Your business has many resources to look to during this time of need. We will continue to update you as this information is constantly changing.
Certain small businesses given 3-months to remit sales tax:
Effective immediately, the Department of Revenue is extending relief to small retail businesses that are unable to timely pay their February, March and April sales tax liabilities.
Small businesses whose monthly retail sales during the previous calendar year averaged $62,500 or less may file their monthly sales tax returns for the February, March and April 2020 reporting periods without paying the state sales tax reported as due.
Late payment penalties will be waived for these taxpayers through June 1, 2020.
Similar sales tax relief may be available on a case-by-case basis to other businesses significantly impacted by COVID-19 and the preventative measures being taken to limit its spread in Alabama.
For more information about this small business tax relief measure, click here.
Small Business Administration (SBA) Economic Injury Disaster Loan:
Last week’s Federal Emergency Declaration activated the SBA’s Economic Injury Disaster Loan program (EIDL). These loans will provide working capital to small businesses suffering substantial economic injury as a result of COVID-19.
- Loans up to $2,000,000.
- 3.75% fixed interest rate on loans to for-profit companies.
- 2.75% fixed interest rate on loans to non-profits.
- Up to 30-year term and amortization (determined on case-by-case basis).
- Financing to be used for fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact.
While the National Disaster Relief Program is now active, Alabama has not yet implemented an Economic Injury Disaster Loan declaration. Until that happens, companies in Alabama cannot apply for the SBA Economic Injury Disaster Loan. Governor Ivey and her team at the Alabama Department of Commerce are in the process of formally requesting a disaster declaration for Alabama, which will allow the U.S. Small Business Administration to activate the Economic Injury Disaster Loan Program. To check to see if Alabama has been added, click here. Once Alabama has been added to the list of eligible states, businesses can begin applying online for Economic Injury Disaster Loans.
Alabama Small Business Development Center (SBDC): What should you be doing now?
First, it is important to understand that while Economic Injury Disaster Loans can be a lifeline, they will take time to acquire and not all businesses will qualify. Alabama SBDC recommends that you take action now to preserve cash and protect assets. You should be in contact with your lending institutions to see what programs your bank/credit unions are offering during this time (delaying payment requirements/interest only payments) and vendor payments on account. Do the hard stuff first.
Next, prepare the following documentation, which will be required for application. Although the application is online, we recommend familiarizing yourself with the paper forms so that you can have the information filled out ahead of time. Forms are linked below.
- SBA Loan Application (SBA Form 5).
- Tax Information Authorization (IRS Form 4506-T) for each owner with minimum 20% ownership interest in the business.
- Federal personal AND business tax returns for the last three years, including all schedules (include personal tax returns for each owner with minimum 20% ownership interest in the business).
- Personal Financial Statement (SBA Form 413D) for all owners of the business with minimum 20% ownership interest.
- Schedule of Liabilities listing all fixed debts (SBA Form 2202 may be used).
- A current year-to-date profit and loss statement and balance sheet.
- Monthly sales figures beginning 3 years prior to the disaster and continuing through the most recent month available (SBA Form 1368). Total figures for each year should reconcile to the sales figures on corresponding tax returns.
- Written explanation of the amount you are seeking and how it will be used. Describe the loss.
Once Alabama has been declared eligible, begin an online application here.