Posted: March 31, 2020
Illinois Thoroughbred owners and trainers face the threat, amid the ongoing COVID-19 crisis, of lost live racing opportunities for potentially months to come. To help our members navigate this tremendous challenge, the Illinois Thoroughbred Horsemen’s Association has assembled a list of useful resources and related news.
It is our privilege to advocate for Illinois horsemen. If the ITHA may help answer any questions or be of assistance, please do not hesitate to contact us directly at firstname.lastname@example.org. However, please know that we cannot provide financial or legal advice. We encourage our members to seek tax-related, financial or legal guidance from their own trusted professionals.
Paycheck Protection Program
The federal Coronavirus Aid Relief and Economic Security (CARES) Act, signed into law on March 27, includes nearly $350 billion to provide forgivable loans to small businesses and non-profits to maintain their existing workforce and help pay for rent, mortgage and utilities.
The measure also provides $10 billion for Small Business Administration emergency grants of up to $10,000 and $17 billion for the SBA to cover six months of payments for existing SBA loans.
Applications for loans through the Paycheck Protection Program, the nearly $350 billion loan initiative, may be made at any lending institution approved to participate in the program through the existing SBA lending program. PPP will provide eight weeks of cash-flow assistance for small businesses, through federally guaranteed loans, to employers maintaining their payroll during this emergency.
The program is available to small businesses employing 500 or fewer employees. Independent contractors may be eligible, too. To learn more, here are links to additional resources:
Economic Injury Disaster Loan with $10,000 Grant
The Economic Injury Disaster Loan program, also administered by the SBA, now offers an emergency advance of up to $10,000 as part of a loan.
The $10,000 advance can be forgiven if the funds are used to provide paid sick leave to employees; maintain payroll to retain employees; meet increased costs due to supply chain disruption; make rent or mortgage payments; or repay obligations that can’t be met due to revenue losses.
If the same business takes advantage of both PPP and EIDL, then, according to the Senate Committee on Small Business and Entrepreneurship, the EIDL grant of up to $10,000 “would be subtracted from the amount forgiven under PPP.”
Employee Retention Tax Credit & Other Business Tax Changes
The federal CARES Act also makes changes to business tax policies. These changes include:
- Businesses are eligible for an employee retention tax credit if 1.) the business operations were fully or partially suspended due to a COVID-19 shut-down order; or 2.) gross receipts declined by more than 50% compared to the same quarter in the prior year. Eligible businesses can get a refundable 50% tax credit on wages up to $10,000 per employee. The credit can be obtained on wages paid or incurred from March 13, 2020, through Dec. 31, 2020.
- Businesses and self-employed individuals can delay their payroll tax payments. These payments, the employer share of Social Security tax owed for 2020, can instead be deferred and paid over the next two years. Fifty percent must be paid by the end of 2021 and 50% must be paid by the end of 2022. (Note: The ability to defer these taxes does not apply to a business that has a Paycheck Protection loan forgiven.)
- Businesses that have net operating losses have some limitations relaxed. If your business had a net operating loss in a tax year beginning in 2018, 2019, or 2020, that loss can be now be carried back five years instead. This may improve cash flow and liquidity for some businesses. Pass-through businesses and sole proprietors will also be able to take advantage of the relaxed net operating loss limitations.
- Businesses that were due to receive corporate alternative minimum tax credits at the end of 2021 can instead claim a refund now, in order to improve cash flow during the COVID-19 emergency.
- Businesses will be able to increase their business interest expense deductions on their tax returns. For 2019 and 2020, the amount of interest expense businesses are allowed to deduct on their tax returns is increased to 50% from 30% of taxable income.
Federal Employer Paid Leave Requirements
Be advised the CARES Act requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. Additional details are available here.
Illinois Small Business Emergency Loan Fund
Illinois Gov. J.B. Pritzker has announced multiple new programs to provide more than $90 million in financial relief to Illinois small businesses. They include the Illinois Small Business Emergency Loan Fund, a $60 million fund to support low-interest loans of up to $50,000 for small businesses in every industry outside of Chicago.
“Businesses with fewer than 50 employees and less than $3 million in revenue in 2019 will be eligible to apply,” Pritzker said. “Successful applicants will owe nothing for six months and will then begin making fixed payments at 3% interest for the remainder of a five-year loan term.”
Eligibility for Unemployment Benefits
The Pritzker administration recently announced its plan for emergency rules to “clarify that individuals unemployed due to COVID-19 can generally qualify for unemployment benefits to the full extent permitted by federal law.” The rules, the administration said, “will provide assistance to individuals who may be restricted in the type of work they can perform due to COVID-19.”
Note: Illinois has joined the federal government in extending its deadline, from April 15 to July 15, for income tax filing. Additional details from the Illinois Department of Revenue are here.
The Pritzker administration has launched a website—Coronavirus.illinois.gov—to centralize updates from state government, prevention and preparation tips, frequently asked questions, and resources from public health experts.