How Frisco businesses can benefit from the CARES Act

The Frisco Chamber of Commerce held its eighth virtual Conversation with the Chamber event April 7. (William C. Wadsack/Community Impact Newspaper)
The Frisco Chamber of Commerce held its eighth virtual Conversation with the Chamber event April 7. (William C. Wadsack/Community Impact Newspaper)

The Frisco Chamber of Commerce held its eighth virtual Conversation with the Chamber event April 7. (William C. Wadsack/Community Impact Newspaper)

US Chamber of Commerce executive Christina Lotspike broke down the Coronavirus Aid, Relief and Economic Security Act—or CARES Act—passed by Congress on March 27 and explained how Frisco employers and small businesses can get financial assistance.

Lotspike joined the Frisco Chamber of Commerce for its eighth virtual Conversation with the Chamber event April 7.

The CARES Act encompasses a $2 trillion package for employers, individuals and companies during this uncertain period, Lotspike said.

“It really is the hope that when health officials ultimately decide it’s safe to start opening the economy back up, that it will really provide relief that at least creates a bridge that allows us to get the economy back up and running quicker with the highest possible number of people still attached to their jobs,” Lotspike said during the event.

How the CARES Act applies to all employers

One of the most important and overlooked provisions of CARES Act, Lotspike said, is the ability for businesses to delay payment of the employer portion payroll taxes. This is the 6.2% employers pay on social security.

“Businesses have the ability to delay payment of the employer portion of payroll taxes between now and Jan. 1 of 2021,” she said.

However, employers will still have to remit the employee share of payroll taxes during this time, Lotspike said. If businesses choose to delay their payments, 50% will be due Dec. 31, 2021, and the remaining 50% will be due on Dec. 31, 2022.

Lotspike said additional tax changes include carrying net operating losses for 2018, 2019 and 2020 back 5 years.

“For businesses that have a loss, the ability to apply this retroactively against other taxes you’ve already paid is expanded here,” Lotspike said.

The CARES Act also includes the Qualified Improvement Property Fix, which Lotspike said is important for those in the retail and restaurant industries that have improved their property in past years.

“This is intended to help give these folks liquidity now,” she said.

Employee retention credit was a last-minute addition during the CARES Act process, Lotspike said. This can apply to employers that have fully or partially shut down because of a government order or if they had a 50% drop in gross receipts in a quarter compared to the same quarter the year prior.

Lotspike said if an employer in one of these situations is continuing to pay its employees, the employer can receive a $5,000 refundable tax credit.

How the CARES Act applies to small businesses

Employee retention credit, however, differs between small and large employers, she said.

Employers will not be eligible for employee retention tax credit if they receive a Paycheck Protection Program loan, or PPP, Lotspike said. This loan offers $349 million for small businesses with less than 500 employees.

“If you take advantage of the Paycheck Protection Program and have your loan forgiven, you can’t also defer your payroll taxes,” Lotspike said. “It’s one or the other.”

For small business employers, the PPP provides loans for employers that are equal to the lesser of 2.5 months of average payroll, or $10 million, Lotspike said.

“We expect these loans will be made by local and national lenders,” she said.

These loans are forgiven, Lotspike said, and they convert to grants equal to the amount employers spend on payroll, rent and interest on mortgage and utilities for 8 weeks after the origination of the loan. There is an extreme demand for this forgivable loan program, she said.

Loans are then reduced proportionately, Lotspike said, if the employer reduces the number of full-time employees. Loan forgiveness is reduced if the employer cuts wages by more than 25%, she said.

“[That is] important to keep in mind for employers that have already reduced their staff,” Lotspike said. “They can avoid reduction in forgiveness if they bring back employees and restore the wages generally within 30 days and maintain those employees through June 30.”

Small businesses and sole proprietors can apply for the PPP through any financial institution that currently serves as a partner in providing existing Small Business Administration products, such as 7A loans, Lotspike said.

“More than $500 billion in loans under the PPP were approved in the first 48 hours,” she said.

On April 10, independent contractors and self-employed individuals can begin applying for the PPP, Lotspike said.

“The SBA is working to bring additional lenders into the program,” she said.

Small businesses can also get financial assistance from the Small Business Administration’s Economic Injury Disaster Loan, EIDL loan, Lotspike said. This includes those who are self employed, independent contractors, nonprofits and sole proprietors.

The EIDL loan can provide up to $2 million in working capital for up to a 30-year term, she said. This includes a 3.75% interest rate for businesses and a 2.75% interest rate for nonprofits.

A new feature of these loans include a $10,000 emergency grant, Lotspike said. The SBA is supposed to provide the grant within 3 days after a small business applies for the loan and indicates need for the grant, she said.

