Stimulus Loan vs. Tax Relief: Which is Better for Your Small Business?

stimulus loan

The recent stimulus legislation has provided support for small businesses facing economic hardship during the coronavirus crisis. There are two choices: 1) a combination of tax credits and the deferral of payroll deposits and 2) a loan known as the Paycheck Protection Program (PPP). These two options are mutually exclusive, meaning if you take the PPP loan you cannot take the tax credit or defer payroll tax deposits and vice versa. It can be difficult to determine which would be best for your business, but there are some key differences that can make a big difference. Let’s take a closer look.

PPP Loans

Administered through the Small Business Administration (SBA) and applied for through banks or other financial institutions, the Paycheck Protection Program loan can be converted into a grant and is available to businesses with 500 employees or less. For restaurants and hotels, the 500-employee limit applies to each individual location, not the business as a whole.

While the business cannot fold, it does not have to be open and operational during the crisis in order to qualify for the loan. Employees don’t have to work in order to receive their payroll. The ultimate goal of the PPP is for businesses to be able to continue paying employees throughout the crisis.

A PPP loan will be forgiven and turned into a grant if the small business can sustain its payroll for a minimum of eight weeks and use the loan proceeds only for salaries and essential operating expenses like utilities and rent. No more than 25% of the loan can be used for non-payroll costs in order to be forgiven. If the loan is eligible to become a grant, the interest (initially set at 1%) still has to be paid by the business. The maximum loan amount is either $10 million or 2.5 times the monthly payroll, whichever amount is less. The payroll for each employee is capped at $100,000 per employee. Terms of the loans are set by the Small Business Association.

ERTC

The second option is called the employee retention tax credit (ERTC). This credit is taken against payroll taxes. To be eligible for the ERTC, a business’s operations must be suspended by a government authority OR experience a 50% or greater decline in tax receipts for any quarter in 2020 compared against the same quarter in 2019. Eligibility ends when the business’s gross receipts are greater over one quarter of 2020 than 80% of if its receipts for the same quarter in 2019.

The credit includes up to 50% of wages paid from March 12th through the end of the year. The maximum a business can receive is $5,000 per employee against 2020 payroll taxes (both Social Security and Medicare). Since the credit is refundable, a business will receive a payment from the government if the credit exceeds the payroll taxes due. In addition to the ERTC, a business can defer deposits of payroll taxes due in 2020. One half of the deferred taxes must be paid by the end of 2021 and the other half by the end of 2022.

In order to determine which of the above options is right for your business, it’s important that you have a thorough understanding of both. Generally, businesses with higher-salaried employees will benefit more from the PPP loans/grant option while businesses with lower-salaried employees will get more out of the ERTC, but this is not always the case.

IMPORTANT: How fast do you need the money? The PPP requires an application and approval process. You can take advantage of the ERTC option immediately, but you will have to wait for any refunds from the tax credits.

Reach out to us if you need help deciding which option is best for your small business. We are excited by how many small NJ business owners we have been able to help stay afloat thus far!

 

 

 

 

 

 

 

 

 

The Impact of Coronavirus on the NJ Real Estate Market

With the whole world seemingly coming to a standstill amid the 2020 coronavirus crisis, the New Jersey real estate market is starting to show signs of distress. Buyers are uncertain about leaving the house and sellers aren’t keen on letting strangers into their home. With the financial crisis destabilizing the economy on top of the current health crisis, many buyers and sellers are deciding to sit tight until this is all over. It can be hard to make confident decisions about real estate plans in the midst of all these unknowns. Here is what you need to know about the NJ housing market going forward.

Exactly how the coronavirus crisis will impact the real estate market is yet to be seen. The overall U.S. housing market saw a good start at the beginning of 2020. The virus has caused the real estate market to take a slower, more cautious pace. As the situation develops, there has been a significant slowdown in real estate listings at a time of the year when listings are normally at their highest. Another sign that the housing market is likely to slump: mortgage applications are down 24% from this time last year, despite mortgage rates being at an historic low. Refinance applications, however, are up 168% from where they were this time last year.

