How will the CARES Act help my business?

Q: What are Paycheck Protection Program loans?

A: Paycheck Protection Program loans are loans made under Section 7(a) of the Small Businesses Act. The CARES Act has increased the eligibility of those able to receive these loans to any business that employs less than 500 employees. The CARES Act further allows any payments on the loan to be deferred for 6 to 12 months and will provide forgiveness of some or all amounts owed on the loan for the covered period if certain conditions are met.

Q: How much is the loan amount I can receive?

A: CARES Act authorizes a loan amount equal to the lesser of:

  • $10 Million, or

  • 2.5X avg. total monthly payments for allowed payroll costs from Feb. 15, 2019 to June 30, 2019

Q: Where can I apply for the loan?

A: Any bank that is qualified to make a small business loan. The Secretary of the Treasury is going to greatly expand the number of banks that are qualified to make these loans. It is expected that any Center that qualifies for a loan will be able to receive the loan from the bank it currently has a relationship with.

Q: What can the loan be used for?

A: The loan can only be used to pay for the following expenses:

  • Payroll costs

  • Costs related to continuing group health benefits

  • Salaries, commissions, wages, etc.

  • Interest payments on a mortgage

  • Rent

  • Utilities

  • Interest on debt incurred prior to Feb. 15, 2020

Q: What is the Covered Period of the loan?

A: CARES Act designates the qualified period beginning February 15, 2020 and ending June 30, 2020.

Q: How much of the loan will be forgiven at the end of the covered period?

A: The loan will be forgiven in an amount equal to the sum of the allowable expenses for the covered period of February 15, 2020 – June 30, 2020. The amount forgiven will be reduced based on the following:

  • Number of Employees: Avg. # of employees per month from Feb. 15 – June 30, 2020 / Avg. # of employees per month from Feb. 15 – June 30, 2019 (or Jan 1 – Feb. 29, 2020)

    • Amount will be reduced by the % determined by the above ratio

    • Avg. # of employees = avg. # of employees for each pay period falling within a month

  • Reduction in salary and wages: Total salary and wage reductions on any employee making less than $100K/year greater than 25% during the most recent full quarter.

There will be no penalties for reductions made between Feb. 15 and 30 days following enactment of the CARES Act (April 26) if the reduction is eliminated by June 30.

Q: What is the process for receiving debt forgiveness?

A: Documentation of all expenses must be provided to the lender. The lender then has 60 days to determine whether or not the borrower qualifies for loan forgiveness, and what that amount is eligible for forgiveness.