This article was originally published on April 1, 2020.
1. Payroll Protection Plan (PPP) expands loan access and provides forgiveness to employers who maintain payroll
According to Coach Brian Duprey, this is arguably the most important resource for preschool and childcare providers.
What it is: The PPP gives lenders such as banks and Community Development Financial Institutions (CDFIs) $349 billion to make loans with less restriction around who’s eligible and what’s forgivable. This is designed to encourage lenders to provide loans that help small businesses make payroll, provide benefits to workers, and make necessary payments, such as utilities, mortgage, and rent. Businesses who qualify can get the lesser of either two and a half months worth of eligible payroll costs or $10 million (Ankin Gump). You’ll need to have your full time equivalent (FTE) levels the same or similar to what it was before the COVID-19 crisis in the eight weeks after you accept this benefit to maximize what’s forgivable. PPP provides a strong incentive for providers to maintain their staff on payroll, as well as the resources to be able to do so even during periods of closure or low enrollment. Keep in mind, PPP loans are forgivable, so you can also apply for SBA Disaster Relief Loans when PPP money runs out. Learn more about the details of the PPP here.
Who qualifies: Sole proprietors, self-employed individuals, nonprofit organizations, for-profit small businesses, and businesses with multiple locations with less than 500 employees per location are eligible to apply.
How to take advantage of this benefit: Small businesses and nonprofits can apply starting April 3, 2020. Visit the U.S. Small Business Administration’s (SBA) loan program website to find potential lenders that can offer loans to your center.
2. Tax credits for keeping idled workers on payroll
What it is: You can get a refund, formally known as an Employee Retention Credit, if you keep workers on payroll during the COVID-19 crisis. This means you can receive reimbursement for half of what you spend on payroll expenses (which includes paid sick and family leave), up to $5,000 per staff member for wages paid after March 12, 2020 and before January 1, 2021.
Who qualifies: You need to be able to prove that you took at least a 50% decrease in revenue compared to the same quarter in previous years. Keep in mind, you can’t receive this credit and certain SBA loans mentioned above, so you’ll need to choose which relief option makes the most sense for your center.
How to take advantage of this benefit: Report your qualified wages and related credits for each quarter on your federal employment tax return. According to the Internal Revenue Service (IRS), “eligible employers can fund qualified wages by accessing federal employment taxes, including withheld taxes, that are required to be deposited with the IRS or by requesting an advance of the credit from the IRS”. Learn more about the Employee Retention Credit here.
3. Funding for subsidized child care
What it is: The CARES Act allocates $30 billion for education relief, including providing $750 million to Head Start for emergency staffing needs and $3.5 billion to the Child Care Development Block Grant program to support essential workers like health care providers and first responders (source) and to support online learning.
Who qualifies: The funding goes directly into state-funded subsidy programs (i.e., Head Start) and grants. Although individual centers may not directly benefit from the Head Start package, more families may inevitably qualify for subsidized child care if the unemployment rate rises due to COVID-19. Remember, in most states, any children on subsidy will continue to receive full tuition coverage, so connecting your families with subsidy resources may benefit you both. Moreover, if your center provides services to essential workers, you may be eligible to receive funding from the Child Care Development Block Grant.
How to take advantage of this benefit: Visit your state’s subsidy program website to learn about guidelines and how they’re distributing these resources. You may also want to consider connecting certain families with childcare financial assistance resources.
4. Laid off or furloughed staff receive additional support
What it is: With an increasing number of businesses having to lay off or furlough staff, the CARES Act aims to support unemployed workers by providing an additional $600 each week on top of existing state unemployment benefits until July 21, 2020.
Who qualifies: This relief package expands unemployment eligibility to those who previously did not qualify for unemployment benefits, such as independent contractors, workers who are still employed but can’t work due to illness or caregiving responsibilities related to COVID-19, and those who were hired for a new job but were unable to start due to reasons related to COVID-19.
How to take advantage of this benefit: If a staff member or someone you know needs these unemployment benefits, you can direct them to their state’s unemployment benefits program to file a claim. Keep in mind, unemployment offices are experiencing a dramatic uptick in these types of requests, so although the goal is to get benefits into the hands of workers immediately, advise your staff that the process may take longer than expected.
5. Eligible individuals and families receive one-time payments
What it is: In addition to the benefits mentioned above, there’s additional help on the way for certain individuals and families in the form of a one-time payment of $1,200 or less for individual taxpayers and $2,400 for married couples filing jointly, plus an additional $500 for each child under the age of 17.
Who qualifies: All legal U.S. residents that are not claimed as a dependent on someone else’s tax return and who make less than a gross income of $75,000 individually or less than $150,000 for married couples who file jointly, are eligible for this benefit.
How to take advantage of this benefit: The IRS will look at 2019 or 2018 tax returns and transfer the money to individuals and families via direct deposit. The IRS is working on building a portal where people can update their tax information as needed. If you or someone you know qualifies for this benefit, you may want to use Forbes’ stimulus check calculator to help you gauge how much you might receive from the IRS.
6. Deferred payroll taxes for the rest of 2020
What it is: Employers (which includes self-employed individuals) can delay their portion of Social Security payroll tax for the rest of 2020 and pay it back over the next two years, though you’ll need to pay 50% of it by the end of 2021. As a provider, you’ll still have to withhold taxes from paychecks and give it back to the IRS, but your half of payroll taxes will be delayed, which should give you more funds to allocate elsewhere during this crisis.
Who qualifies: All taxpayers qualify, regardless of their income tax liability.
How to take advantage of this benefit: All of your social security taxes that you originally planned to deposit between March 12, 2020 and December 31, 2020, are not required to be deposited on your normal deposit schedule. You can choose to deposit half of what’s required by December 31, 2021 and the remainder of your deferred taxes by December 31, 2022. The IRS is expected to revise Form 941 (Employer’s Quarterly Federal Tax Return) to track your decision to defer tax deposits.
We know how critical your services are for students, families, and communities, and we are inspired by your commitment to early education -- now more than ever. We hope this resource helps simplify the CARES Act so you can take immediate action to receive the much needed relief you deserve. We are in this together as an early childhood learning community, and our top priority is supporting your needs. If you have any feedback or ideas on what else we should cover, please let us know by emailing us at email@example.com.
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