Lawyers and law firms impacted by the coronavirus outbreak can access a variety of business assistance resources under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The coronavirus pandemic has brought with it not only extensive public health impacts, but also economic ramifications that are leaving many businesses and employers wondering how to keep their operations going during this time of uncertainty. We wanted to make lawyers and law firms aware of some small business assistance programs that have recently become available under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act and related initiatives. The options below include forgivable loans, disaster loans, grants, tax benefits, and more.
Paycheck Protection Program
- This program provides $349 billion in Small Business Administration (SBA) administered loan and loan forgiveness relief to small businesses.
- Eligible entities include businesses with fewer than 500 employees, sole proprietors, independent contractors, and people who are self-employed.
- Loans are available in amounts of up to $10 million for expenses such as payroll, rent, mortgage interest, utilities, and certain group health plan costs.
- Borrowers do not need to provide collateral or make a specific showing regarding coronavirus-related losses.
- Lenders must defer all loan payments for a minimum of 6 months.
- Loan proceeds spent on payroll, rent, mortgage interest, or utilities during the 8-week period after the loan is funded can be forgiven up to the full amount of the loan, and the forgiven amount is not considered taxable income. Note that the forgiveness amount is subject to reduction in the event of employee terminations or pay reductions.
- Paycheck Protection Program loans are available until June 30, 2020.
SBA Economic Injury Disaster Loans
- Businesses affected by the coronavirus pandemic across the US can also access low-interest SBA disaster assistance loans in amounts of up to $2 million for expenses such as payroll and accounts payable.
- These loans include a $10,000 immediate grant that can be awarded to borrowers within 3 days of submitting an application.
- Disaster assistance loans related to COVID-19 are available until December 31, 2020, but cannot be used to pay for items for which a borrower has already used a Paycheck Protection Program loan.
Other SBA Assistance
- If your business has an existing relationship with an SBA Express Lender, you may be able to obtain up to $25,000 through the SBA Express Bridge Loan Pilot Program while an economic injury disaster loan application is pending.
- The SBA is providing debt relief to new 7(a) loan borrowers by covering principal and interest payments for 6 months.
- Employers with fewer than 500 employees can access 100% reimbursement, subject to per diem and aggregate caps, for paid leave given to employees pursuant to new leave requirements enacted under the Families First Coronavirus Response Act.
- Employers and self-employed individuals have the option of deferring payment of the employer portion of Social Security payroll taxes incurred from the CARES Act’s date of enactment until December 31, 2020. Half of the deferred amount will be due by the end of 2021, and the other half will be due by the end of 2022.
- Employers whose businesses have been fully or partially suspended, or whose gross receipts are below 50% of what they were in a comparable quarter in 2019 due to COVID-19, are eligible to receive an employee retention credit of 50% of qualifying wages up to $10,000 paid between March 12, 2020 and January 31, 2021. This credit is not available to businesses that take out SBA loans.
- Prior year tax returns can be amended to distribute net operating losses from 2018, 2019, and 2020 to the prior 5 years, and there is no limitation on taxable income.
- For attorneys looking for ways to take their practice virtual during the COVID-19 pandemic, this list offers a number of free products and resources.
- With regard to implementing video chat and conferencing options for your firm to comply with social distancing and shelter-in-place rules, Justia recently published this guide to free and low cost video apps and services. Once you have chosen one, you can add it to your Justia Lawyer Directory profile to let your clients know how they can communicate with you by video chat.
We hope that you and your families are staying healthy under these difficult circumstances, and we encourage you to take all necessary steps to stay safe and promote public health. As we all learn to navigate the evolving circumstances associated with the pandemic, we are dedicated to helping you minimize disruptions to your law firm operations and remain as available as possible to your clients.
Disclaimer: The information in this post (“post”) is provided for general informational purposes only. No information contained in this post should be construed as legal advice from Justia Inc., nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.