Despite this, those looking to enter the real estate market this spring are not totally out of luck. While the number of potential buyers is lower than normal, they are still there. And while some sellers are nervous to let outsiders into their homes, many sellers are adapting to the coronavirus challenge by asking potential buyers to follow additional hygiene rules. Buyers and sellers can wear masks, booties over shoes, and be mindful of keeping their distance. Frequent cleanings of a property can also help ease the minds of sellers and buyers during a transaction.

On the other hand, buyers can expect fewer bidding wars and more time to negotiate a better deal. As investors flee stocks for the safety of US bonds, buyers will notice that mortgage interest rates are increasingly favorable. We have already started to see this with some of the lowest rates in the history of the housing market. If you are looking to buy a home, now might be THE BEST time to do it if you can work through the logistics of social distancing.

For buyers, sellers, and realtors, there has been a big shift towards online real estate platforms to combat logistical issues caused by the coronavirus. People are utilizing real estate tools like Zillow, Trulia, and Realtor.com for their housing searches now more than ever before. Virtual tours, digital walk-throughs, and video conferencing are temporarily replacing traditional in-person interactions.

The full impact of the crisis is not yet known, but as long as you are making informed decisions and remain flexible, you should not be afraid to move forward with your plans to buy or sell a house in New Jersey this spring. Veitengruber Law will remain available throughout this crisis to offer expert advice and help you achieve your real estate goals.

Dealing with Financial Stress Due to COVID-19

Covid-19


Are you aware of the impact of long-term stress on the human mind and body? Now, more than ever, it’s crucial to be aware of the strain money woes can put on your body AND mind.


The arrival of COVID-19 has brought with it a barrage of physical illness, hospitalization, and even death. An effect of the virus mentioned much less often, that can also have a disastrous effect on lives, is the psychological stress so many are experiencing.

Not knowing when you’ll receive your next paycheck while the pile of overdue bills on your kitchen table grows, can have a negative impact on your health. The body’s “fight or flight” response is meant to be a helpful boost of adrenaline to get us through temporary challenging situations. The problem arises when the situation shifts from temporary to long-term.

Any stressor that puts the body into “fight or flight” mode for longer than an hour or so is going to wreak havoc on many bodily functions. The adrenaline rush that comes with being stressed causes an increased heart rate and blood pressure, dilated pupils, heightened brain function, and a higher intake of oxygen.

If stressors are present over a long period of time (like during a global pandemic), other health issues will begin to arise. In combination with a poor diet and lack of exercise, chronic stress is one of the leading causes of heart disease. Other complications from long term stress (money worries in particular) include:

  • Migraines
  • Sexual dysfunction
  • Asthma
  • Gastrointestinal issues
  • Chronic high blood pressure
  • Diabetes
  • Intractable all-over body pain
  • Stomach ulcers 
  • …and more

It’s generally not a good idea to make any important decisions when you’re under a lot of stress because your state of mind isn’t primed to make good judgement calls. Unfortunately, it’s pretty common to make bad choices when dealing with things like the fear of not being able to pay your monthly living expenses. Money stressors can incite depression or PTSD in some people, which can then lead to a downward spiraling cycle of Overspending, Guilt, and Fear; Lather, Rinse, Repeat.

In addition to depression and PTSD, stress can trigger other psychological problems like:

  • Anxiety
  • Insomnia
  • Sleep apnea
  • Narcolepsy
  • Restless leg syndrome
  • Hypersomnia
  • Anger issues
  • Hopelessness

Studies have shown a direct correlation between money stress and depression long before the current global pandemic entered our lives. It’s clear that people dealing with financial troubles are significantly more likely to be depressed than those who don’t struggle to pay their bills.

Under normal circumstances, it may be possible to overcome money worries before they lead to detrimental psychological or physical ailments. With the additional stress of the unknown that accompanies COVID-19, however, the average American is under an excruciating amount of mental strain.

