Prepare for the CARES Act
Effective Friday, April 3, 2020, small businesses and sole proprietors can apply. Self-employed and independent contractors can apply starting Friday, April 10th. Once they are finalized, applications will be available from your local banker, https://www.sba.gov/document/sba-form--paycheck-protection-program-ppp-sample-application-form
Businesses can borrow 2.5 times what their average monthly payroll was during the period 2/15/19 to 2/15/20. To determine your monthly payroll amount, you can include salary, wages (including cash tips), employee group health care insurance premiums, retirement contributions, and medical/sick leave. Example: If your annual payroll cost (adding in all these items) for the period 2/15/19 – 2/15/20 was $500,000, your average monthly payroll cost is $41,667. You can borrow 2.5 times your average monthly payroll cost, for a total loan amount of $104,168.
Because the loans are intended to help businesses keep paying their employees, the expectation is that a business will use at least 75% of the loan proceeds on salary (including health insurance, retirement, and leave) and no more than 25% of the loan proceeds on the other approved items (rent, utilities, and interest on mortgages or other obligations). Any amount of the loan over 25% used for approved items other than salary will not be eligible for forgiveness.
