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CARES Act: Small Business Loans and Grants FAQs


Members of our CARES Act Response Team hosted a webinar on Friday, April 3, reviewing SBA loans and grants programs. Below are some of the most frequently asked questions we received regarding these programs: 

How many employees do I list on the application? Full-time and part-time employees or ONLY full-time employees?

In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019. For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.

Borrowers may use their average employment over the same time periods to determine their number of employees, for the purposes of applying an employee-based size standard. Alternatively, borrowers may elect to use SBA’s usual calculation: the average number of employees per pay period in the 12 completed calendar months prior to the date of the loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for 12 months).

The application says ‘payroll costs, including benefits. What does that include and how do I add that number to my payroll number?

Payroll costs include:

  • Compensation in the form of salary, wages, commissions, or similar compensation to employees whose principal place of business is in the United States
  • Cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate)
  • Payment for vacation, parental, family, medical, or sick leave
  • Allowance for separation or dismissal
  • Employer paid portion of - payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement
  • Payment of state and local taxes assessed on compensation of employees

All amounts should be added for the twelve-month period and then be divided by twelve to determine average monthly payroll cost.

I am a sole proprietor, not registered as a business, working under my Social Security number. I regularly contract with the same people that I pay and file 1099s for them. Can I qualify for a loan to continue paying them given we are not getting new projects to work on right now? And does what I draw for myself count as payroll also?

As an independent contractor or sole proprietor, you can apply for a PPP loan. The legislation allows the net earnings from self-employment to be considered for the loan calculations. If your business employed independent contractors, they would have to apply for their own PPP loans. You cannot include the amount paid to them as part of payroll cost in the loan amount or loan forgiveness calculation.

Economic injury during what time period? We may not see major injury now but might not be able to make up for rescheduled/canceled events.  

The covered period for EIDL loans is January 31, 2020 through December 31, 2020. The covered period for PPP loans is February 15, 2020 through June 30, 2020.

Does the $100k cap just apply to salary/bonus/tips or does it apply to all payroll costs per employee? If the wage limit is $100k and I have an employee over $100k can I reduce their salary to $100k and still be in compliance with the act?

The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:

  • employer contributions to defined-benefit or defined-contribution retirement plans;
  • payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
  • payment of state and local taxes assessed on compensation of employees.

For PPP, I have seen materials indicating the interest rate is .5% - 4% fixed rate. Has that changed to 1% overall?

Per the current SBA guidance released on April 2, 2020 the current term is a 1% interest rate which will have to paid back over a two-year period for any portion of the loan that is not forgiven.

We thought we could apply for both EIDL and PPP but now it appears we can't.  We completed the first part of the EIDL application and hope to receive the $10,000 grant. Can we accept this grant if received? Or do we have to decline the EIDL grant in order to get PPP?

You can apply for both loans but are not allowed to use the loan funds for the same purpose. If you have an already existing EIDL loan, you can refinance it into a PPP loan. Any advances/grants received when refinancing into a PPP loan must be deducted from the maximum loan amount applied for under PPP.


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