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Over the last several days, the United States Senate has been working on a bill to provide emergency health care and economic assistance during the COVID-19 global pandemic. This bill, known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act, addresses concerns ranging from small business interruption to individual, family, and business economic relief. While the bill also contains a myriad of economic and healthcare response-related provisions, this summary focuses on one aspect of the economic provisions, the Paycheck Protection Program.

This legislation was fully passed by Congress on March 27, 2020, and is expected to be enacted by President Trump in short order. Applied Payroll Solutions is closely following the CARES Act and will update this article with any changes. Please contact us if you have questions about how this applies to your company.

We realize there is a lot of information being published through the internet, via emails, texts, and social media.  We are trying to monitor this information and present the most concise easy to understand information that may be relevant to you. 

As we continue to shelter at home and maintain social distancing, we pray you are able to stay healthy and safe.


As part of CARES Act that was recently passed in Congress the “Paycheck Protection Program” was established to render aid to eligible small businesses and prevent them from going under due to economic losses caused by the COVID-19 pandemic. The “Paycheck Protection Program” would provide more than two months of cash-flow assistance through 100% federally guaranteed loans to small employers who maintain their payroll during this emergency. If the employer maintains payroll, the use of loan funds for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven, which would help workers to remain employed and affected small businesses and our economy to recover quickly from this crisis. This proposal would be retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls.

Loan Amount of the lesser of:
250% of average monthly Payroll Costs (1), the outstanding current balance of your existing SBA 7(a) loan made between January 30, 2020 and February 15, 2020, or • $10,000,000

Loan Terms:

  • 4% interest rate
  • Up to 10-year term
  • No collateral required
  • No personal guaranty
  • Payment deferral of no less than six months and up to a year

Loan Forgiveness (2):
Loans are up to 100% forgivable based on a total of the expenses below:

  • Payroll
  • Interest
  • Rent
  • Utilities

1 Payroll costs are defined as: (1) the sum of payments of any compensation with respect to employees that is a— (A) salary, wage, commission, or similar compensation; (B) payment of cash tip or equivalent; (C) payment for vacation, parental, family, medical, or sick leave; (D) allowance for dismissal or separation; (E) payment required for the provisions of group health care benefits, including insurance premiums; (F) payment of any retirement benefit; or (G) payment of State or local tax assessed on the compensation of employees; and (2) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year.

2 Loan forgiveness is subject to the requirements and qualifications of section 1106 of the Cares Act. Borrower will be required to monitor and support the necessary documentation for loan forgiveness. See below for more information.

Required Documentation

  • Documentation verifying the number of full-time equivalent employees on payroll and their pay rates and any State income, payroll, and unemployment insurance filings
  • Documentation verifying payments on mortgage and lease obligations, and utility payments • Complete copies, including all schedules, of the two most recently filed Federal income tax returns for the applicant business and any principal owning 20 percent or more
  • Personal Financial Statement completed, signed, and dated by the applicant, each principal owning 20 percent or more of the applicant business, and each general partner or managing member (you may use SBA form 413 or your own version)
  • Schedule of Liabilities listing all fixed debts
  • A 2019 year-end profit-and-loss statement and balance sheet
  • A current year-to-date profit-and-loss statement and balance sheet
  • Certification Form completed, signed, and dated by an authorized business representative stating that documentation provided is “true and correct” and “forgiveness is requested to retain employees and cover interest, rent, and utility expenses”.

Loan Forgiveness

An eligible recipient shall be eligible for up to 100% forgiveness of loan in the amount equal to the sum of payroll, interest, rent, and utility costs. The amount of forgiveness may not exceed the principal amount of the covered loan. The forgivable amount of the loan is calculated by the multiplying the average number of full time equivalent employees for each pay period falling with a month by the quotient obtained by dividing—

  • the average number of full-time equivalent employees per month employed by the eligible recipient during the covered period; by one of the following
  • the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019; or
  • the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on January 1, 2020 and ending on February 29, 2020; or
  • in the case of an eligible recipient that is seasonal employer, as determined by the Administrator, the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019.


Payroll – Payments used for the continuation of payroll costs, group healthcare benefits, retirement benefits, and periods of paid sick, medical, or family leave. Payroll costs can further be defined as any salary, wage, commission, cash tip or similar compensation as employee may receive in addition to any State or local tax assessed on the compensation of employees. Please note that forgiveness only applies to employees that receive an annual compensation up to $100,000.

Interest – Payments of interest on any mortgage or other debt obligations (excluding any prepayment or principal obligation) that was incurred before February 15, 2020.

Rent – Payments for rent must be under a leasing agreement that was in force before February 15, 2020.

Utilities – Payments for utilities are for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.

Note: The Information Contained Within Is Not Tax Or Legal Advice. The information has been gathered from various sources of information as it has become available.  This is a fast-moving situation that is still being finalized.  These Issues Are Complex, And Applicability Depends On Individual Circumstances. Businesses Should Consult Tax Or Legal Counsel Before Taking Action On Any Of The Items Identified Above.