COVID-19 is literally putting a pause button on flower business cash flows, enter the Families First and CARES Act which offers significant relief to floral businesses.
The Paycheck Protection Program provides direct financial assistance to florists and there are guidelines for forgiveness. It’s not clear if the government funds will run out or if it will be replenished, so YOU MAY WANT TO ACT SOON!
Note: you should consult your accountant/bank before taking action and use the CAREs Act (let us know if you need a recommendation).
Paycheck Protection Program (PPP)
The PPP program to provide direct funds to cover payroll expenses and can be forgiven.
- PPP Gives 2.5x monthly payroll
- Example: If your monthly payroll is $10,000, you could get a PPP grant for $25,000
- No personal guarantees required; cover sole proprietors, contractors
- Proceeds will be paid out a week after application completed and accepted.
- PPP Forgiveness up to 100%
- Forgiveness if hiring back staff by June 2020
- Forgiveness available if used for specific categories of spending:
- Payroll, healthcare (company part), state/local taxes, rent, utilities
- Any un-forgiven amount will be payable over 2 years at interest of 0.5%.
- How To File
- Loans are made through local lenders (e.g. Chase, Bank of America). Change it to Speak to your Bank Account rep today!
- What you Need to File
- Average Monthly Payroll Amount
- Number of Employees
- Annual Revenue
- Incorporation Date
- Documents showing payroll (e.g. 941 or Business Tax Returns)
Economic Injury Disaster Loans (EIDL)
A separate program, Emergency Economic Injury Grant – loan to help run your business. In addition to this loan the SBA is offering an immediate $10,000 advance for working capital, they claim it will be paid within three days of applying. To get the advance, you must first apply for an EIDL and then request the advance. The advance does not need to be repaid (up to the $10,000).
- EIDL Loan
- Rates are 3.75%, 30 Year Term
- Payments are deferred a full year from the date of the loan
- Loans are approved based on credit score
- Loans under $200,000 can be approved without a personal guarantee
- No collateral like real estate is needed
- What’s new here?
- Now available to a sole proprietor, contractors
- $10,000 in an emergency grant cash advance that can be forgiven if spent on paid leave or maintaining payroll
- Faster approval process – based on self-certification so less red tape
- Previously you had to show an inability to get funds from another source
- No Forgiveness
- There is no Forgiveness, this is just a loan
Filing Taxes and Extensions
- 2019 Tax Filing deadline – moved from April 15 to July 15
- No estimated taxes – for Q1 and Q2 are due; pay 75% of estimated on Oct 15
- Matching SS, Medicare – taxes (the 941 company portion) are not currently due. Can put off without interest/penalty.
Employee Retention Tax Credit
The goal is to encourage companies to retain their current payroll as-is:
- Tax Credit
- Of as high as 50% of wages paid to an employee up to $10,000 in wages.
- To qualify
- Full/part shutdown due to Coronavirus or decline in revenues of 50% or more
- Can’t be taken alongside other COVID-19 loans
The FDIC is encouraging banks to go easy on borrowers and credit cardholders. This might include, “waiving fees on late or missed credit card or loan payments and waiving early withdrawal penalties for out-of-work savers who need access to money locked up in CDs,” according to Forbes.