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STATE OF ILLINOIS - COVID-19 RESPONSE

  • Gov. Pritker’s daily updates at 2:30: Watch live or Listen to audio-only.
  • Per Gov. Pritzker’s Executive Order, official guidance on what is “essential business.”
  • All current state updates can be found here.
  • Has Your Business Been Impacted By COVID-19?  Illinois DCEO is seeking information from businesses on how they have been impacted by this crisis so that it can develop resources and response.  They have created a short survey here

 

Coronavirus Aid, Relief, and Economic Security (CARES Act)
Small Business Owners Guide to the CARES ACT PDF from US Senate Committee

The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was just passed by Congress are intended to assist business owners with whatever needs they have right now. When implemented, there will be many new resources available for small businesses, as well as certain nonprofits and other employers. This guide provides information about the major programs and initiatives that will soon be available from the Small Business Administration (SBA) to address these needs, as well as some additional tax provisions that are outside the scope of SBA.

Struggling to get started? The following questions might help point you in the right direction from the Guide. Do you need:

  • Capital to cover the cost of retaining employees? Paycheck Protection Program might be right for you. (p2)
  • A quick infusion of a smaller amount of cash to cover you right now? Emergency Economic Injury Grant. (p7)
  • To ease fears about keeping up with payments on your current or potential SBA loan? The Small Business Debt Relief Program. (p6)
  • Just some quality, free counseling to help you navigate this uncertain economic time? Resource Partners. (p9)

Navigate the Guide's table of contents if you know what resources you are looking for to direct you to the program or assistance product you may need:

  • Paycheck Protection Program Loans (p2) 
  • Small Business Debt Relief Program (p6) 
  • Economic Injury Disaster Loans and Emergency Economic Injury Grants (p7) 
  • Small Business Counseling (p9) 
  • Small Business Contracting (p10) 
  • Small Business Tax Provisions (p11)

 

SMALL BUSINESS ADMINISTRATION
Sign up for Updates from the Small Business Administration

SBA Economic Injury Disaster Loan (EIDL) Assistance
All Illinois small businesses (according to SBA’s size standards) and private non-profits can now apply for loans of up to $2 million. These loans are made directly by SBA, not banks.  If your businesses have been affected by the coronavirus pandemic, this program offers working capital to meet needs including payroll, accounts payable, and fixed debt payments until the situation improves. Interest rates are 3.75% for small businesses and 2.75% for non-profits. Your businesses may apply now at SBA: Disaster Assistance.  

Highlights From Bradley University SBDC - Last Updated March 19, 2020

  1. As of March 19, 2020, the SBA approved Governor Pritzker’s request to declare all counties in Illinois as declared disasters and companies are now able to apply for the SBA disaster loans. 
  2. The SBA Economic Injury Disaster Loan (EIDL) is a loan, not a grant.  However, it comes with a low interest rate of 3.75% for businesses, and 2.75% for private non-profits. And the payback period can be as long as 30 years. There is also a four-month grace period after the loan is approved before the first payment is due.  Businesses should also consult their accountant, banker, or lawyer for additional guidance as to the suitability of this loan program for your circumstances.
  3. Loan requests are made directly by individuals (sole proprietors) and businesses. Banks do not accept EIDL applications. Loan proceeds are paid directly to the applicant’s bank account.
  4. The loan amount may be up to $2,000,000. There is no fee to apply. Approved applications do not have to use all the approved loan amount and application approvals may be placed on hold for up to six months. 
  5. Only small businesses are eligible as determined by your industry’s NAICS code and SBA guidelines. However, for most businesses, less than 500 employees would qualify. If needed, our advisors can confirm if your business qualifies.
  6. Approvals are partly based on the demonstrated ability to repay the loan as evidenced through financial history and projections, along with credit scores. However, a low credit score does not preclude approval. Collateral will be required for loan amounts above $25,000 with real estate as the preferred collateral.
  7. The goal of this loan program is to provide the working capital you need to get through depressed economic conditions. This includes expenses such as rent, payroll, and other operational expenses.


Hospitality Emergency Grant Program (DEADLINE:  APRIL 1)

To help hospitality businesses make ends meet in the midst of the COVID-19 pandemic, DCEO is launching the Hospitality Emergency Grant Program with $14 million drawn from funds originally budgeted for job training, tourism promotion, and other purposes. Grant funds are available to support working capital like payroll and rent, as well as job training, retraining, and technology to support shifts in operations, like increased pick-up and delivery. Bars and restaurants that generated between $500K and $1M in revenue in 2019 are eligible for up to $25,000, and bars and restaurants that generated less than $500K in revenue in 2019 are eligible for up to $10,000. Hotels that generated less than $8M in revenue in 2019 are eligible for up to $50,000.

