The COVID-19 pandemic and subsequent economic shutdown have wreaked havoc on many business owners and real estate investors. Here are 20 tips that may help.
Apply for Federal Help
The SBA 7(a) program provides assistance to small business owners up to $5 million with a maximum SBA guarantee of 85% for loans up to $150,000 and 75% for loans above that amount. The Coronavirus Aid, Relief, and Economic Security (CARES) Act included $349 billion in forgivable PPP loans for businesses with fewer than 500 employees.
Check Insurance Policies
Some policies include business interruption coverage, though some have exclusions for viruses. Force majeure may allow for contractual obligations to be excused, but not every clause is included in every lease.
Check the Main Street Lending Program
The Federal Reserve Board expanded the program to provide credit flow to small and midsize businesses that were sound financially before the pandemic. The minimum loan size was doubled to $1 million.
Take Advantage of Active Losses
Pass-through business owners can now offset active losses against other forms of income, such as wages and investments, without limit. Previous law limited this to $250,000 a year for individuals and $500,000 for couples.
Tap Chambers of Commerce for Guides to Funding Assistance
Defer Loan Payments with Lenders
Defer Payments with Creditors
You may be able to either defer payments or arrange for a schedule of payments to ease your financial burden.
Defer Insurance Agency Payments
Work with your provider to either defer payments or make partial payments.
Refinance Existing Loans
Help Educate Tenants
When your tenants are aware of funding programs, you have a greater chance of payment.
Apply Cost Segregation
Use the new CARES tax laws to apply cost segregation and 179D/45L to generate losses, and use these to amend up to five years’ previous tax returns for refunds.
Negotiate Property Taxes
Work with your county on strategies for lowering payments or tax deferral.
Find New Income Sources
These can include leasing your rooftop for 5G technology to cellular phone companies.
Seek New Tenants
Repurpose Your Building
Turn a mall to a distribution center or a hotel to apartments. Reimagine your space.
Extend Returns Through September
The Treasury Department pushed the tax-filing deadline from April 15 to July 15 in response to COVID-19. The deadline is expected to be pushed back to September.
Pause Payroll Taxes
The CARES Act includes a payroll deferral of the employer’s share of Social Security tax. Deferred taxes will be due in 50% installments on Dec. 31, 2021 and Dec. 31, 2022.
Pause 401(k) Matching Payments
Re-examine Utilities
You may negotiate lower rates, or go with solar and sell energy back to utilities.
Use Higher Interest Deductions
Prior to the CARES Act, interest deductions were limited to 30% of earnings before interest, taxes, depreciation, depletion and amortization. The CARES Act increased the limit to 50% for 2019 and 2020.
The CARES Act’s five-year carryback on losses can immediately generate cash flow, and taking advantage of 5G technology could be a whole new revenue stream as well.
Heidi Henderson
Engineered Tax Services
800-236-6519
hhenderson@engineeredtaxservices.com
