A guide to the tax credits, loans, grants, and other funding available to small business owners

While many relief programs aimed at supporting small businesses have expired more than a year and a half into the COVID-19 pandemic, support is still available. From tax credits to special loan programs and grants, here are several opportunities to consider if you’re looking for financial relief for your business.

Tax credits

The American Rescue Plan Act, which President Biden signed into law in May 2021, has extended several tax benefits to support small businesses that were hurt by the pandemic.

  • Employee Retention Tax Credit. If your business temporarily closed or revenue declined by more than 20% because of COVID, you can receive a tax credit of up to $10,000 per employee that you retained in 2020. This credit is now available for all four quarters of 2021 at an increased rate of $7,000 per employee per quarter or up to $28,000 for the calendar year.
  • Tax credit for sick and family leave. You can receive payroll tax credits of up to $511 per day through September 30, 2021, for any employee who missed work for a COVID-related reason, including caring for a sick family member and getting vaccinated. This credit is capped at $5,110 for employees who are sick and $2,000 if they are caring for someone with COVID-19.
  • Work Opportunity Tax Credit. Extended through 2025, this tax credit can help employers navigate the challenging job market. Businesses can receive up to $9,600 per new employee when the employee has consistently faced barriers to employment. This designation includes individuals from target groups, including veterans, ex-felons, people who receive certain government assistance, and chronically unemployed individuals. The tax credit is part of an effort to incentivize workplace diversity and increase job access.

Action tip: Read the criteria for tax credits carefully to make sure you take advantage of all the relief for which your business is eligible.

Loans and grants

The widely known Paycheck Protection Program (PPP) provided federal loans to small businesses who were impacted by COVID-19, and it ended on May 31, 2021. However, there are still opportunities available for cash-flow assistance, including the following:

  • Economic Injury Disaster Loans (EIDLs). The U.S. Small Business Administration (SBA) can provide up to $2 million in low-interest, 30-year loans to businesses and private nonprofit organizations that experienced financial losses due to the pandemic. This disaster loan is available through the end of 2021 to provide working capital and cover business debt.
  • SBA grants. If you’ve applied for the Economic Injury Disaster Loan (EIDL), you may be eligible to receive a maximum of $15,000 in grants, even if you’re not approved for an EIDL. Qualifying small businesses must be located in low- to moderate-income areas and demonstrate pandemic-related revenue loss. The two grants are called the Supplemental Targeted Advance and the Targeted EIDL Advance.
  • SBA loan forgiveness. All borrowers of standard 7(a), 504, and microloans are eligible for several months of debt relief that includes principal, interest, and fees. To be eligible for relief, your loan must have been approved by Sept. 30, 2021. Businesses do not need to prove they have been affected by the pandemic to apply for loan forgiveness.

Action tip: Find out if your business qualifies for SBA loans and grants by visiting the SBA website. Before you apply, consult your tax advisor for guidance.

Other options

Federal loans and tax credits are not the only option for COVID relief. Your business might also benefit from the following:

  • Tax loss carryback. As part of the initial COVID relief package, small businesses that showed a loss in 2018, 2019, and/or 2020 can carry that loss back up to five years, offsetting any previous profits. Businesses that paid taxes in those years may now be eligible for a refund.
  • State programs. Many states offer their own COVID relief programs and incentives. Check with your state’s tax authority and local business groups to learn about opportunities through state-specific relief programs.

Action tip: Do you want help uncovering the best way to infuse cash into your business? Consult your tax advisor or accountant, who can help you make the best decision.

Coping with the pandemic has been a challenge for many small businesses. Seek out the help for which you’re eligible, so you can put your business on a stronger footing going forward.

Sources: U.S. Department of Treasury Small Business Tax Credit Programs, IRS, IRS, SBA, SBA, SBA, IRS.