  • Applications for awards will be accepted until 5:00pm on April 1st, and winners will be chosen via a lottery.
  • More information here.
  • Application: [English]  [Spanish]


Illinois Small Business Emergency Loan Fund
DCEO and the Illinois Department of Financial and Professional Regulation (IDFPR) are establishing the Illinois Small Business Emergency Loan Fund to offer small businesses low interest loans of up to $50,000. Businesses located outside of the City of Chicago with fewer than 50 workers and less than $3 million in revenue in 2019 will be eligible to apply. Successful applicants will owe nothing for six months and will then begin making fixed payments at a below market interest rate for the remainder of a five-year loan term.


Childcare Resources
From Ready Nation: Like schools, most child care programs have been asked to close. But many emergency and essential workers continue to need reliable care for their kids. Thus, the state is in the process of establishing a series of “emergency child care” options – settings that could operate under more flexible-than-usual rules, while still offering kids and families crucial assistance.  Existing, interested providers could apply to re-open in this process; other, new providers could explore options for starting-up. See below for more information:

  • How to find emergency child care – Call 888-228-1146 or visit here.
  • General guidance on establishing emergency-care options, including rules, a license application, list of essential workers, and background-check authorization – click here.
  • Related FAQ, including info on the closure of normal child care operations – click here.

 

Reminder: Families First Act Goes Into Effect April 1
The Families First Act grant emergency paid sick leave to employees of businesses with fewer than 500 employees and expands family and medical leave. It takes effect on April 1, 2020.  The US Department of Labor has an FAQ here.

 

Small Business Development Centers (SBDC)
Your local SBDC provides one-on-one assistance, education, and research to assist small business owners and entrepreneurs who want to start, grow, or accelerate a business. Business advisors are on the front lines when businesses are impacted by any kind of disruption from tornadoes to pandemics. Most SBDC’s are fully operational and ready to assist businesses during these challenging economic conditions.

You may visit this website to find your local Illinois Small Business Development Center (SBDC). If you are located outside of Illinois, please visit this website to find your state’s SBDC network.

 

OTHER RESOURCES

 

 

Governor Pritzker presented his annual State of the State address on Wednesday, January 29, 2020. Regardless of personal politics, there is something to be said for taking note of and claiming wins for the state when possible.  You may find some opportunities to use some of these when promoting your own communities to outside parties.

"The State of our State is growing stronger each day...

Today the Illinois economy supports 6.2 million jobs.  This is the most jobs on record for our state, and we now have the lowest unemployment rate in history. Last year, for the first time in nearly 20 years, every major region in our state was growing simultaneously - and even more remarkably, communities in southern Illinois like Carbondale have led that growth. Over the past year, Illinois has reduced its unemployment rate more than ALL of the top twenty most populated states in the nation — and more than our Midwestern peers.

237 Illinois businesses from all over the state made Inc Magazine's List of Fastest-Growing Businesses in the Nation, including companies in Columbia and Rock Island, St. Charles and O'Fallon, Taylorville and Chicago.

Student applications to Illinois' public universities increased last fall for the first time in many years. Illinois is the second-largest producer of computer science degrees in the nation, accounting for nearly 10 percent of all computer science degrees awarded in the entire United States."

Other highlights from the speech are below, full speech is available [here]. 

  • "Rebuild Illinois will create and support 500,000 jobs in the state as we fix our aging and crumbling roads and bridges, bring broadband to parts of the state that are internet deserts, as well as modernize our hospitals, our community centers, our state police facilities, our universities, and colleges." 
  • The legalization "adult-use cannabis with the most equity-centric legislation in the nation which will result in 63,000 new jobs, and new opportunities for entrepreneurs, especially those from communities that have been left behind." And gives "a second chance to hundreds of thousands of people who had a low-level cannabis conviction or arrest on their record."
  • The License to Work Act "ended the practice of revoking driver's licenses for unpaid parking tickets and fines - because often the only way someone has to pay their parking ticket is if they can travel to work. We restored driving privileges to more than 50,000 people."
  • Consolidated "650 downstate and suburban first responder pension systems - which will alleviate local property tax burdens and strengthen the funds that offer a decent retirement to our police and firefighters."
  • We capped out-of-pocket insulin costs at $100 for a 30-day supply, restored federal funding of our state immunization program, reduced the number of opioid-related deaths, and expanded insurance coverage for mammograms and reproductive health.
  • "We stopped bad-mouthing the state and started passing laws that make Illinois more attractive for businesses and jobs. Working across the aisle, we brought tax relief for 300,000 small businesses through the phase-out of the corporate franchise tax. And we laid the groundwork for new high-paying tech jobs by opening new business incubators, by incentivizing the building of new data centers, and by investing $100 million in a University of Illinois and University of Chicago partnership that will make Illinois the quantum computing capital of the world."
 