However, Lotspike said the EIDL loan does interact with the PPP.

“If you receive a $10,000 grant through this EIDL program, that amount will be subtracted from the amount of money that you can have forgiven as part of the PPP,” Lotspike said. “If you get benefits from both, you can’t get forgiveness under both, so it will be offset dollar to dollar.”
By Elizabeth Ucles
Elizabeth is the reporter for Community Impact Newspaper's Frisco edition. She graduated from St. Edward's University with a degree in Writing and Rhetoric with a journalism concentration and a minor in Spanish in May 2019. Elizabeth covers public and higher education, development and transportation.


Texas Gov. Greg Abbott announced Phase 3 of his Open Texas plan June 3. (Brian Rash/Community Impact Newspaper)
Gov. Greg Abbott's June 3 guidelines allow most Texas businesses to operate at 50% capacity

Texas Gov. Greg Abbott continues to lift coronavirus-related business restrictions.

Collin County Health Care Services reported the death of an 89-year-old Frisco man with COVID-19 and underlying health conditions. (Community Impact staff)
Collin County officials confirm COVID-19-related death of 89-year-old Frisco man

This is the second confirmed death of a Frisco resident with COVID-19 since the coronavirus pandemic began in March.

Frisco City Council approved a resolution June 2 to provide federal funding for housing grants to seven agencies for their outreach and work during the coronavirus pandemic in Frisco, Celina and Prosper. (Screenshot courtesy city of Frisco)
Frisco to distribute $6.7M in CARES Act funding to Collin County agencies to give to residents

Frisco is overseeing the distribution of $6.7 million in federal funding for housing and living assistance for Collin County residents from the Coronavirus Aid, Relief, and Economic Security Act.

Plano-based Cinemark announced it would begin a phased reopening of its movie theaters June 19. (Courtesy Cinemark)
Plano-based Cinemark to begin phased reopening of theaters June 19

Cinemark has announced a “multiphased” reopening of its movie theaters that will begin June 19, three months after the Plano-based company closed all its locations nationwide in response to the coronavirus pandemic.

Registration is now open for a free drive-thru COVID-19 testing clinic to be held in Frisco on June 4. (Courtesy Adobe Stock)
Frisco opens preregistration for free drive-thru COVID-19 testing on June 4

The free testing will be offered from 10 a.m. to 4 p.m. in the “Red” parking lot of Toyota Stadium. Preregistration is required.

Census reinstates some field operations in Texas following coronavirus delay. (Courtesy U.S. Census Bureau)
Census reinstates some field operations in Texas following coronavirus delay

Operations began in Fort Worth, Dallas, Austin and San Antonio beginning May 25.

Jungle Joe’s offered indoor play areas for children and a health-conscious menu for adults. (Courtesy Jungle Joe's)
Kid-friendly cafe Jungle Joe's closes Frisco location

The kid-friendly cafe offered a play area for children along with a health-conscious menu for both parents and children.

The fourth floor of the Frisco Public Library will be reopened to the public June 4. (William C. Wadsack/Community Impact Newspaper)
Frisco Public Library to reopen at 25% capacity on June 4

The public computers and Wi-Fi will be available, but only the first and fourth floors of the library will be open to the public based on guidance issued by Gov. Greg Abbott.

Frisco Mayor Jeff Cheney and Frisco Fire Chief Mark Piland sat among other city leaders at a June 1 town hall meeting. (Courtesy city of Frisco)
TOWN HALL RECAP: City leaders update COVID-19 testing efforts, reopening plans

The Frisco mayor and fire chief updated residents on COVID-19 and the city's reopening plan.

Oun said he perfected his fried chicken recipe over a six-month period. (Courtesy Mother Clucker)
ROUNDUP: Read about local businesses in the DFW area

Read Community Impact Newspaper's latest business coverage from the Dallas-Fort Worth area.

Landon Development Company recently purchased 637 acres of Brinkmann Ranch for a planned mixed-use development that is expected to be valued at more than $1 billion once completed. (William C. Wadsack/Community Impact Newspaper)
Developer planning $1B project on portion of Brinkmann Ranch

In addition to thousands of single-family homes and multi-family units, the project includes approximately 16 acres for Frisco parks and 31 acres for Frisco ISD schools.

Mayor Jeff Cheney said an estimated 2,000 people marched along Eldorado Parkway as part of a protest in Frisco on June 1. (Courtesy Andrew Holden)
Mayor, police chief among crowd marching through Frisco in peaceful protest

Mayor Jeff Cheney said he and the police chief were among more than 2,000 people who attended the June 1 protest in Frisco.