COVID-19 Resources for Pearland Businesses
We recognize the seriousness of the COVID-19 virus and the impact that it is having on our community. The City and the City’s Economic Development Corporation (PEDC) understand that our local employers are vital to our community’s economy and are committed to facilitating communications and support from state and local resources during this time.
As additional federal and state government resources become available in the future, we will continually update this information. Please contact us if you have any questions.
Below are some local resources that can provide assistance during this disruption.
SMALL BUSINESS ADMINISTRATION (SBA)
Under the Coronavirus Aid, Relief and Economic Stimulus (CARES) Act approved by Congress, additional resources are available to assist businesses impacted by COVID-19. There are two loan programs and a Small Business Debt Relief program from the Small Business Administration to assist businesses impacted by COVID-19. A business may qualify for both the Paycheck Protection Program and Economic Injury Disaster Loan (EIDL) as long as they cover different items. EIDL is directly through the SBA and is now taking applications. The Paycheck Protection Program is through your local lender. See below for more details on all three programs. A guide to the CARES Act for small business owners is available here.
I. SBA ECONOMIC INJURY DISASTER LOAN (EIDL) AND EMERGENCY ECONOMIC INJURY GRANTS
The U.S. Small Business Administration (SBA) is offering low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as the result of COVID-19. The SBA’s Economic Injury Disaster Loan (EIDL) program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. SBA offers the loan with long-term repayments in order to keep payments affordable, up to a maximum of 30 years.
These working capital loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses with a maximum 30 year term. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
The CARES Act also provides an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19. To access the advance, you first apply for an EIDL and then check the box on the application to request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
There is no cost to apply with funds coming directly from the US Treasury and not your bank. SBA will calculate the businesses’ ability to fund itself for the next six months and if it cannot, it is eligible for a loan. There is no required personal guarantee for loans up to $200,000. Collateral is required on EIDLs over $25,000, but a loan will not be declined for a lack of collateral, however will require the borrower to pledge what is available. Payments start the 12th month after the date of the note. There is no obligation to take the loan or draw down entire amount offered.
We encourage you to first reach out to your local bank/lender to see what credit/assistance is available. Also, determine if you are a small business by taking the size standard test.
There is a three-step disaster loan process:
- Apply online: Be sure to check the box that you want to be considered for an advance (emergency grant) of $10,000.
- Loan processing decision: Information will be verified and credit checked and more information may be requested to determine the loan amount. A loan officer will contact you to make a recommendation and discuss the next steps. The SBA’s loan funds are limited and demand is high.
- Loan closes and funds disbursed: Once you sign and submit loan documents, an initial disaster bridge loan of $15,000 will be available.
What You Will Need to Apply
- Review the screenshots of the EIDL application.
Other Information You May Be Asked for Later
- Up to two years Tax Returns with all schedules: IRS Form 4506-T
- Complete copy, including all schedules, of the most recent Federal income tax return for principals (own 20% or more), all general partners or managing members and each owner who owns more than 50% of an affiliate business
- If the most recent Federal income tax return has not been filed, a year-end profit and loss statement and balance sheet for that tax year is acceptable.
- Monthly Sales Figures: SBA Form 1368
- Personal Financial Statement: SBA Form 413D
- Schedule of Liabilities: SBA Form 2022
- A current year-to-date profit and loss statement
- Up to two years Tax Returns with all schedules: IRS Form 4506-T
Additional and up-to-date information can be found on the COVID-19: Small Business Guidance and Loan Resources page on the SBA’s website and Application.
II. SBA PAYCHECK PROTECTION PROGRAM
The Paycheck Protection Program will provide 8 weeks of cash-flow assistance through a 100 percent federally guaranteed loan to small businesses (less than 500 employees) who maintain their payroll during the COVID-19 crisis. If the employer maintains its payroll, the portion of the loans used for covered payroll cost, interest on mortgage obligations, rent, and utilities would be forgiven.
This SBA program is offered by local banks, credit unions and other SBA certified lenders. Please check with your local lender to see if they are participating in the program and if funding is available. To increase the approval time, lenders will have the authority to process, close and service a loan without SBA review. The program was part of the CARES Act approved by Congress and has funding cap.
Small businesses, sole proprietors, independent contractors and self-employed individuals are eligible. The maximum loan amount will be the lesser of $10 million dollars or 2.5 times the average monthly payroll and employee benefits, excluding compensation above $100K, based on the prior year’s payroll. The requirement to have credit elsewhere, collateral requirements and all requirements for a personal guarantees are waived. All principal, interest and fees for six months will be waived. The interest rate is 1.0% fixed rate with a 5 year term. No personal guarantee or collateral is required.