2020 Legislative Review

The IEDA sifts through the thousands of introduced bills and attempts to determine which might actually be moving in a given year.  There are a number of factors that come into consideration, but one good indicator is stated intent by leadership.  In this regard we can look to the Governor's recent calls to action: 

  • Ethics Reform (conflict disclosures, more transparency, stopping the legislator-turned-lobbyist revolving door);
  • Desired changes for the Property Tax Extension Limitation Laws (PTELL) and consolidation/elimination of local governments;
  • And of course, the Governor's Graduated Income Tax.

The Illinois Taxpayers’ Federation of Illinois believes [property taxes] will be a recurring theme.  They indicate that it is important to determine what success in property tax reform looks like:  “Do property taxes need to be lowered, and if so by how much, or is simply slowing the growth of property taxes enough? One area of particular concern will be to make sure that the General Assembly does not simply shift the tax burden from homeowners to businesses and call it reform or a tax reduction.”

Also, we have already seen comments regarding possible legislation for [Gig Economy Workers], as well as [Ending State Competition for Corporate Subsidies].

A lot of legislation can be very program/region-specific, such as the [South Suburban Brownsfield Redevelopment] or [Quad Cities Regional Compact], and we rely on our legislative committee members to help us identify those items that have a broad impact for our membership. You can see some of the issues we are currently tracking below:

  • HB0320 - Property Tax: PTEL Freeze
  • HB0322 - Repeal red light cameras
  • HB2667 - Small/mid-sized business enterprise initiative program
  • HB2671 - Credit based on utilization of minority-owned or female-owned businesses
  • HB3319 - EDGE Tax Credit: Transferability
  • HB3864 - High Impact Business: Wages
  • HB3865 - High Impact Business: Wind
  • HB3707 - Enterprise Zone Eligibility 
  • HB3726 - Cybersecurity Right to Know Act
  • HB4021 - Creates a small business income tax deduction to allow for saving for larger capital expenditures
  • HB4051 - Independent Contractor: Ride Share Employment
  • HB4138 - Ending state competition for corporate subsidies
  • HB4277 - Prevailing Wage: Public Works
  • SB2272 - Exempts local governments from the parking tax
  • SB2284 - Grant Accountability and Transparency Act clarification
  • SB2305 - Model business enterprise program for procurement of muni contracts
  • SB2307 - DCEO: Office of Inclusion
  • SB2331 - Data Transparency and Privacy Act
  • SB2481 - Tax: "selling price" no longer includes the value of traded-in motor vehicles
  • SB2502 - Ending state competition for corporate subsidies
  • SB2544 - Revenue sharing for financially distressed cities
  • SB2547 - Includes fire protection services in the definition for TIF redevelopment project costs
  • SB2560 - Complete Streets Act to improve safety, access, and mobility for users of the various modes of transportation
  • SJR051 - Rural Development Task Force

 

 

2019 Legislative Review - Image of the Statehouse Dome

The end of the Legislative Session marked far more activity than in recent memory.  We saw a vote to legalize marijuana, passage of a $45 billion infrastructure plan, approval of six new casinos (Chicago, Waukegan, southern Cook County, Rockford, Danville, and near Marion), legalized sports betting, $40k minimum wage for teachers, passed a state budget, began the process of instituting a graduated income tax, increased the gas tax (to 38 cents), and added a dollar per pack to the cigarette tax (to $2.98). Most bills passed with bipartisan support, with the exception of the graduated income tax (Fair Tax) ballot question.


 

BUDGET REVENUE & BLUE COLLAR JOBS ACT
Senate Bill 689 is where a chunk of the operating budget money is being generated and includes several Republican requests to secure the aforementioned bipartisan support for gaming, capital, and the budget.  We have included page numbers below for your reference, and you may use this [link to SB689]

New Amnesty Programs
From October 1 – November 15, 2019, Illinois will be offering new Amnesty Programs, and interest and penalties are waived.

