I hope you are all hanging in there. I wanted to share the following information regarding provisions of the CARES Act that are applicable to craft breweries.
Paycheck Protection Loan
One of the biggest benefits to small businesses in the CARES act is the Paycheck Protection Program loans through the SBA. These loans are based on 2.5x your average monthly payroll costs (includes wages, tips, commissions, health insurance, retirement plan costs, and unemployment taxes) and can be forgiven if you use those funds within the first eight weeks of the loan on payroll costs and for rent, mortgage interest and utilities costs (although only 25% of the proceeds can be used for rent, interest and utilities). Any remaining loan balance after the forgiveness is to be repaid within 2 years at an interest rate of 0.5%
See our video below for more details.
SBA 7a Loan Subsidy
For those breweries with existing 7a loans, you can get a subsidy from the SBA that will pay your loan (principal and interest) for six months. More details will be released later this week from the SBA on how to apply to get this.
Under the CARES act, recovery rebates are being sent to each adult for $1200 each and children for $500 each. A family of four would receive a check for $3400.
There are income limitations in place for single filers and married filing jointly filers. The income is based on your 2019 return or if that is not filed your 2018 return. There may be some tax planning that needs to happen if your 2018 income is below the threshold and your 2019 income is above the threshold. More information is below on our video over this subject.
Payroll Tax Credits
For those businesses that had to shut down or significantly reduce operations, but continue to pay staff, there is a Employee Retention Credit in place that will give you a credit up to certain qualified wages and limits on the employer’s share of the social security credits. This credit cannot be used with the Paycheck Protection Program.
There is also a payroll tax deferral in place for the same employer’s share of the social security taxes that pushes payment of those 2020 amounts to 2021 and 2022.
Finally, for those businesses who have employees using the emergency paid sick leave and FMLA, there is an advanced credit you can receive instead of waiting to file your 941s and get refund there. More info is in the video below.
Federal Excise Tax Extensions
The TTB put in place yesterday 90 day extensions to pay and file the Q1 and Q2 Brewers Report of Operations and excise taxes. This basically means that your Q1 reports and taxes are now due 90 days later than they normally would have been.
Please let us know if you have any questions on these law changes. You can reach directly out to me at firstname.lastname@example.org