COVID Financial Management
COVID-19 Relief for Restauranteurs and Retailers
- Many restaurants and retailers have been directly impacted by the coronavirus pandemic.
- The federal government has passed legislation designed to support individuals and businesses while attempting to stimulate the economy.
- Determine what steps you can take to protect your business during this potential disruption.
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Who could have imagined our world would be turned upside down so quickly by COVID-19? We’ve seen the effects of the pandemic on restaurants and retail businesses, both large and small. The government is trying to move quickly to help these businesses, and it is important for businesses to be aware of the various programs available.
Phases of legislation introduced
The government’s initial response was to pass the Families First Coronavirus Response Act (FFCRA). This legislation provides benefits to employees related to sick leave and additional family and medical leave. While the FFCRA provides a tremendous benefit to employees, the economic strain to employers was recognized: the legislation also comes with a tax credit for employers that covers the cost of wages and health insurance coverage related to qualified employees requiring time away from work. This credit would be reflected on the employer’s quarterly payroll tax return against the employer’s portion of payroll taxes. Additionally, this credit is refundable if it exceeds the employer’s portion of payroll tax due.
The government’s second step was to pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law March 27 and provides approximately $2 trillion in overall stimulus. The CARES Act provides many levels of assistance, which include:
- Sending stimulus payments directly to taxpayers via checks or direct deposits based on income levels, filing status, and number of dependents. The government has indicated these checks should be issued as quickly as possible, allowing individuals to use these dollars to stimulate their local economies.
- Providing individuals additional unemployment benefits of up to $600 each week for a period of four months. The retail and hospitality industries have been forced to lay off much of their workforces as closures and reduced services were mandated. Although many states implemented emergency unemployment, allowing benefits to be available immediately and without impact to the employer, these federal benefits may potentially help many who are suddenly without income.
- Allowing the Small Business Administration (SBA) the ability to secure loans of $350 billion to assist small businesses. This portion of the legislation, referred to as the Paycheck Protection Program, provides eight weeks of cash flow to businesses with fewer than 500 employees. The program provides a maximum loan of $10 million with a maximum interest rate of 4%. If employers maintain payroll, these loans will be forgiven. In addition to the SBA, many states offer these loans as well. Check with your CLA advisor to see if your state has a program available to you. (For example, Illinois and Wisconsin are offering low-interest loans as well as grant programs for qualified businesses.)
- Creating a $10 billion program for small businesses that applied for an Emergency Injury Disaster Loan (EIDL). All small businesses impacted by COVID-19 are encouraged to apply for this loan to aid in working capital needs.
Steps you can take
As many businesses are forced to make the difficult decision to temporarily close, please consider the following:
- Check your insurance policy or contact your insurance provider to confirm whether your policy covers business interruptions related to COVID-19.
- Reach out to your bank to begin communications before loan payments become difficult or impossible; some banks are offering 90-day deferrals.
- Call your landlord to discuss discounted or suspended payment agreements.
- Watch the mail for notices from your state unemployment agency, since many of these agencies are processing claims as quickly as possible to assist unemployed individuals (however, they often require correspondence from the employer).
- Temporarily suspend all services that are not essential, which includes cable, garbage, delivery services, etc.
Additionally, be sure to visit your local association websites for restaurants, taverns, grocers, and retail merchants. These associations are fighting for benefits and are providing up-to-date information as well.
How we can help
During these uncertain and ever-changing times, our goal is to keep our clients informed as we become aware of new information, while providing smart strategies and insights to respond and prepare. Visit our COVID-19 Resource Center for more details and updates related to COVID-19. In the meantime, stay safe and healthy and please reach out to your CLA team with any questions.Contact Us