  • For those owing Illinois taxes from 06/20/11 – 07/01/18. [pg143]
  • For franchise tax or license fee liabilities for tax periods 3/15/2008 – 6/30/19. [pg155-156, 309]

Repeal of the Franchise Tax
The Illinois franchise tax is being phased out. New provisions in the Business Corporation Act exempt the first $X in liability “from the tax imposed under this Section” as follows:

  • 2020: $30
  • 2021: $1,000
  • 2022: $10,000
  • 2023: $100,000
  • 2024+: No Payment Due

 

Blue Collar Jobs Act
Beginning January 1, 2021, four new (or expanded) income tax credits. For the purposes of these credits:

  • Underserved areas refer to a geographic area that meets any of the following conditions [pg170]:
    • 20% poverty rate
    • 75% of children in the federal free lunch program
    • 20% of households receive Supplemental Nutrition Assistance Program (SNAP)
    • Average Unemployment rate is more than 120% of the national average
  • The total aggregate amount of credits awarded under the Blue Collar Jobs Act shall not exceed $20,000,000 in any State fiscal year.
  • Businesses that receive a credit are required to maintain a certified payroll, as well as records for all laborers and other workers employed for a period of 5 years from the date of the last payment. [pg239]
  • Even if the taxpayer uses a subcontractor, the taxpayer shall keep all records. If records or claims are knowingly false it is a class A misdemeanor. [pg241]
  • Eligible projects include building a structure/building or making improvements to real property, undertaken and commissioned by an eligible business. This does not include the routine operation, repair, or maintenance of existing structures, buildings, or real property. [pg170]
  • A credit may not reduce the taxpayer’s liability to less than zero. If the amount of the credit exceeds the taxpayer’s liability, the excess may be carried forward and applied against succeeding years. [pg198]

High Impact Business Construction Jobs Credit
Available for up to 50% (75% in underserved areas) of the incremental income tax attributable to employees in the course of completing a High Impact Business construction jobs project. [pg168]

Enterprise Zone Construction Jobs Credit
Available within a certified Enterprise Zone up to 50% (75% in underserved areas) of the incremental income tax attributable to employees on a qualified project with a capital investment of at least $10,000,000. [pg174]

  • Must receive approval from designating municipality/county & DCEO for the EZ construction jobs credit project. The Department shall give notice of approval within 45 of receipt, specifying reasons for their decision, and allowing 60 days for amendment and resubmission. [pg175]
  • The zone organization shall report to DCEO on the programmatic and audited financial status of any approved project.

New Construction EDGE Credit
Available for certified agreements which include a capital investment of at least $10,000,000 in a New Construction EDGE Project. Applicants must meet existing criteria by the EDGE Tax Credit Act (10/5-10, 15, & 20). DCEO shall post the terms of each agreement on its website (including the business name, location, estimated value, and underserved status).  Applications for the New Construction EDGE Credit must include:

  • project description, and location/amount of the investment & jobs created or retained;
  • duration of the credit and the first taxable year it may be claimed;
  • credit amount allowed each taxable year;
  • verification authorization for tax amounts;
  • amount of capital investment, project time period, and designated location
  • acknowledgment of investment notification requirements
  • acknowledgment of completion & occupancy requirements
  • terms regarding verification of completion, and other conditions [pg237]:

River Edge Construction Jobs Credit
Available for up to 50% (75% in underserved areas) of the incremental income tax attributable to River Edge construction employees on a qualified project with a capital investment of at least $1,000,000 in a qualified rehabilitation plan. [pg242-274] The Department shall give notice of approval within 45 of receipt, specifying reasons for their decision, and allowing 60 days for amendment and resubmission. [pg246]

Manufacturing Machinery & Equipment Credit
Manufacturing machinery and equipment exemption which includes production-related tangible personal property purchased on or after July 1, 2019.  Adds to the definition of “production-related tangible personal property” to include supplies & consumables used in a manufacturing facility including fuels, coolants, solvents, oils, lubricants, and adhesives, hand tools, protective apparel and fire and safety equipment used or consumed within a manufacturing facility.  The maximum amount of the exemption may not exceed 5% of the price of the property. The aggregate amount for the exemption may not exceed 10 million. [pg250-274]


 

THE ILLINOIS CAPITAL PROJECTS (BUILDING UP & OUT)

Senate Bill 690 makes up the “vertical” portion of the capital bill, infrastructures such as schools and hospitals.  Whereas Senate Bill 1939 consists of the “horizontal” elements (roads, bridges, and transit).

