Posted on

First and foremost, we hope you and your family are safe and healthy. On March 27, 2020, the Corona Aid, Relief and Economic Securities (CARES) Act was signed into law.

The CARES act includes several provisions directly targeted at assisting small businesses and not-for-profits, such as yours, in maintaining operations and payroll costs.  We think one or more of these provisions may contain important benefits available to your small business or organization. 

Paycheck Protection Program “PPP” Loans

This provision provides businesses and organizations with cash flow assistance through 100% Federally guaranteed loans to employers who maintain their payroll during this national emergency.  The loan may be forgiven if the borrower maintains payroll and staffing levels during the 8-week period following the loan origination date or restores their workforce count and wages by June 30, 2020.  If the funds are not used to maintain payroll and staffing levels, loan repayment terms can extend out to 10-years at 4% interest.  The maximum loan is 2½ times the borrower’s average monthly payroll costs (includes employee benefits – not to exceed $10 million).

Small businesses harmed by COVID-19 between February 15, 2020 and June 30, 2020 with fewer than 500 employees, including not-for-profits and individuals who operate as a sole proprietor or independent contractor are eligible to apply.

SBA loan qualification requirements are significantly reduced under the PPP provision and include:

  • no personal guarantees required
  • no collateral required
  • no requirement that the borrower was unable to obtain credit elsewhere
  • borrower was in operation before February 15, 2020
  • borrower had employees

Initially, loans will be processed by banks that are already approved by the Small Business Administration.  The U.S. Treasury has indicated that the application process will start on April 3 for small businesses and sole proprietors, and April 10 for independent contractors and self-employed individuals. 

SBA Economic Injury Disaster Loans (EIDL) & Emergency Economic Injury Grants

This provision is a low interest (3.75% small business and 2.75% not-for-profits) loan of up to $2 million, repaid over a period of up to 30 years.  This loan may be used to pay for expenses that could have been met had the disaster not happened, including payroll and other operating expenses.  Small businesses have the opportunity for an immediate advance of $10,000 which, according to the SBA, will be given within three days of the loan application date.  This advance is effectively a grant and is not required to be repaid even if the loan is denied.

Upon approval of the EIDL the option to convert to the previously mentioned PPP loan is available.  Any Emergency Economic Injury Grants made in connection with the EIDL application will reduce the PPP Loan by an equivalent amount. 

Businesses and private not-for-profits that have been in operation since January 31, 2020 are eligible.  Loans greater than $200,000 will require personal guarantees and the SBA will place liens against assets of the business.

Loans will be processed directly by the Small Business Administration and applications are available on their website.  As of the date of this letter, the URL is

Employee Retention Credits

This provision creates a fully refundable payroll tax credit for employers with 100 or fewer full-time employees equal to 50 percent of the “qualified wages” paid by employers between March 13, 2020 and December 31, 2020.  To be eligible, a business must (i) be fully or partially suspended due to an order from a governmental authority limiting travel, commerce or meetings during the applicable calendar quarter or (ii) suffer a significant decline in gross receipts—i.e., a reduction in gross receipts of 50 percent or more during a calendar quarter when compared to the same quarter during the previous year.

Fifty percent of the first $10,000 of compensation paid, including employee benefits such as health insurance, to an eligible employee during a quarterly period is eligible for a credit.

The credit is claimed by reducing federal payroll tax deposits (941 deposits) made during the quarter and/or a refundable credit when filing their quarterly payroll tax returns.    Employers are not eligible for the credit if they receive a small business loan pursuant to the CARES Act.

Delay of Payment for Employer Payroll Taxes

This provision allows an employer to defer payments of the employer portion of the Social Security Tax through December 31, 2020.  The deferred amounts will be payable in two equal installments, one at the end of 2021 and the other at the end of 2022.  This provision also applies to the self-employed individuals to defer 50% of their self-employment tax with payments to be made according to the same schedule. 

Employers that are granted loan forgiveness under the SBA loan program created by the CARES Act are not eligible for this deferral.

We can assist you with the application(s) process.  Currently, at least one of these provisions, PPP, covers our fees to complete the application for you.  Other time incurred maybe billed at our standard hourly rates.

Please understand, these opportunities are generalized, are subject to change, and may not reflect exact outcomes for your company.  We hope you find this information useful and the assistance eases the financial burden created by this virus.

Don’t hesitate to contact us to discuss your specific situation.