Updated April 23, 2020.
What programs in the recent relief bills help small businesses?
In March 2020, the federal government passed three multi trillion-dollar relief bills which represent the largest economic stimulus in US history.
- The Coronavirus Preparedness and Response Supplemental Appropriations Act–Passed March 6, 2020
- Families First Coronavirus Response Act (FFCRA)–Passed March 18, 2020)
- Coronavirus Aid, Relief, and Economic Security (CARES) Act–Passed March 27, 2020
Small Business Tax Credits and Forgivable Loans
In this article, we focus on two small business relief programs. They are part of the second and third bills. The programs we address are:
- Tax Credits for Paid Sick and Paid Family and Medical Leave (Part of the FFCRA)
- Paycheck Protection Program (Part of the CARES Act)
Tax Credits for Paid Sick and Paid Family and Medical Leave are part of the FFCRA that includes the EPSLA and the expansion of the Family and Medical Leave (FMLA). The Paycheck Protection Program is part of the CARES act.
What are most important things for small businesses to do right now?
It’s understandable if you feel overwhelmed right now. Many business owners do. Let’s take things one step at a time. First;
- Track employee hours for at-home, onsite, and mobile employees
- Don’t cut wages, furlough employees, or lay off employees before you learn what you can qualify for
The Emergency Paid Sick Leave Act
What is the EPSLA?
The FFCRA requires employers to provide paid leave through two separate components;
- The Emergency Paid Sick Leave Act (EPSLA)
- Emergency Family and Medical Leave Expansion Act (Expanded FMLA)
The EPSLA is the second law contained in the FFCRA that provides paid leave. Specifically, it provides full-time employees up to 80 hours (two weeks) of paid sick leave for basically the same coronavirus related reasons as outlined in the EFMLEA.
We will now answer employers’ frequently asked questions regarding these programs.
How does an employee qualify for leave under the programs?
You will recognize that many of these qualifiers are contained in FMLA. The notable addition is that employees may qualify if they are unable to work because the employee must care for a son or daughter whose school or daycare is closed due to a public health emergency or if the employee is under a quarantine order by any jurisdiction.
Can I qualify for the EPSLA tax credit if I have employees outside the U.S.?
The 500-employee requirement applies to only employees in any state of the United States, the District of Columbia, or any U.S. territory.
How do I calculate required paid sick leave if my part-time employee’s schedule varies from week to week?
Use a six-month average. If the employee’s number of normal hours scheduled has not yet been determined, or if the employee’s schedule fluctuates from week to week, you may use a six-month average to calculate the average daily hours.
When calculating EPSLA pay, am I supposed to count overtime?
Yes. The Emergency Family and Medical Leave Expansion Act requires qualifying employers to pay workers for hours they would have been normally scheduled to work even if that is more than 40 hours/week. However, the Emergency Paid Sick Leave Act requires that paid sick leave be paid only up to 80 hours over a two-week period.
What is the easiest way to track employee hours, PTO accruals, and overtime?
Employee time tracking systems create online timecards as employees log their hours with an online web clock. They also track PTO, sick leave, and overtime.
I can’t wait until I file my taxes next year. How can I make payroll right now?
The answer to this question brings us to the second topic of this article, The Paycheck Protection program.
The Paycheck Protection Program (PPP)
The PPP component in the CARES act is designed to provide loans to businesses to cover qualified operating expenses for a limited period. If the requirements are met, the loan can be forgiven. The Small Business Administration (SBA) will administer this program.
How much of the loan can be forgiven?
Employers may receive 100% reimbursement if the conditions are met.
What types of business operating expenses apply?
- Interest on mortgage debt
- Health insurance costs
Is my business eligible for a Paycheck Protection Loan?
Your business is eligible if you:
- Have fewer than 500 employees
- Part-time, full-time, temp, and independent contractors count as employees
- Are a single-member LLC, corporation, 501(c)(3), sole proprietor, Veteran organization, or Tribal business
What should small business owners do right now to determine if they qualify for a Paycheck Protection Loan?
- Look at your payroll to see if you kept the employees you had
- If you reduced your staff, there will be a reduction in loan forgiveness available
- If you’ve cut wages by 25%, that dollar value will affect the loan forgiveness as well.
Can I qualify for a Paycheck Protection Loan if I have already let employees go?
Yes. If you bring them back on your payroll.