Senate Bill 690
Leveling the Playing Field for Illinois Retail 
After the Wayfair v South Dakota decision, Illinois can now require that remote retailers (Amazon, Ebay, Facebook, etc) collect State and local Retailers’ Occupation Tax (ROT) rather than use tax.  The Illinois Retail Merchants Association states (more information here) that Illinois would raise $460 million annually, with $368 million to the state and $92 million to localities by formula, plus any additional ROT where applicable.  IRMA states that local governments win with an increase in their tax share, and they get all of any locally-imposed ROT. Finally, there is no change in this matter for Illinois retailers or anyone with a warehouse or distribution center in Illinois. [pg1-7, 126-129, 155]

Parking Excise Tax
Beginning on January 1, 2020, a tax is imposed on the privilege of using in this State a parking space in a parking area or garage for the use of parking one or more motor vehicles, recreational vehicles, or other self-propelled vehicles, at the rate of 6% for a parking space paid for on an hourly, daily, or weekly basis; and 9% when on a monthly or annual basis. [pg7-20]

Data Center Investments
Two new tax benefits apply to data centers that make a capital investment of $250 million over a 5-year period, create 20 new jobs, and is either carbon neutral or green building certified. If the data center is in an economically disadvantaged area, there is a data center construction employment tax credit equal to 20% of the wages paid to construction contractor employees. Additionally, there is a sales/use tax exemption for property used in the construction or operation of a certified data center. [pg37-44, 81, 97, 113, 150]

Cigarette Taxes
As of July 1, 2019, taxes on cigarettes will increase to $1 per pack and Illinois imposed a floor tax.  Electronic cigarettes are now subject to a 15% tax on the wholesale price. [pg170-196]

Sports Wagering and More
Although the IEDA was not engaged in the gambling components of any legislation, we wanted to point it out in this bill. A new income tax surcharge was created on income from the sale or exchange of gaming-related assets equal to the federal income tax on that sale.  You can find more on pages 227 – 816.

Senate Bill 1939
Motor Fuel Tax
Illinois hasn’t passed an infrastructure bill in a decade.  However, this weekend a bipartisan effort in the Senate (12 of 19 Republicans and 36 of 40 Democrats) voted to increase the tax on fuel and increase vehicle registration and title fees to gather money for $45 billion statewide construction program. Also, as a concession to Republicans, the state will begin shifting 80% of its gasoline sales tax to the Illinois Road Fund.

SB1939 increases the motor fuel tax by 19¢ to 38¢ a gallon for regular fuel and 26¢ a gallon for diesel. Also, municipalities in Cook County may impose up to a 3¢ per gallon tax. DuPage, Kane, McHenry, Lake, and Will can now impose up to 8¢ a gallon (from 4¢).  Finally, the annual vehicle registration fee from $101 per year to $151 beginning with the 2021 registration year, and the commercial distribution fee is being eliminated July 1, 2020.


 

OTHER LEGISLATIVE HIGHLIGHTS

Senate Bill 687 – The Fair Tax
Changing the Illinois Tax Structure has been long discussed in Illinois, but after this session, a question about graduated income tax will be put to voters on the 2020 ballot. This is seen as a win for Gov. Pritzker. Expect a huge public battle to be waged via on the airwaves, television channels, and online media on both sides of this issue.  Both sides are expected to spend large amounts of money to sway public opinion.  Senate Bill 687 proposes the following to be put before voters:

Non-Joint Filers

  • $0-$10,000 – 4.75%
  • $10,001-$100,000 – 4.9%
  • $100,001-$250,000 – 4.95%
  • $250,001-$350,000 – 7.75%
  • $350,001-$750,000 – 7.85%
  • More than $750,000 – 7.99% of all income

Joint Filers

  • $0-$10,000 – 4.75%
  • $10,001-$100,000 – 4.9%
  • $100,001-$250,000 – 4.95%
  • $250,001-$350,000 – 7.75%
  • $350,001-$1,000,000 – 7.85%
  • More than $1,000,000 – 7.99% of all income

Senate Bill 687 increases the corporate income tax rate from 7% to 7.99% (or 10.49% with the personal property tax replacement income tax). The residential property tax credit is increased from 5% of property taxes paid to 6%. A new Child Tax Credit for children under the age of seventeen is created and the credit is equal to $100 and begins to phase out for joint filers with an income of $60,000.

Cannabis Legalization
Under the passed House Bill 1438, not only will possession up to 30 grams will be legalized for adult use, but clemency will be granted to people charged with possession of up to that amount in the past.  There are various taxes and fees applied to fund social, economic, and health programs – including a 7% tax on the gross receipts by a cultivator to a dispensing organization, and retail taxes.

Non-Resident Income Taxes
Senate Bill 1515 taxes non-resident that spend more than 30 working days in Illinois. Illinois Residents will receive a credit for income taxes paid to other states.