CARES Act, FFCR Act and SBA Loan Information

Two major acts were signed into law recently, the CARES Act on 3/27/20 and FFCR Act on 3/18/20, we have summarized important information to help you understand the changes.  The new loan and grants will be administered by the SBA and bank officers, their interpretations may differ and more guidelines are forthcoming regarding the application process.  The SBA and banks will ultimately determine the loan amount.

Emergency Economic Injury Grants

These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL) https://covid19relief.sba.gov/#/. To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.

For more information see below.

Paycheck Protection Program (PPP) Loans

The program would provide cash-flow assistance up to 2.5 times average monthly payment.  If employers maintain their payroll, the loans would be forgiven.  The forgiveness is based on 8 weeks of payroll, mortgage interest, rent and utilities subject to employee retention and salary levels, no SBA fees, and at least six months of deferral with maximum deferrals of up to a year. Small businesses and other eligible entities will be able to apply at their local bank if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020.

For more information see below.

If I get an EIDL and/or an
Emergency Economic Injury Grant, can I get a PPP loan?

Whether you’ve already received an EIDL
unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency
Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP
loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP
loan, any advance amount received under the Emergency Economic Injury Grant
Program would be subtracted from the amount forgiven in the PPP. However, you
cannot use your EIDL for the same purpose as your PPP loan. For example, if you
use your EIDL to cover payroll for certain workers in April, you cannot use PPP
for payroll for those same workers in April, although you could use it for
payroll in March or for different workers in April.

Loans for Small Business Paycheck Protection Program (PPP) Loan up to 2.5 times average monthly payroll – if interested apply with local bankers.

Business will need to certify

  1. That
    the uncertainty of current economic conditions makes necessary the loan request
    to support the ongoing operations of the eligible recipient;
  2. Acknowledging
    that funds will be used to retain workers and maintain payroll or make mortgage
    payments, lease payments, and utility payments;
  3. That
    the business does not have a SBA (7)(a) loan pending for the same purpose and
    duplicative of amounts applied for or received under a covered loan;
  4. During
    the period beginning on February 15, 2020 and ending on December 31, 2020, the
    business has not received amounts under the Paycheck Protection Program for the
    same purpose or duplicative amounts applied for or received under a covered

  • Are guaranteed 100% by the Small Business Administration (no personal guarantees or collateral required);
  • Must be taken out between February 15, 2020, and June 30, 2020;
  • A borrower that receives a Section 7(a)(36) loan Paycheck Protection Program for employee salaries, payroll support, mortgage payments and/or other debt obligations would not be able to receive an SBA economic injury disaster loan (EIDL) for the same purpose, or co-mingle funds from another loan for the same purpose.
  • