Ohio Small Business Grants Available Starting June 29

Jun 28, 2021

The Ohio Development Services Agency released eligibility information for a series of small business grants available starting Tuesday, June 29. Below you will find information regarding each of these grants including eligibility, qualifications, and fund usage.

Food & Beverage Establishment Grant
This program provides grants up to $30,000 to restaurants, bars, coffee shops, and other food and drinking businesses affected by the COVID-19 pandemic. The dollar amount of each grant will be determined by the business’s loss of revenue in 2020.

  • Eligible businesses for this grant include food service contractors, caterers, mobile food services, bars, taverns, nightclubs, full-service restaurants, limited-service restaurants, cafeterias, coffee shops, and businesses that do not otherwise qualify for the Entertainment Venue Grant because they earn more than 50 percent of their revenue from the sale of food and/or beverages.
  • Eligible businesses must have experienced at least a 10 percent reduction in revenue in 2020 at one or more Ohio locations.
  • Grant funds can be used to reimburse eligible businesses for the following expenses relating to their Ohio business location as long as the costs do not violate state or federal law and are not otherwise specified as ineligible costs:
    • Personal protective equipment to protect employees, customers, or clients from COVID-19.
    • Measures taken to protect employees, customers, or clients from COVID-19.
    • Utility payments.
    • Mortgage or rent payments for business premises (personal residences explicitly excluded).
    • Salaries, wages, or compensation paid to contractors or employees, including an employer’s share of health insurance costs.
    • Business supplies or equipment

Grants will be awarded on a first-come, first-served basis under the guidelines outlined, here.

Lodging Grant
This program provides grants up to $30,000 to hotels, motels, and bed and breakfast operations affected by the COVID-19 pandemic. The dollar amount of individual grants to qualifying businesses will be determined by the business’s decline in occupancy rate in 2020.

  • The business must have at least one Ohio location that has been in operation since at least Dec. 1, 2019, and must have a hotel/motel license from the Ohio Department of Commerce.
  • Businesses can be a hotel, motel, or bed and breakfast.
  • The business must have experienced at least a 10%reduction in occupancy in 2020 as a result of COVID-19.
  • Grant funds can be used to reimburse eligible businesses for the following expenses not otherwise specified as ineligible costs:
    • Personal protective equipment to protect employees, customers, or clients from COVID-19.
    • Measures taken to protect employees, customers, or clients from COVID-19.
    • Utility payments
    • Business supplies or equipment.
    • Mortgage or rent payments for business premises (personal residences explicitly excluded).
    • Salaries, wages, or compensation paid to contractors or employees, including an employer’s share of health insurance costs

Grants will be awarded on a first-come, first-served basis under the guidelines outlined here.

New Small Business Grant
Grants of up to $10,000 to small businesses established between Jan. 1, 2020, and Dec. 31, 2020, under this program.

  • The business must be a for-profit entity that started operations between Jan. 1, 2020, and Dec. 31, 2020, and that has at least two and no more than 25 Ohio employees paid via W2 wages as of Jan. 1, 2021.
  • The business must have a physical location in Ohio and experienced revenue loss or unplanned costs because of the COVID-19 pandemic.
  • A lengthy list of ineligible businesses includes those that previously received the Small Business Relief Grant; are a nonprofit entity; are publicly traded; are operated by a governmental agency or entity; are a club; are primarily engaged in political or lobbying activities or political issue advocacy; operate as a sexually oriented business; engage in conduct regulated by the Ohio Casino Control Commission or the Ohio State Racing Commission. A complete list can be found here.
  • Grant funds can be used to reimburse eligible businesses for the following expenses:
    • Personal protective equipment to protect employees, customers, or clients from COVID-19.
    • Measures taken to protect employees, customers, or clients from COVID-19.
    • Mortgage or rent payments for business premises (personal residences explicitly excluded).
    • Utility payments.
    • Salaries, wages, or compensation paid to contractors or employees, including an employer’s share of health insurance costs.
    • Business supplies or equipment.

Additional grants, including the Entertainment Venue Grant which provides up to $30,000 to theaters, music venues, spectator sports venues, museums, and other entertainment establishments affected by the COVID-19 pandemic, are available through the Ohio Development Service Agency website.

