Tether Talk is usually a forum for education and inspiration on how to use tethering equipment effectively in your photography business. As VP of Finance at Tether Tools, I leave those discussions to our photography experts and the Tether Tools Pro Team. But, with the economic impact the coronavirus has had on the photography industry, I have some timely information that is pertinent to photographers as it pertains to the recently passed Coronavirus Aid, Recovery and Economic Security (CARES) Act.
The CARES Act has very broad parameters which should positively impact all Americans in some way. For small business and sole proprietors, it’s pertinent to understand the benefits available to you in order to weather the economic downturn. Below is a quick overview of CARES and the action items you need to be aware of for your business.
What does the CARES Act mean for photographers?
Through the CARES Act, the government is providing forgivable loans to small businesses and independent contractors across the United States. The loan payments are deferred for up to one year. However, all or a portion of the loan can be forgiven if the company or sole proprietor maintains and pays employees for 8 weeks from the date of the loan, plus allowed expenses such as rent and utilities.
The current law will cover up to 2.5 times your monthly payroll cost (either as a small business or independent contractor) with adjustments based on average monthly payroll for the prior year. If your photography business just started this year, payroll costs will be considered based on January and February 2020 data.
What steps need to be followed to apply for benefits through CARES?
The exact steps to be followed will depend on the unique nature of the business. For businesses with employees, a large among of data might be needed to confirm the loan amount you are submitting for. Those data points include information such as:
Detailed payroll payments by each individual adjusted for a number of factors, including:
- Maximum allowed compensation ($100,000/year per employee)
- PTO and Sick time were included
- Health benefits contributions
- Retirement contributions such as a 401k company match
- Total amount of employer-paid taxes including Social Security, Medicare, Federal and State Unemployment Tax
The data listed above get added up to come up with a total payroll cost which then directly correlates to the amount of the loan your small business can apply for.
How should photographers apply for a CARES Act loan?
Based on the research I’ve done, the loan application should be completed with your existing banking relationship to make the process as seamless as possible. Most banks have a requirement that only business relationships prior to February 15th can apply.
The first day small businesses were able to apply for a loan was April 3, 2020. The news has covered that the surge of applications has overwhelmed many banks, so getting your application submitted and processed may take some time.
Applications open for independent contractors and freelancers on Friday, April 10, 2020. As banks get their own procedures for this new type of loan worked out, the application process should be smoother and easier.
While I hope this information gives you an overview of how the CARES Act can provide temporary relief from the impact COVID-19 has had on your photography business, be sure to consult with your accountant or trusted financial advisor for definitive advice you should follow. Like many things surrounding Coronavirus, information around the CARES Act seems to change by the day.
The US Chamber of Commerce published a helpful checklist which is linked below for your reference.
To all of our photographer partners, good luck! Please take advantage of this program so that we can all come out stronger on the other side.