Broker Check

Business Owners and The CARES Act

| April 09, 2020
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I hope this publication finds you and your family well during this crisis. As we all continue to battle COVID-19, we want to reassure you that Private Capital Group remains fully committed and dedicated to our clients, their families, and their futures.

The government has begun implementing aspects of the CARES Act over the past week and we feel it appropriate to provide some insight on what that means for small business owners and self-employed individuals. Below we have outlined how small businesses and self-employed individuals can partake in the fiscal policies set into place during this crisis.  

Planning for small businesses challenges

No business has been hit harder than small businesses and they are facing a new and challenging list of struggles every day to keep their doors open. Pressure to adopt innovative practices to retain customers, pay employees, and keep both safe and healthy during this crisis will continue to be a challenge in the coming weeks and months. Although much uncertainty still lies ahead, new laws and measures have been implemented to provide relief for small businesses and  self-employed individuals. The CARES Act and the Families First Coronavirus Response Act have instituted five primary measures to help small businesses and self-employed workers:

  • Access to loans and immediate emergency funds for business owners intending to continue to pay employees and remain open and for self-employed individuals, there are two loan types that have become available: Paycheck Protection Program and Economic Injury Disaster Loans.

The Paycheck Protection Program offers an interest rate of 0.5%, with a maximum loan amount of the lesser of 2.5 times your monthly payroll (Maximum compensation $100,000 per employee annually) or $10 million. Portions of this loan may also be
forgiven. The maximum loan used for payroll costs are capped at $100,000 on an annualized basis for each employee. Due to the likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. These loans must be used for payroll, compensation costs, healthcare benefits, rent, utilities, and mortgage interest incurred on existing debt. These loans were first available on April 3rd and may not consist of fees, personal guarantees, or collateral.  

The Economic Injury Disaster Loan is offered by the SBA and can be accessed through an application process on their website. This may include quick relief in as little as three days for amounts up to $10,000. The EIDL may be transferred into the Paycheck Protection Program and may be deducted and eligible for forgiveness. 

  • Existing Small Business Administration Loans may be deferred for a six-month period. Business owners may not be required to make payments and the SBA may pay the lender starting with the next due payment. If current loans are already on deferment, this six-month deferment period will begin after your current deferment has concluded.

  • Debt forgiveness for payroll and operational costs, under the Payment Protection Program, is provided if the funds are used for payroll, mortgage interest payments, rent and utilities during the eight weeks following the loan inception. This forgiveness may not be taxable as gross income.

  • Employer tax credits may be used if your business is closed in accordance with government guidelines or if your business sees a 50% decrease in gross receipts. There are many stipulations to this relief, so be sure to contact your tax advisor for details.

  • Delayed tax payments due between now and January 1, 2021. You can delay payroll tax payments normally due between now and January 1, 2021. Half of these delayed tax payments are to be due on December 31st, 2021, and the other half to be due by December 31st, 2022.  

If you have any questions or concerns on the Cares Act, the Paycheck Protection Program, or the Economic Injury Disaster Loan program, please reach out to your advisor for further clarification.

We wish you and your loved ones all the best during this trying time.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Private Capital Group, LLC (“PCG”), or any non-investment related content, made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Information contained in this communication is based on data gathered from what we believe are reliable sources. It is not guaranteed by PCG as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. Further, you should not assume that any discussion or information contained in this communication serves as the receipt of, or as a substitute for, personalized investment advice from PCG. To the extent discussed herein, investment indices are unmanaged and cannot be purchased directly. Historical performance results for investment indexes and/or categories are included for informational purposes only and generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PCG is neither a law firm nor a certified public accounting firm and no portion of the communication should be construed as legal or accounting advice. A copy of the PCG’s current written disclosure Brochure discussing our advisory services and fees is available upon request.
Please Note: Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W. Dry Creek Circle, Suite 575, Littleton, CO 80120, 303-797-9080. Private Capital Group, LLC   is not affiliated with The Leaders Group, Inc. If you are a PCG client, please remember to contact PCG, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. PCG shall continue to rely on the accuracy of information that you have provided.
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