What should I do next?
Beginning Tuesday, June 29, 2021, businesses can apply at BusinessHelp.Ohio.Gov. To access the application, individuals will be required to log in using an existing OH|ID or create a new OH|ID, which provides users with secure access to state of Ohio services and programs. For more information on creating an OH|ID, visit OHID.Ohio.Gov/. For help in creating an OH|ID account, click here.

After an application is approved, businesses also will be required to provide an Ohio Supplier ID assigned by the Ohio Office of Budget and Management. If the applicant business does not currently have an Ohio Supplier ID, the business will be required to register at Supplier.Ohio.Gov. A Supplier ID is required so that grant funds can be distributed by direct deposit.

If you require assistance or have general questions about your application, our team is ready to help. Contact our restaurant practice leader, Kristin Metzger below.

Connect With Us.

 

Kristin Metzger, CPA
Restaurant Practice Leader
kristin.metzger@wvco.com | 419.891.1040

Categories: COVID-19, Other Resources, Restaurant & Hospitality

COVID-Related Fraud Risk on the Rise

Feb 19, 2021

Many small business owners do not believe their businesses can or will fall victim to occupational fraud. Due to this belief and budget restrictions, many small businesses do not make this a priority, which leaves them vulnerable.

According to the Association of Certified Fraud Examiners’ 2020 Report, financial statement fraud is the costliest type of occupational fraud affecting organizations. Financial statement fraud is not only costly from a fiscal standpoint, but it also impacts trust within the organization, the community, and with investors.

The rapid advance of COVID-19 has placed a significant strain on organizations and individuals alike. Donald R. Cressey’s fraud triangle theory includes the three major factors that are commonly present when financial statement fraud occurs: Pressure, Opportunity, and Rationalization.

Here is how COVID-19 has impacted these factors:

Pressure – Organizations are facing challenges never experienced before. COVID-19 has left many facing revenue loss, supply chain disruptions, and employee wellness concerns. All these factors, and more, are causing undue pressure to meet financial expectations.

Opportunity – While organizations are receiving state and federal funding to cope with the financial impact of COVID-19 disruption, there are dramatic shifts in operations with remote working and a reduction of in-office staff. This means internal controls are reduced and accessibility increased. These become prime opportunities for fraud.

Rationalization – Mounting stress impacts individual decision-making skills, leading people to rationalize actions they would otherwise regard unacceptable or illegal. Employees may rationalize they are “owed” financial support because of the work they do.

Some potential areas to consider when thinking about your organization include:

  • Revenue recognition – The timing and amount of revenues recognized.
  • Allowances and reserves – Changes in methodology and unusual adjustments.
  • Valuations – Significant estimates used in projections, declining cash flows, and idle assets.
  • Treatment of expenses – Expenses are recorded in the proper period.
  • Disclosures – The adequacy and sufficiency of disclosures.
  • Margins – Reasonableness of margins given the current year operations.
  • Internal control – Opportunity for control override.

These are just a few of the common ways for financial statement fraud to occur. While we all work diligently to recover from the COVID-19 disruption, we need to be aware of the heightened risks and adjust our processes and tasks to monitor for this risk.

If your company needs assistance, William Vaughan is here to assist you.

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Juli Seiwert, CPA

419.891.1040 | juli.seiwert@wvco.com

Categories: Audit & Accounting, COVID-19

Ohio Court Sides with Restaurant Group in Business Interruption Insurance Lawsuit

Feb 15, 2021

The U.S. District Court for the Northern District of Ohio recently ruled in the case of Henderson Road Restaurant Systems, Inc. vs. Zurich American Insurance Company, that the restaurant group is entitled to business interruption insurance coverage due to lost sales and increasing expenditures as a result of a government-ordered shutdown. Business interruption insurance has been widely disputed during the COVID-19 pandemic as many business owners have sought compensation for losses incurred during government-imposed shutdowns and curfews. The court ruled in favor of the restaurant group claiming it had a valid claim even though a provision within the policy denied coverage for any shutdowns caused by a microorganism. The Court argued the government orders were what caused the shutdown, not the actual novel coronavirus. Thus, the microorganism provision does not prevent the repayment.

In its defense, the insurer argued the restaurant group did not satisfy the requirement within the policy stating business income loss must be tied to “a direct physical loss of or damage to”. However, the court agreed with the restaurant group noting it lost its ability to use the insured properties for their intended purpose. The judge maintained the temporary state and local closure orders led to the restaurant group to suffer a covered loss because the orders prohibited them from allowing in-person dining, which was the foundation of their business model.

The case has been certified for an immediate appeal. If the court’s decision survives the appeal, all businesses in Ohio closed due to shutdown orders may be entitled to recover some form of their losses from their insurer. Policyholders and insurers in Ohio await a resolution of these key issues and will look for clarification of the policy interpretation rules by the Sixth Circuit or the Ohio Supreme Court.

For more information on our restaurant practice and the services we offer, please connect with our practice leader below:

Connect with Us.

Kristin Metzger, CPA

Restaurant Practice Leader

Email Me!

Categories: COVID-19, Restaurant & Hospitality

Americans Begin to Receive Second Round of COVID-19 Stimulus Checks

Dec 30, 2020

Tuesday afternoon, U.S Treasury Secretary Steven Mnuchin took to social media announcing the disbursement timeline for the second round of stimulus checks. He noted the following:

  • Direct Deposit – Individuals who have direct deposit set up with the IRS can start looking for their second stimulus payments as early as last evening (12/29) and continue into next week.
  • Paper Checks – The IRS will begin sending out paper checks today, Wednesday (12/30/20), which means people should begin receiving those checks within the next two weeks.*
  • Status of Payment – Mnuchin also stated later this week, you can check the status of your payment here

*To speed up delivery, a limited number of people will receive their second stimulus payment by debit card. But the form of payment for your second stimulus check may be different than your first payment. Some people who received a paper check last time might receive a debit card this time, and some people who received a debit card last time could receive a paper check. The pre-paid cards will come in white envelopes that “prominently displays the U.S. Department of the Treasury seal,” the IRS said. The card will bear the Visa name on the front and the name of the issuing bank, MetaBank, will be on the card’s back. The information included with the card will explain that this is your Economic Impact Payment. There’s more information on the pre-paid cards here.

While Congress remains in discussion about an increase to a $2,000 stimulus amount, what we know for now is:

  • As it currently stands, the checks will be for $600 for eligible adults, and $600 per dependent, meaning a family of four could receive $2,400.
  • Individuals who earned less than $75,000 and those married filing jointly who earned less than $150,000 in 2019 are eligible for the full amount.
  • Those who made more are eligible for reduced stimulus checks at a rate of $5 per $100 of additional income.
  • The checks phase out completely for individuals that earned $87,000 and couples that made $174,000 in 2019.

If you have questions regarding your stimulus check, please contact your William Vaughan Company advisor or contact us at 419.891.1040. We’d be happy to help!

Categories: COVID-19

Act Now to Take Advantage of SBA Loans & Payroll Tax Incentives

Apr 03, 2020

In light of the novel coronavirus (COVID-19) global pandemic, many small-to-medium-sized businesses are struggling to manage revenue losses amid prolonged economic uncertainty.  To offset the pandemic’s financial impacts, Congress has passed several stimulus bills, including the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which includes provisions that can provide for increased cash flow as well as tax savings. Businesses should quickly consider how these provisions could help their companies during this uncertain time to ensure they are maximizing available benefits.

SBA Paycheck Protection Program

This $350 billion forgivable loan program, included in the CARES Act, 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.

What can the loan be used for? 
The loan can cover costs including payroll, the continuation of health care benefits, employee compensation (excludes compensation in excess of $100,000 on an annual basis), mortgage interest obligations, rent or lease payments, utilities, and interest on debt incurred before the covered period.

Who is eligible for the program? 
To qualify for the program, businesses must have either fewer than 500 employees (including full time, part-time and “other” employees), meet the SBA’s size standards, or have less than $15 million of tangible net worth and less than $5 million of average net income in the last 2 years. There are some special eligibility rules for businesses in the hospitality and dining industries.

How much can a business borrow?
The maximum amount for these loans is two times the average total monthly payroll costs, or up to $10 million. The interest rate may not exceed 4%. Businesses can also defer payment of the principal, interest, and fees for six months to one year.

