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!

 

 

 

 

 

 

 

 

 

Should You Sell Your NJ Home During a Recession?

sell your NJ home

If you had been considering selling your home during the typically busy spring market, no doubt the coronavirus crisis has given you pause. With fears of a looming recession and most people stuck at home, the idea of entering the real estate market can be daunting. Is now a good time to try to sell your home? The answer isn’t black and white. Today, we bring you four questions to ask yourself if you are preparing to sell your NJ home in the near future.

1. Are You Prepared for a Price Drop?

In a recession, homes will likely sell for less than they would in a healthy economy. Decreased demand coupled with a soft market means you will likely have to list your home at a lower asking price than you ordinarily would. You may end up selling for less than you paid for the home. Your net profit can easily end up being, well — non-existent.

If your house isn’t selling during a recession, an inflated price is normally the culprit. As a seller, you need to be realistic on the value of your home and list the property accordingly, which may mean being willing to lose money in order to close the deal.

2. Do You Need to Sell?

If it’s not absolutely essential that you sell your home during a recession, it’s in your best interest to wait awhile for the economy to improve. Naturally, however, there are situations that make moving a MUST. A new job, the need to be closer to an ailing loved one, and downsizing your budget are all reasons that justify selling no matter what the market looks like. If it is the right time for you to sell for personal reasons, don’t focus as much on the state of the market. Hone in on your own goals and take concrete steps toward achieve them.

3. Are you Buying and Selling?

If you’re buying a new home while simultaneously selling your old home, it’s possible that the financial gains/losses of these transactions will mean that you’ll break even. While you might have to sell for a lower price when the market is in a slump, the good news is that you’ll also likely be able to snag a deal on your new digs as well.

In fact, if you are selling a secondary property during a recession, it might be worth considering investing any money you make from the sale into purchasing a new property to turn into rental income when the market turns around. Real estate tends to be a steady investment even during times of economic turmoil.

4. Is Your Home Move-In Ready?

During an economic downturn, buyers are less likely to purchase a fixer-upper or a property that needs a lot of updates. Money-conscious buyers will be looking for a home that requires minimal renovations up front.

IMPORTANT: This doesn’t mean you need to fully renovate in order to be competitive on the market. Fresh paint, landscaping, and small repairs can go a long way toward improving the value of your property. Also, invest time and energy into generating buyer interest to help drive up the sales price.

Buying or selling a home during the 2020 quarantine/COVID-19 pandemic? Veitengruber Law is a real estate firm in Central NJ working full steam ahead all the way through the crisis. We can help you navigate the real estate market – whether virtually or in person following all of the recommended social distancing rules. Visit our website and follow us on social media to learn more about how we help NJ real estate clients every day.

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.

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.