A. Asset management firms with no more than 500 employees may be able to leverage some aspects of the economic stimulus packages passed by the federal government. In particular, for small businesses, the CARES Act includes two disaster loan programs—The Paycheck Protection Program (PPP) and the Emergency Economic Injury Disaster Loans (EIDL) program. The PPP is a forgivable loan program that significantly expands which organizations are eligible for Small Business Administration (SBA) loans. For organizations facing financial strain as a result of COVID-19, these loans can help offset a variety of costs.
The CARES Act also provides funds for the EIDL program, and it makes several changes to this program, which is available to businesses and nonprofits of all sizes in a declared disaster area. Currently, all 50 states, the District of Columbia, Puerto Rico, Guam and the Northern Mariana Islands have all been declared disaster areas for purposes of the EIDL Program. These loans are processed directly through the SBA. Asset management firms can apply for loans under both SBA programs, as long as they don’t cover the same expenses.
Employers who don’t take advantage of the PPP would be eligible for a 50% credit on qualifying wages paid to employees between March 13 through December 31, 2020, if they either:
- Fully or partially suspend operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel or group meetings (for commercial, social, religious or other purposes) due to COVID-19; or
- Experience a significant decline in gross receipts during the calendar quarter, relative to a comparable quarter in 2019.
All employers are eligible to defer their social security tax liability due March 27 through the earlier of PPP loan forgiveness, if applicable, or December 31, 2020.
In addition to these loans, the CARES Act also includes a number of tax savings opportunities, including the Employee Retention Credit, AMT credits, net operating loss carrybacks and tax-deductible charitable contributions.
While there are many opportunities available in the stimulus bills, eligibility for some provisions is dependent on company size and other factors, and many benefits are mutually exclusive or have other implications. Given the level of complexity in deciding which relief measures to pursue and in securing them, it is critical for organizations to consult with professionals in order to maximize their savings and direct relief where it will matter most.
It’s also important to note that asset management firms with an international presence should look at what additional opportunities maybe available in the countries in which they operate.
To learn more, view our insights: Breaking Down the CARES Act’s $500 Billion Economic Stabilization Plan and CARES Act Aids Employers Who Continue to Pay Employees.