Summary of Small Business Relief in COVID-19 Legislation
For Companies:
I. Paycheck Protection Program1
a. Cash flow assistance to small business with 500 employees or fewer from the SBA
b. Low interest loans equivalent to 2.5x average monthly payroll costs or $10 million,
whichever is less.
c. Meant to cover payroll costs, paid sick leave, supply-chain disruptions, employee
salaries, health-insurance premiums, and mortgage payments.
d. If the employers maintain their payrolls until June, the portion of the loans used for payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven (i.e. the loan becomes a grant).
e. Reduction in headcount proportionately reduces the amount of loan forgiveness.
f. A similar program is available for companies with more than 500 employees through the
Federal Reserve.
II. Employee retention credit2
a. Refundable credit against payroll taxes (employer 6.2% OASDI).
b. Credit amount of 50% of up to $10,000 in wages paid per employee (maximum credit
$5,000 per employee)
c. Applies to companies affected by COVID-19 shutdowns or 50% reduction in revenues
from same calendar quarter in the prior year.
III. Delay of payment of employer payroll taxes3
a. Allows employers (and self-employed individuals) to defer payment of the 6.2 percent employer-side Social Security payroll tax, effective for wages paid between the date of enactment and December 31, 2020.
b. Payment ultimately would be due in equal parts on December 31, 2021, and December 31, 2022.
IV. Net Operating Loss (NOL) carryback rules reinstated and expanded
a. NOLs from tax years 2018, 2019, 2020 can be carried back 5 years to claim refunds from taxable years
V. Due date for Federal income tax returns and payments due April 15, 2020 automatically
4
1 Coronavirus Aid, Relief, and Economic Security (CARES) Act 2 Id.
3 Id.
4 IRS Notice 2020-18
