CARES Act - Payroll Protection Program
Loan Amount and Estimated Forgiveness Calculator
Overview of Program: The CARES Act provides businesses with fewer than 500 employees, including sole proprietorships and non-profits, access to up to a $10 million loan through the ''Covered Period'', which runs from February 15, 2020 through June 30, 2020. The program includes a provision that allows these loans to be forgiven by the Small Business Administration (''SBA''). It is possible for the entire principal of the loan to be forgiven. Borrowers of this loan program will receive the loan without the need to pledge collateral or provide a personal guarantee.

Critical Definitions:
1. ''Maximum Loan Amount'' is calculated as the lessor of:

A) $10,000,000
B) 2.5 times average monthly ''Payroll costs'' for the previous 12 months before the loan date


2. ''Payroll Costs'' include:

A) Wages, commissions, salary or other similar compensation to an employee,
B) Payment of a cash tip or equivalent,
C) Payment for vacation, parental, family, medical or sick leave,
D) Allowance for dismissal or separation,
E) Payment for group health care benefits, including premiums,
F) Payment of any retirement benefits, and
G) Payment of state or local tax assessed on the compensation of employees.

Per Interim Final Rule published by SBA on 4/2/2020 located at: https://www.sba.gov/document/policy-guidance--ppp-affiliation-interim-final-rule

Do independent contractors count as employees for purposes of PPP loan calculations? No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation.

Important: 'Payroll Costs' do NOT include:

A) The Compensation of any individual employee in excess of an annual salary of $100,000,
B) Payroll taxes,
C) Any compensation of an employee whose principal place of residence is outside the U.S., or
D) Any qualified sick leave or family medical leave for which a credit is allowed under the Coronavirus Relief Act


3. ''Loan Forgiveness Amount'' is the amount of the loan that can be forgiven and is based on specific costs incurred during the 8-week period after the loan origination. Any amount of loan forgiveness is tax-exempt. It is calculated as the sum of the following:

A) Payroll costs
B) Mortgage interest
C) Rent obligations
D) Utility payments

Per Interim Final Rule published by SBA on 4/2/2020 located at: https://www.sba.gov/document/policy-guidance--ppp-affiliation-interim-final-rule

Do independent contractors count as employees for purposes of PPP loan forgiveness? No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan forgiveness.

Important: The loan forgiveness amount can be reduced (note the double negative) by two factors:

A) The ratio of reduction in FTEs during the 8-week period following the loan origination when compared to periods in either 2019 or 2020, and

B) Reduction in the salary or wages paid to an employee who earned less than $100,000 in annualized salary by more than 25% during the covered period.

Important: There are two exemptions that will not reduce the Maximum amount of loan forgiveness:

A) If you reduce the number of FTEs between February 15 2020 and April 28 2020 but re-hire the same number of FTEs you had as of February 15 2020 by the end of the 8-week period after loan origination, you will not be penalized with a reduction in loan forgiveness related to the number of FTEs.

B) If you reduce the salary of an employee that earned less than $100,000 by more than 25% February 15 2020 and April 27 2020 but return the salary of said employee that was earned as of February 15 2020 by the end of the 8-week period after loan origination, you will not be penalized with a reduction in loan forgiveness related to the reduction in salary or wages