Regardless of your socio-economic status, chances are high that you will feel the effects of this global pandemic. Whether due to furlough, job loss, money lost through investment(s), business closure, fewer customers, or being unable to work due to school closures, virtually everyone is feeling vulnerable. There is no shame or embarrassment to be had if you’re dealing with financial strife right now. No one could have predicted COVID-19 and the widespread destruction it has left in its wake.

If you’re dealing with financial stressors and need help figuring out the right money management  strategy, let Veitengruber Law help you. There are a number of options available to help those who have been affected by the fallout from the coronavirus. Our team is working full-time (at home but together every day via the power of technology). You can reach us at the phone numbers on our website, or you can send me an email at george@veitengruberlaw.com. You can also message us on any of our social media pages. We are active on Facebook, Instagram, Twitter, and LinkedIn.

Budgeting Basics During a Crisis

budgeting basics

Creating a budget is certainly not a walk in the park even in the best of times. Budgeting is an ongoing process and for most people, your budget has the possibility of changing from month to month. When the world is in the middle of a pandemic and you’re potentially working with a reduced amount of income, staying within a budget is of the utmost importance. Our advice for budgeting basics holds true now, but budgeting during a crisis presents challenges that we aren’t presented with when things are flowing smoothly. that you will want to pay special attention to as you map out the next several months of your finances.

If you’ve never set up a budget before, you picked an interesting time to start, but it can still be done, and major kudos to you for recognizing that you NEED to work within a budget. As with most things in life, the more you practice budgeting, the better you’ll get. Take a good hard look at all of the points listed below, note how they’ve changed since COVID-19 came on the scene, and you’ll be able to piece together a new (and hopefully very temporary) “Pandemic Budget.”

Income

Let’s begin at the most obvious place: your income. As we all know, your income is going to determine your budget, or in other words, how much money you have to spend. Your income can come from a variety of sources: your main day-to-day job, side jobs, child support, or even rental properties. It includes any source that brings money into your household each month. To start creating your budget, record the total amount of money that you’re making. For many Americans, this figure will differ from your “normal” income amount as you face reduced work hours, fewer clients, furlough, or total job loss. If the latter is the case, be sure to file for unemployment ASAP.

It’s important to take taxes into account, so make sure you’re recording your monetary income post-taxes. Some people refer to this as “take home pay.” If you’re married, you’ll potentially be combining your incomes, so record them on the same budget.

If you are self-employed, budgeting is even more important. Your COVID-19 month-to-month income may be unpredictable depending on your business. If you’re still bringing home money but your business will likely suffer in the upcoming months, use your income figures from the three months that you made the least amount of money over the past 2-3 tax years. Average those three amounts and use that figure for your projected pandemic monthly income.

Expenses

The next part (that no one likes to think about) is what you spend your money on. Though expenses have their own categories, you always have regular “offenders” every month like your utilities, mortgage, or car payment. Sometimes utilities can sway a bit from month to month, but in general, they stay consistent.

You can’t forget about the other necessities like groceries, gas, clothing, household necessities, and other miscellaneous items. For your budget, it’s important to take into consideration everything that is going to require money. You may very well need to (and/or be forced to) delete some expenses at this time both in order to cut back on spending and also because you simply won’t have access to some things right now.

Set Priorities

Your priorities right now are likely going to be slightly different than usual. Make sure the basics are covered before setting money aside for any extras.

