April 30, 2021: A Pandemic Lifeline Employers Should Know About

Gusto Editors

April 30, 2021

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How’s the recovery really going?

Headlines are starting to sound more optimistic about economic recovery, but what’s the prognosis for small businesses? New data released by Visual Capitalist examines the small business recovery rate in 50 metro areas across America to tell the story:

There’s quite a bit of purple on the map indicating more small businesses opening up in several states around the country, but does that mean the situation has improved? “The short answer is no,” writes Visual Capitalist, “on a national scale, 34% of small businesses are closed compared to January 2020.” However, the numbers around new business formation also show that entrepreneurs are undeterred:

Despite an initial dip in the early months of the pandemic, there has been a dramatic spike in EIN business applications.

Even in the face of a global pandemic, the perseverance of such metrics prove that the innovative American spirit is unwavering, and spells better days to come for small business recovery.

Read Visual Capitalist’s full report here.

401(k) loans: A pandemic lifeline

When life gets tough, wouldn’t it be nice to have access to a short-term cash infusion without a lot of risk or penalty? This is actually something employers can offer to their teams in the form of a 401(k) loan. A 401(k) loan allows employees to borrow from their retirement savings plan and pay it back over time with interest.  

Employees can typically borrow up to 50% of their plan’s vested balance up to a maximum of $50,000 within a 12-month period. Under the CARES Act, the IRS increased the limit to $100,000 for loans made between March 27 and September 22, 2020 if individuals were impacted by COVID-19. Note that 401(k) loan rules are not the same for every plan, so be sure to discuss the details with your plan manager and employees. 

Learn more about offering 401(k) loans here.

SMB Tax Credit Series, Part 5: Child and Dependent Care Credit

In the run up to Tax Day on May 17, we’re highlighting some of the most helpful COVID-19 tax credits for small businesses each week.

By now we don’t have to tell you that childcare was one of the massive challenges of the pandemic. Harvard Business Review found in a national survey that “nearly 20% of working parents had to leave work or reduce their work hours solely due to a lack of childcare.” That brings us to this week’s tax credit.

The Child and Dependent Care Credit can help parents pay for the cost of care for children or dependents in their household so they can work or look for work. The full credit is available to families making up to $125,000 and fully phases out for those with an AGI of over $400,000.

Qualifying dependents include children 12 years old or younger at the time that they receive childcare, or a spouse, parent, or other dependent who is physically or mentally incapable of caring for themselves. They must also have lived with you for at least six months out of the year.

How much is the credit for? 

  • For the 2020 tax year, you can claim a maximum of $1,050 for one qualifying dependent and $2,100 if you have two or more. This credit is partially refundable for 2020.
  • For the 2021 tax year, the American Rescue Plan increased the credit to a maximum of $4,000 for one child and $8,000 for families with more than one. This credit is fully refundable for 2021.

How long do you have to claim it? Claim this credit when you file your 2020 or 2021 tax returns.

Read our full guide to claiming the Child and Dependent Care Credit. Tune back in next week for another tax credit spotlight, and see a full list of COVID-19 tax credits here.

Relief spotlight

Restaurant Revitalization Fund

Registration for the Restaurant Revitalization Fund (RRF) is now open. The $28.6 billion in funds is expected to go quickly, so you should register for an account before applications open on Monday, May 3, at 9am PT | 12pm ET. Read our guide to find out if you’re eligible, then register here.

Paycheck Protection Program

Paycheck Protection Program (PPP) round 2 funds are currently estimated to run out before the May 31, 2021 application deadline, and may expire as soon as early to mid-May. Check out our step-by-step guide for instructions on how to submit your application, or get in touch with one of Gusto’s lending partners today.


MAY 7: IFundWomen’s Influencer Marketing Strategy Workshop

Influencer marketing is becoming a crucial aspect of any brand’s marketing mix. A community of creatives to support your brand not only builds brand awareness, social growth, and valuable content creation, it also enhances performance marketing efforts and drives concrete sales and returns. In this workshop, you’ll learn the following from a pro:

  • How to define influence
  • How to curate the right partners
  • How to craft a creative message
  • How to develop a relationship roadmap
  • How to measure results

RSVP here.

Find the latest relief options in our Small Business Relief Finder.

Want more small business news and resources? Check out past editions in our archive.

Gusto Editors Gusto Editors, contributing authors on Gusto, provide actionable tips and expert advice on HR and payroll for successful business management.
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