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CARES Act

Now that the SBA portal has reopened, we are in the process of requesting E-Tran numbers on applications we have already received. We are not accepting any new applications at this time.


Prepare for Forgiveness of Your Paycheck Protection Program Loan
The Paycheck Protection Program provides borrowers with the option to apply for forgiveness of their loan up to the full principal amount as well as any accrued interest. In order to ensure you receive the highest amount of forgiveness possible, please follow the guidelines outlined below. Failure to do so may reduce the amount of forgiveness you will receive.

Forgiveness Guidelines

During the eight weeks following your receipt of the loan you must ensure funds are used according to the following guidelines:

  • At least 75% must be used for payroll costs
  • No more than 25% may be used to pay:
    • Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
    • Mortgage interest payments (but not mortgage prepayments or principal payments);
    • Rent payments
    • Utility payments
    • Interest payments on any other debt obligations that were incurred before February 15, 2020;
    • Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020.


Other factors may reduce your forgiveness. See “Avoid Workforce Reduction or Wage Reduction” section below for additional information


What Qualifies as Payroll Costs?

Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of

  • salary, wages, commissions, or similar compensation;
  • 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 of such tips);
  • payment for vacation, parental, family, medical, or sick leave;
  • allowance for separation or dismissal;
  • 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;
  • and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation.

Exclusions include:

  • Any compensation of an employee whose principal place of residence is outside of the United States;
  • The compensation of an individual employee in excess of an annual salary of $100,000, prorated as necessary;
  • Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees;
  • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116–127).

Avoid Workforce Reduction or Wage Reduction

The purpose of the Paycheck Protection Program is to encourage companies to hire their employees back at comparable wages. The amount of your loan forgiveness may decrease if you reduce your workforce during the eight-week period or reduce their salary by more than 25% of their total salary during the most recent full quarter they were employed. Follow the guidelines below:


Workforce Reduction Calculation

The amount of the loan forgiveness is reduced by the quotient of the following: Monthly average full-time equivalent (FTE) employees during the Covered Period divided by the monthly average FTE employees of either of the following periods: February 15, 2019 - June 30, 2019 or January 1, 2020 - February 29, 2020.


For seasonal employers, the measurement period is February 15, 2019 - June 30, 2019


Example: XYZ Company receives a $1,000,000 loan which it spends on qualifying expenses during the covered period. However, its average number of FTEs from February 15, 2019 to June 30, 2019 is 100 and the average number of employees during the Covered Period is 75. The forgiveness portion would be 75% (75/100) of $1,000,000 or $750,000. The remaining portion would need to be repaid.

Wage Reduction Calculation
The intent of the CARES Act is to ensure that companies hire back employees at comparable wages. Accordingly, the amount of loan forgiveness is decreased by any reduction in salary or wages of specified employees that is in excess of 25% of their total salary during the most recent full quarter they were employed. Only employees earning less than an annualized rate of $100,000 during 2019 are included in this calculation.


Example: XYZ Company receives a PPP loan. After the Covered Period, XYZ Company performs a workforce reduction calculation and determines that its potential loan forgiveness amount is $750,000. Employee A worked for XYZ Company last year. Employee A has a salary of $80,000. During the first quarter of 2020, Employee A is paid $20,000. If XYZ Company reduces Employee A's salary by more than $5,000 a quarter (more than 25% based on most recent full quarter salary calculated), the amount in excess of $5,000 must reduce the loan forgiveness.


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