  • Groceries: Although how you acquire your groceries may look different right now, you have to feed you and your family, so first and foremost, set aside enough money for food. This should come before you worry about other bills. You may have to adjust your food allowance slightly to allow for delivery fees at this time.
  • Utilities (Electric, Water): You have to keep the water running and the lights on, so these should take next priority. You might be asking, “isn’t my mortgage more important?” Well, living in a house without lights or water is no fun. The utility company won’t wait to turn your water and electric off if you don’t pay them. Many mortgage companies are giving a tad more leeway than usual during the challenging times we are living in!
  • Mortgage or Rent: Although you may get slightly less push back if you’re a little late, don’t put your housing payment off entirely unless it’s a dire emergency. Stay on top of it and don’t let it slip to the bottom of the pile.
  • Gas/Fuel: Normally, you have to put gas in the car to get to work. If you’re now working from home for the next several months, the good news is that the money you would have spend on gas and parking can be spread out to use in other expense categories where needed.
  • Clothing: This is another budget category that you can easily cut out right now. Even if you’re required to video conference, you only need to look presentable from the chest up, and no one is going to be able to discern whether you’ve worn the same shirt to every meeting – just hang it up to keep the wrinkles out in between calls!

Under normal circumstances, we’d say that as long as you’re meeting your necessary expenses then you can spend some of your income as you wish. A “fun money” fund, if you will. However, as we’re in the middle of a pandemic that shows no clear end date, we have to advise you to save anything you have left over – just in case you need to make ends meet for longer than originally planned.

Final Touches

Once you’ve figured out your grand total of expenses, you want to make sure that it doesn’t add up to more than your total income. If you end with a negative number, you’ll need to go back through and see what unnecessary spending can be cut out. If Income – Expenses = $0, you’ve successfully created your first budget! Some people prefer to have their final number greater than $0, just to provide a little wiggle room. This is naturally preferable so that you can begin to build up a small savings.

As you go through the next few weeks, chances are, you will have to make some edits to your budget. This is more than okay. Remember, creating a functional budget is a tricky process even in the best of times and it takes time to figure out. Don’t be discouraged at the thought of having to create a budget; instead be proud of yourself for taking a step towards managing your money skillfully, especially in such a challenging time.

Everything You Need to Know About Your Stimulus Check

covid-19

In light of the developing coronavirus crisis, Congress has agreed to a $2 trillion dollar stimulus relief package which President Trump has signed into law. The package includes a $250 billion expansion of unemployment benefits and $500 billion in loans to corporations. But how will this impact the average citizen? One much anticipated provision in the bill is a one-time payment in the form of a check paid out to those who are eligible. Here is everything you need to know about the stimulus checks.

Not everyone will receive a check. Individuals must be legal residents that are not/can not be claimed as a dependent on someone else’s tax return. There are also limits on how much income you can earn to receive a stimulus check. Payments start to decrease for single filers with an adjusted gross income (AGI) over $75,000, married couples filing jointly with AGI over $150,000, and heads of household (a single person with dependents) with an AGI above $112,500. The amount you receive in your stimulus check will be based on your 2019 income or your 2018 income if you have not filed your 2019 tax return yet.

So exactly how much money will you be receiving? You can use this calculator to determine your payment. Some of the information is as follows:

The maximum an individual can receive is $1,200. Smaller checks will go out to individuals making up to $99,000 a year, falling $5 for every $100 in income above $75,000. Married couples can receive up to $2,400, again with smaller checks going to married couples who earn up to $198,000 a year. Couples will also receive $500 for every child in their household under 17.

If you are currently receiving Social Security retirement or disability benefits but still earn too little to have to file income tax returns, you will also receive a stimulus check based on the information you provided the IRS through forms SSA-1099 and RRB-1099. If you are a college student or older teen who still depends on your parents for more than half your support, you are not eligible to receive a stimulus check.

These checks basically function like a 2020 tax credit. Therefore, if you earned too much in 2018 or 2019 to receive a payment, but have recently lost income (possibly due to the crisis), you will be eligible for the payment when you file your 2020 tax returns in 2021. On the other hand, if you qualify for the payment under your 2018 or 2019 returns but would not qualify based on your 2020 income, you will not be required to pay back the stimulus check.

Treasury Secretary Steven Mnuchin has stated checks could go out within the next three weeks. If you used a bank account for your direct deposit for your 2019 tax returns, you should see your money deposited there. If you do not have a direct deposit established, you will receive a check in the mail at your last recorded address. Mailed checks could take longer than direct deposits.