To encourage employers to maintain payroll, the employer can receive loan forgiveness for an 24-week period after the origination date used on payroll cost, interest on mortgage obligation, rent and utilities. Employers that rehire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period. It is not anticipated that more than 40% of the forgiven amount may be for non-payroll cost.
More detailed information can be found at the following links related to the Paycheck Protection Program:
Additional information can be found on the Paycheck Protection Program page on the SBA’s website. Also, the U.S. Chamber of Commerce has issued a guide to help small businesses and self-employed individuals prepare to file for a loan.
III. SBA SMALL BUSINESS DEBT RELIEF
The CARES Act provided the SBA funding that requires it to pay all principal, interest and fees for six months on all core existing non-disaster SBA loan products, including 7(a), Community Advantage, 504 and microloan programs. Please contact your lender to see if your existing loan qualifies. This relief will also be available to new borrowers who take out loans within six months.
The Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.
- Up to $25,000
- Fast turnaround
- Will be repaid in full or in part by proceeds from the EIDL loan
FEDERAL INCOME TAX FILING DATE AND STATE FRANCHISE TAX DEADLINE DEFERRED TO JULY 15
Federal income tax returns, along with Federal income tax payments, that were due April 15, 2020, have been automatically postponed to July 15, 2020 without any interest or penalties. Originally, the IRS was allowing tax payments to be deferred until July 15, but returns would still be have been required to have been filed by April 15, but this was later revised to also extend the filing of tax returns to July 15. Learn more.
In addition, the due date for 2020 State of Texas franchise tax reports has also been extended to July 15. Learn more.
FEDERAL TAX CREDIT FOR REQUIRED PAID LEAVE
The Families First Coronavirus Response Act (Act), signed into law on March 18, 2020, allows small and midsize employers two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing the act’s required Coronavirus-related leave to their employees. All businesses with fewer than 500 employees are eligible to receive funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation is designed to enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.
Eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS. The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees. Learn more (including examples) on the tax credits.
TAX PROVISIONS FOR BUSINESSES
The CARES Act has multiple provisions to assist business with cash flow and liquidity to encourage businesses to keep employees on the payroll during the COVID-19 crisis. We encourage you to reach out to your accountant/tax preparer to see which provisions can benefit your business. A few of the provisions include:
- Eligible employers receive a credit against applicable employment taxes for each calendar quarter in an amount equal to 50% of the qualified wages for each employee. Credit is not available if taking advantage of the small business interruption loan.
- Payroll taxes deferred for most employees from March 27 to December 31, 2020. Half deferred until December 31, 2021 and the other half to December 31, 2022.
- Net Operating Loss provision allows businesses to apply losses from 2018, 2019 or 2020 to past years’ profits and claim refunds.
- Business interest provision temporarily allows increase in the interest deduction from 30 to 50 percent for 2019 and 2020.
Employees working reduced hours or that have been laid off/furloughed because of COVID-19 will be eligible for unemployment. The CARES Act passed by Congress increases the amount customarily available for unemployment by $600 per week until July 31, 2020.
Congress expanded benefits to self-employed, independent contractors and “gig workers” who normally don’t qualify for unemployment benefits, but may qualify under Disaster Unemployment Assistance (DUA). You should first apply for regular unemployment so the state can determine you are ineligible for benefits before applying for DUA. The expanded benefits for independent contractors or self-employed individuals are being funded through the CARES Act.
Additional information for employers from the Texas Workforce Commission for employers and filing for unemployment.
TEXAS WORKFORCE COMMISSION – SHARED WORK PROGRAM
The Texas Workforce Commission (TWC) encourages employers to enroll in Shared Work program as an alternative to layoffs. The voluntary Shared Work program was developed to help Texas employers and employees withstand a slowdown in business such as the impact of COVID-19. For more information on the Shared Work Program or to apply for the program, click here.
TWC resources for employers can be found here.
CDC: INTERIM GUIDANCE FOR BUSINESSES AND EMPLOYERS
The Centers for Disease Control and Prevention has released guidance to assist businesses and employers plan, prepare and respond to Coronavirus Disease. The CDC will update this interim guidance as needed and as additional information becomes available.
HOUSTON WORK SAFE PROGRAM
Greater Houston Partnership has released tools and guidance to assist employers as the Houston region moves to reopen our economy. Learn more.
LOCAL PUBLIC HEALTH RESOURCES
Pearland continues to work with local, regional and state partners to monitor and prepare for Coronavirus. We encourage you to visit the local County Public Health information pages for the most recent local information.