How Can the Coronavirus Stimulus Plan Help You and Your Small Business?

 

Needless to say, the last four weeks have been nothing short of surreal. Navigating this new normal and doing everything we can to stay positive and not get too rattled by the onslaught of news has suddenly become our primary focus no matter what our walk of life.

Over the last few weeks, I’ve been fielding calls from concerned clients and friends seeking advice and answers to questions regarding their finances. So, I’ve been doing my best to cover how to be proactive and resourceful during this time of uncertainly. I’ve attended more Zoom meetings with colleagues and mentors in the financial services industry in the last four weeks than I have in the last twelve months. All this in an effort to learn as much as I can about the new programs that exist to help people navigate financial hardships, so I can share with you.

Two of those meetings were with CPAs, which was helpful even though the information is still not all that clear and is changing rapidly, almost daily.

 

Please NOTE: I am not a Certified Public Accountant, legal or tax attorney. Nor do I provide legal, tax or accounting advice. Please see your own legal, tax or accounting professional for the most up-to-date information regarding your personal situation.

 

Here is what I can share with you at this point. (Please know that this information is rapidly changing as the situation progresses. So please check and double-check all pertinent dates, figures and specific information as it relates to your situation.)

The Coronavirus Aid, Relief, and Economic Security Act (CARES ACT) is the U.S. government’s plan to help ease the financial hardship that hard-working Americans are dealing with right now, as well as provide some level of aid to small businesses.

The Stimulus Plan includes the new unemployment benefits, the Economic Injury Disaster Loan program (freelancers and solo-entrepreneurs in particular, will want to check this out immediately),  and the Paycheck Protection Program. For more info on the Federal Pandemic Unemployment Compensation, check out this Investopedia article.

To see how the Coronavirus Stimulus Plan components may affect you, check out this article. It includes information on the suspension of Student Loan payments.

 

For those who file taxes as a Solo-entrepreneur, gig-worker or independent contractor (1099 income), you can file for State Unemployment when FEMA declares your state a National Disaster. All 50 states are now under a major disaster declaration.

Stimulus Checks are automatically processed for those who qualify. You’ll not need to apply for this benefit.

 

Retirement Account Withdrawals & Loans

Regarding withdrawals from your retirement accounts, under normal circumstances, you would pay a 10% penalty of early withdrawal from a qualified retirement plan such as a 401K, 403(b) or IRA. However, Congress has lifted the penalty during the Coronavirus pandemic. However, it will count as income, so you’ll have to pay income tax on the money you take out. (Remember, this is money you haven’t paid taxes on yet.)

According to a CBS new piece, the relief package’s provisions include:

• It lets people make early withdrawals from retirement accounts without paying the typical 10% penalty.
• It allows people to take bigger loans from those accounts, up to $100,000 (versus the normal $50,000 max. loan limit)
• It provides an additional year (on top of what a particular plan offers) to repay those loans.

 

Please NOTE: I highly recommend that you DO NOT take a loan against or withdrawal funds from your retirement account if you can help it at all. That is money that is set aside for your future financial security and it should be left untouched until then.

It would be much better for you to cut back on your current expenditures and cut out expenses that are not essential. At least for the time being. Do whatever you have to do to preserve and protect your retirement savings. Your future self will thank you!

 

No RMDs during 2020

Also, for those over age 70 1/2, there will be no Required Minimum Distributions (RMDs) from your qualified retirement accounts required for the year 2020.

Tips for Small Business Owners navigating these benefits

1. Time is of the essence; apply as soon as possible.
2. If filing for small business loan benefits, file in this order: 1) State Unemployment (for solo-entrepreneurs and gig workers). 2) Check with your bank to see if they are offering the PPL (Paycheck Protection Loan) with forgiveness options, and apply immediately. 3) File for the Economic Injury Disaster Loan (EIDL), including Emergency Grant with forgiveness options. This application takes about 5 minutes.
3. Note that not all banks are processing these loans, so you’ll need to call your bank right away to find out if they are.
4. If they approve you for the loan, do not commingle loan proceeds with personal funds. If necessary, open a separate business account (or at the least, a separate personal account) to keep the funds separate. Proper documentation of distributions and how the funds are used will be important.

Small Business Owners: Free Resources for You to Download

For your convenience, I’m sharing access to the following resources. No opt-in necessary. Just click the link and download. 🙂

The Small Business Owner’s Guide to the CARES Act

U.S. Chamber of Commerce Coronavirus Small Business Guide & Checklist

Small Business Loan Options Under the CARES Act

 

Good News: Your Taxes Can Wait!

As a reminder: You have more time to file your 2019 federal income taxes. The new deadline is July 15^th, 2020. (You’ll want to check with your state to see if your state’s deadline has been extended.)

If you need additional time, you can request an extension until October 15, 2020 by filling out Form 4868 form. For details on the new tax deadlines from the IRS, you can review the article on the IRS.gov website here.

 

One Final Point – Stay Positive and Walk in Love

Please do not underestimate the impact negative news can have on your immune system, emotional wellbeing, and nervous system. While this pandemic and its consequences are very real, please remember that This Too Shall Pass. We will get beyond this. We will come out of this. This will not last forever.

Until then, take extra time for self-care, enjoy nature if you can, read uplifting material, and keep your body, mind and spirit strong. Personally, I have found prayer to be extremely comforting at times like this. Studies show that praying has positive effects on the brain, which in turn strengthens your immune system.

Choose to walk in love. Let go of unforgiveness (unforgiveness weakens your immune system). Practice daily appreciation and gratitude.

Be well and God bless!