Securing Your Finances During COVID-19
The priority is to keep your business open, and that requires having sufficient funds in place. Take advantage of applicable loan options, business credits, and other financial programs that can help you at this critical juncture of the coronavirus pandemic.
PPP and Loan Forgiveness
A Paycheck Protection Program (PPP) loan can help you keep employees on payroll, bring back those you furloughed, and cover certain overhead costs. PPP loans may be forgiven if funds are used on eligible covered costs.
Employee Retention Tax Credit
A refundable federal tax credit against employer payroll taxes for businesses that complied with government order to partially or fully suspend operations, or recognized significant reduction in gross receipts but retained their employees. Businesses can only claim the credit on wages that are not forgiven or expected to be forgiven under the Paycheck Protection Program (PPP).
Eligible employers can:
Under the CARES Act: Claim the credit against 50% of qualified wages/health plan expenses up to $10,000 per employee annually for wages paid between March 13 and Dec. 31, 2020.
Under the Consolidated Appropriations Act, 2021: Claim a credit against 70% of qualified wages paid up to $10,000 per employee per quarter for the first two quarters of 2021.
Under the American Rescue Plan Act of 2021: Claim the credit against 70% of qualified wages up to a $10,000 limit per employee per quarter for all of 2021. Under this law, certain startup businesses — those started after Feb. 15, 2020 that were forced to shut down due to government order — may be allowed a credit of up to $50,000 per quarter.
The deadline to claim this credit is Dec. 31, 2021.
The law also reverses IRS guidance to allow a tax deduction on PPP forgivable expenses and makes it effective as of the enactment of the CARES Act on March 27, 2020.
Payroll Tax Deferral Period
Employers can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from March 27, 2020 – Dec. 31, 2020.
How deferred repayments are split and paid
- 50% due Dec. 31, 2021
- 50% due Dec. 31, 2022
Deferring payment of employer payroll taxes
Employers can now defer or continue to defer payment of the employer share of Social Security taxes even after PPP loans are forgiven.
Other Funding Options
You and your accountant might determine there are better courses of action to obtain financing based on your business and industry needs.
Small businesses that don’t qualify for traditional small business financing may find other opportunities through SBA loan programs.
Main Street Lending Program
Established by the Federal Reserve to support lending to businesses that were in sound financial condition before the onset of COVID-19.
Business lines of credit
Monthly payments and interest are determined based on how much of the open line of credit you use.
Depending on the amount financed, loans can be either short-term or long-term, and can generally be secured from any lender.
Get the ultimate peace of mind for your business — payroll funding services to help you pay employees during and after the pandemic.
We provide you the flexibility to extend the collection of payroll funds from your bank account by up to seven days without interruption of services or insufficient fund charges.
Business Credit Service
Paychex sends payment history to credit bureaus with the goal of building your business credit file and improving your ability to secure attractive financing terms.