Nearly 125 million Americans are expected to receive a stimulus check over the next few weeks. If you’re not sure how much you’re set to receive, don’t hesitate to call our offices for assistance. We are more than happy to put your mind at ease, and, if it looks like your stimulus check will not offset your current financial difficulties, we can walk you through your rights under the Families First Coronavirus Response Act.

The Families First Coronavirus Response Act: What You Need to Know

On March 18th, 2020, the Families First Coronavirus Response Act (FFCRA) was sign into law, providing important services for American families during this difficult time. The FFCRA is intended to help both employees and employers alike. While there are many provisions in the full legislative package, there are four main aspects of the law that apply primarily to businesses. Here we will break down how this new law may impact your business.

The first portion of the FFCRA that businesses need to pay attention to revolves around the expansion of the U.S. Family and Medical Leave Act (FMLA). In 2020, employers with fewer than 500 employees must provide up to 10 weeks of paid FMLA. The first two weeks of the normal 12-week FMLA leave can be offered as unpaid leave, although an employee is able to receive payment during this time through other paid leave or accrued PTO. Your business could receive an exemption from the Secretary of Labor if you have less than 50 employees or can prove offering the leave would “jeopardize the viability” of your business.

Eligible employees include anyone that has been employed for at least 30 days. Childcare must be provided for employees’ children whose schools have been closed due to the pandemic. The employee must be incapable of working (on-site or remotely) while providing childcare. Employers will first offer unpaid leave (or accrued paid PTO) for 10 days. After this time period, FMLA will go into effect. Employees will be compensated at two-thirds their normal pay rate. The paid leave cannot exceed $200 a day and $10,000 total for the duration of the 10 weeks.

If your business has fewer than 25 employees, you will not be required to reinstate an employee who has taken leave upon their return to work. However, you will be required to do so if you have more than 25 employees. If your business has fewer than 50 employees, you will be exempt from any civil actions concerning emergency paid leave. Healthcare facilities and emergency response organizations are legally protected to exclude any employees from paid leave expansion.

The second aspect of the FFCRA that applies directly to businesses is emergency paid sick leave. Companies with fewer than 500 employees are required to offer paid sick leave to those who meet a specific criteria. The employee must be unable to work on-site or remotely because:

  • They have been put under federal, state, or local quarantine or isolation related to COVID-19.
  • Their doctor has advised them to self-quarantine due to COVID-19.
  • They are experiencing symptoms of COVID-19 and are in the process of getting a medical diagnosis.
  • They are caring for a family member subject to a quarantine order or self-quarantine.
  • They are caring for children whose schools are closed or whose regular caregiver is unable to work because of the COVID-19 emergency.

Full-time employees can receive a maximum of 80 hours of paid sick leave and part-time employees can receive a maximum based on the average amount of time they work in an average two week period. If the employee qualifies under the first three reasons, the sick leave will be paid at the employee’s regular rate with a cap at $511 a day and $5,110 total. If an employee qualifies based on the last two reasons above, they will receive two-thirds their regular pay with a daily cap of $200 per day and $2,000 total.

Emergency paid sick leave through the FFCRA is offered in addition to existing sick leave and/or paid time off that is already offered by the employer. If your business has fewer than 50 employees, you may be exempt if you can prove offering these provisions would “jeopardize the viability” of your business. Again, healthcare and emergency response organizations are able to exclude employees from these provisions.

Tax Credits for paid sick leave and paid FMLA will be offered to help employers afford these provisions. Each quarter, employers are entitled to fully refundable tax credits for costs related to the FFCRA. If these tax credits are not enough to cover employee payouts, the U.S. Treasury Department has been authorized to assist in covering the rest of the costs with cash payouts. The Treasury is also authorized to waive penalties for businesses that do not submit their payroll taxes in anticipation of a refund under FFCRA. A tax credit will be increased by the amount paid by the employer to maintain healthcare for employees on paid sick leave or FMLA.