Is there loan forgiveness?
Yes, provided your business meets certain conditions. Your business will be eligible to apply for loan forgiveness equal to the amount you spent during an eight-week period after the loan closing date on:​

  • Payroll costs
  • Interest on mortgages
  • Payments of rent
  • Utility payments

Principal payments of mortgage payments will not be eligible for forgiveness.

How do you apply?
Applications and underwriting are handled by SBA-approved banks. While documentation requirements will vary between institutions, we would expect them to include the following:

  • Current personal financial statement
  • Latest available personal tax return
  • Latest available business tax return
  • Latest available internal 2019 YE financials
  • YTD internal 2020 financials
  • A spreadsheet detailing the following:
    • List of all full-time employees with eight weeks salary + payroll taxes
    • Cost of two months of rent with copies of leases
    • Cost of two months of mortgage interest with a copy of loan payments
    • Cost of two months of utility costs with a copy of utility payments

What is required to be eligible?
Borrowers will need to include a Good-Faith Certification that:

  • The loan is needed to continue operations during the COVID-19 emergency.
  • Funds will be used to retain workers and maintain payroll or make mortgage, lease and utility payments.
  • The applicant does not have any other application pending under this program for the same purpose.
  • From February 15, 2020, until December 31, 2020, the applicant has not received duplicative amounts under this program.

Are there any other considerations to be aware of?

  • Given these very limited requirements for borrowers, we may see additional guidance from the SBA on how banks should be underwriting these loans.
  • Additionally, the CARES Act does not appear to have overridden the SBA’s “affiliation” rules. Entities are considered “affiliates” when they are controlled by or under common control of another entity. This classification generally includes private equity owners.  Business cannot exceed the size thresholds for either the primary industry of the business alone or the industry of the business and its affiliates, whichever is greater. For groups of affiliates that operate in different industries—a typical case for private equity portfolio companies—industry code is based on the primary income-producing entity. However, there is some ambiguity in the text of the CARES Act, so additional guidance may be forthcoming.

Employee Retention Credit

The CARES Act provides eligible employers with a refundable credit against payroll tax liability.

How much does the credit cover?
The credit is equal to 50% of the first $10,000 in wages per employee (including the value of health plan benefits).

Who is eligible for the credit?
Eligible employers must have carried on a trade or business during 2020 and satisfy one of two tests:

  • Business operations are fully or partially suspended due to orders from a governmental entity limiting commerce, travel, or group meetings.
  • A year-over-year (comparing calendar quarters) reduction in gross receipts of at least 50% – until gross receipts exceed 80% year-over-year.

For employers of more than 100 employees, only wages for employees who are not currently providing services for the employer due to COVID-19 causes are eligible for the credit. For employers of 100 or fewer employees, qualified wages include those for any, regardless of if the employee is providing services.

Employers receiving a loan under the SBA Paycheck Protection Program are not eligible for this credit.

Delay of Employer Payroll Taxes

The CARES Act postpones the due date for employers and self-employed individuals for payment of the employer share of taxes related to Social Security.

When are the deferred payments due?
The deferred amounts are payable over the next two years – half due December 31, 2021, and half due December 31, 2022.

Who is eligible for the deferral?
All businesses and self-employed individuals are eligible. However, employers who receive a loan under the SBA Paycheck Protection Program and whose indebtedness is forgiven are not eligible for the payroll tax deferral.

How We Can Help

Small to medium-sized businesses have many potential avenues—including the SBA loan program and payroll tax incentives—to help offset costs during this uncertain time. However, navigating the complex loan application process is a daunting task. The payroll tax provisions in the CARES Act interact with the SBA loan provisions, adding to the complexity.

In the immediate term, we can assist in analyzing which approach will be the most beneficial for your employees and your company. Those seeking SBA loans will need to move quickly to get their loans approved and funded. We can help you navigate the required paperwork and help organize the necessary information in an expedited manner—so you can boost your cashflow ASAP.

In addition to maximizing these available options, there are also beneficial income tax provisions to claim on income tax returns, including 2019 returns. We can assist companies in determining possible cash tax refunds through net operating loss (NOL) carrybacks and quick refunds of 2019 taxes already paid. Contact your William Vaughan Company advisor today!

 

 

Categories: Other Resources, Tax Planning

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