiveness. This loan has more requirements than the PPP, so check the SBA site for more information and to apply.
Emergency Unemployment Relief for Nonprofits
Sec. 2103 provides help for exempt and self-insured nonprofits. Churches have typically not been covered by unemployment. This law includes them. Other nonprofits with less than four employees have been exempt and others have chosen to be self-insured. For these effected entities the government will pay 50% of the unemployment cost.
Employee Retention Credit
Sec. 2301 provides a 50% tax credit for qualified wages paid in 2020 with a quarter cap of $10,000 per employee. Credit includes health benefits. Cannot receive both PPP or credit from Families First and this provision. More information is available here.
Payroll Tax Deferral
Sec. 2302 allows 6.2% of payroll tax owed in 2020 to be deferred with half being paid by Dec. 2021 and half by Dec. 2022. If you can set aside the tax before the due date, you should consider using the deferral. The deferral applies to business, churches and not for profits.
Do the Unexpected
As good stewards of the business or ministry entrusted to you, you should avail yourself of the relief above. As you do, remember it is more blessed to give than to receive. We have a rare opportunity to demonstrate to the watching world the difference Christ makes. At a time when others are hoarding or looking for ways to game the system, now is the time to let our lights so shine before men that they glorify our Father in heaven. Do the unexpected. Give.
Maybe you can give time. Call someone to pray with them and encourage them. Consider joining our Compassionate Care Campaign to call some of our most vulnerable neighbors.
Give resources. You will be receiving a check from the government. Consider using some of it to unexpectedly bless someone. Get creative. If you buy something to surprise someone, consider registering your card and the rounded up pennies will be donated to us through swipe. A double blessing. Maybe you could donate $300 to your favorite charity and take advantage of the new law which allows you to reduce your income by that amount whether or not you itemize. Like many not for profits our donations were down 50% in March and appreciate your consideration. Even $30 to help support a client during this time goes a long way.
Be generous because your Father in heaven is generous. Love your neighbor – especially those most vulnerable. The Bible is true. “Good will come to those who are generous and lend freely, who conduct their affairs with justice.” Ps. 112:5.