Mike Payne, President & Owner of Hill Manufacturing & Fabrication, breaks down everything you need to know about the CARES act.
If you’re anything like me, you’re doing everything you can to navigate this current environment. As I’ve told my team, there is no playbook and the only thing I can promise is to lead our company through this current market as best as I can using faith, hard work, commitment and shared best practices coming from the private and public sectors.
I’m fortunate to have a close network of fellow business owners, across several industries, to learn alongside. I’d encourage all manufacturing leaders to make a habit of visiting with other shops, your vendors, and customers to discuss what’s helping. Also, reach out to your network of leaders outside of the metal working nation. They are doing things you can’t, for example none of us will be sending equipment home for CNC operators to work on from home. However, you might learn some best practices related to cash flow management, sanitization, new product opportunities and a magnitude of other things.
I’ve found one of the hardest things to stay on top of is the ever changing news. “Current” news and events have taken on an hour by hour meaning. Staying on top of this ever-changing environment is a lot easier with a network of leaders.
For example, over the past few days and weeks the federal government has been working on a relief package. For me, I found it was hard to cut through political analysis and understand how any relief would affect my company and my employees. Thankfully, through a group of excellent leaders I am affiliated with, I was finally able to get an unbiased breakdown of the tools and resources available. I found this very helpful at understanding options for my company and answering questions for my employees.
CARES Act Summary - 3/27/2020
Overview: The CARES Act was signed into law on Friday, March 27, 2020. The bill contains over $2 trillion of stimulus through loans and tax changes for individuals and businesses of all sizes. Some of the key provisions include partially forgivable loans for small businesses, payroll up retention tax credits, and significant increases in unemployment insurance payments for 2020.
Disclaimer: At the time of this writing, the following information was the latest information available, and this information is to be used as a guideline. It is recommended all information contained herein should be validated by an attorney and or tax professional. MakingChips holds no liability to what is written.
Overview: The bill provides a variety of tax credits and flexible retirement fund provisions to individuals, including one-time payments to many households.
One-time Payments and Calculation:
For individual taxpayers
For married filing jointly
For head of household
Retirement Fund Special Changes:
Tax Provisions for Charitable Contributions and Student Loan Payments:
Assistance for American Workers, Families, and Businesses
Overview: The bill expands unemployment insurance programs to include those not typically eligible for benefits, including gig workers and contractors.
Length of Assistance:
Example Benefit Amounts:
Assistance for Mid-Sized Businesses
Overview: Businesses not eligible for other loan programs provided under the other portions of the Act will be eligible to apply for other loans through the Treasury.
Keeping American Workers Paid and Employed – Covered Loans
Overview Paycheck Protection Program (PPP):
The bill establishes a $350 billion loan guarantee program for small businesses, which is an expansion of the SBA section 7(A) loans. The individual loans are available up to maximum of $10 million vs the $5 million maximum previously set by the SBA section 7(A) loans.
Loan availability period: February 15 – June 30, 2020
PPP vs EIDL Loans
Applying for the PPP Loans made available through the CARES Act does not preclude an application for the Economic Injury Disaster Loan through the SBA, which provides small businesses with working capital loans of up to $2 million.
Loan Amount: The loan amount available is the lesser of:
Fees and Conditions:
Lenders: The authority to make these loans is extended to lenders determined by the Administrator and the Secretary of Treasury to have the necessary qualifications to process, close, disburse, and service loans made with the guarantee of the Administration. Applicants will work directly with individual banks, credit unions, etc. to apply for these loans.
Overview: Certain employers who do not receive loan assistance through the covered loan program will be eligible for a $5,000/person tax credit.
Qualifying Wages for the Deduction:
Wages paid after 3/12/2020 until 1/1/2021, with further restrictions based on employee count below
Employee Retention Tax Credit is $600,000 (120 x $5,000)
Social Security Tax Deferral Tax Deferral:
Employers will be able to defer payment of the employer-side Social Security tax or Nonpayment during 2020
Other Bill Provisions Emergency Sick Leave Modifications:
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