The final provision of the FFCRA that applies to businesses is the allocation of $1 billion for state unemployment programs. This provision also gives the state government more flexibility in determining which workers need unemployment insurance. Employees no longer need to wait a week or meet specific work search requirements before becoming eligible for unemployment insurance (UI). These provisions may help employers make business decisions surrounding potential layoffs or staff changes due to the coronavirus crisis.

If you need help understanding how the Families First Coronavirus Response Act may affect you personally or as a business entity, please reach out to us at Veitengruber Law. We are working through the pandemic at virtual locations throughout New Jersey and can be reached at the phone numbers listed on our website.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What to Do if You Can’t Make Your Car Payments During the Coronavirus Pandemic

coronavirus pandemic

It’s infiltrated nearly every part of the country, and when it arrives, the Coronavirus pandemic brings with it more than physical symptoms. Pummeling the US economy is a side effect of COVID-19 that biologists and infectious disease experts failed to mention, but massive nationwide business shutdowns have led to extensive job loss. Those who were unprepared for this unforeseen event quickly found themselves unable to make even their regular monthly living expense payments.

Although a $2T stimulus package has been signed into law, many Americans have already been out of work for weeks, and won’t likely see any payments from this legislation for several additional weeks. In that amount of time, any number of mortgage, rent, and car payments will go unpaid. This may, unfortunately, lead to some people losing their vehicles.

If your car has been repossessed, you might be confused about where to turn. But even after your car is hooked to the tow truck, you have options. There are laws in place to protect you from having to file bankruptcy and some things you can do to recover your vehicle. Here are some answers to common questions about car repossession.

1. Why was my car taken?

Late payments aren’t the only reason your car may be taken. It is very possible for cars to get repossessed by accident. If you were not expecting your car to get repossessed, it is worth it to call your lender to find out where your vehicle is and how you can get it back. If your car was taken in error, congratulations! You should be able to get it back relatively easily.

2. Can I get my car back?

On the other hand, if your car was repossessed for failure to pay, your lender legally has to notify you in the event of a repossession. In some cases, the lender will expect the borrower to pay back the car loan in full, plus the cost of repossession and storage, to get the vehicle back. Alternatively, the lender can require the borrower to pay any past due payments to return the vehicle and reinstate the loan. If you cannot meet the terms required to return the car, the lender will (typically) begin the process of selling the car to make up the balance of the loan.

3. What are my rights?

The borrower is entitled to receive notices from the lender. The first indicates the lender’s intent to sell the property and provides information for the borrower to try to get the car back or pick up any personal belongings left in the car. The second notice comes after the car has been sold by the lender. The borrower must receive a notice confirming the sale, how much the car sold for, repossession and storage fees, and the remaining balance—if any—on the loan.

Keep in mind that the repossession agent cannot use physical force, enter a closed garage, or damage any personal property in your car in order to repossess your car. The police are also barred from aiding in the repossession of a vehicle. They can be present to keep the peace but they are not allowed to intervene in any way.

4. Do I still owe money if the lender sells my vehicle?

If the car in question sells for less than what you owe on the loan, you will owe a deficiency balance. It is your responsibility to pay this balance. If you cannot pay the balance, you could face legal action and wind up on a debt collector’s list.

5. How will repossession impact my credit score?

Normally, repossession will remain on your credit report for 7 ½ years. You should expect the repossession to impact your credit score negatively. It could even increase interest rates or decrease your credit allowance on existing accounts.

Veitengruber Law can help, especially if you are struggling because of the current quarantine situation. Our New Jersey credit repair legal team is working throughout the entire Coronavirus pandemic. We are all working from home, but otherwise it is business as usual. You can reach us via any phone number on our website. We will talk with you to determine your best path going forward. You have access to all of the experts on the Veitengruber Law team during this challenging time! Reach out via phone, email, or message us on social media. We are answering messages on every platform.