Small business tax resources for coronavirus

Third coronavirus small business financial and tax relief

Finally, some good news for small business owners. You’ve been hit especially hard during the pandemic, but aid is still available to help keep you afloat. The new American Rescue Plan (ARP) Act included $48 billion in new small business support. This much-needed lifeline includes:

• New Economic Disaster Loans (EIDL) Grants for businesses in low-income communities and exclusive access to certain business owners
• Dedicated funding for restaurants, bars and other food and drinking establishments

Need help understanding how the new relief bill might benefit you? Our Block Advisors small business certified tax pros can help you make sense of it all.

Please note: The Paycheck Protection Program application period has ended. For details on the loan eligibility and tax impacts, review our Paycheck Protection Program article.

New Economic Injury Disaster Loan program measures for those hardest hit

The Economic Injury Disaster Loan Program (EIDL) was intended to get money quickly to small business owners to alleviate cash flow issues caused by the pandemic. The ARP Act will ensure money is quickly distributed to the hardest-hit by:

• Targeting $10,000 advance grants for low-income communities for businesses with no more than 300 employees that have a loss of more than 30%;
• Providing supplemental grants of $5,000 for businesses in two stages: First for those with no more than 10 employees that have been “severely” (loss of 50%) and second for those “substantially” impacted (loss between 30-50%). With these supplemental grants, some businesses may be eligible to receive up to $15,000;
• Extending the covered period for emergency EIDL grants through Dec. 31, 2021;
• Allowing more flexibility for the SBA to verify grant applications and extending the time for SBA to approve and disburse emergency EIDL grants from three to 21 days;
• Authorizing an additional $15 billion for emergency EIDL grants.

How you can secure new funding

This new round of funding also has set-asides for community lenders to assist hard-to-reach communities and unbanked or underbanked small businesses. If you’re interested in applying for an EIDL loan, you can submit your application with the SBA. For additional qualification details, visit sba.gov.

The Impact to Your 2020 Small Business Taxes

How will all this impact your 2020 taxes?

• Money received from your forgivable PPP loan will not be included in your gross income at the federal level.
  • You will need to check your state to determine if the forgiven loan will be taxable on your state tax return.
• You can deduct qualifying expenses paid with the proceeds of a forgiven PPP loan or emergency EIDL grants. Good news: this overrides previous IRS guidance.
• In addition to payroll, mortgage interest, rent or lease payments and utilities, forgivable PPP expenses have been expanded to include:
  • Personal Protective Equipment (PPE) and investments in adapting your business to comply with health and safety guidelines;
  • Operational expenses for payments on software and other items for HR and accounting needs;
  • Essential supplier costs to keep your business open, including perishable goods;
  • Property damage as the result of public disturbances that aren’t covered by insurance.
• If you provided paid sick leave and paid family and medical leave in 2020, your employer tax credits can be extended through March 31, 2021. The maximum wage amount and percentage of self-employment income were also increased with the ARP Act.
• The employee retention tax credit is a refundable tax credit against certain employment taxes. The ARP Act extends this credit until Dec. 31, 2021.

We know this information is complicated, but you don’t have to go it alone. Block Advisors small business certified tax pros are here to help.

Our small business tax professional certification is awarded by Block Advisors, a part of H&R Block, based upon successful completion of proprietary training. Our Block Advisors small business services are available at participating Block Advisors and H&R Block offices nationwide.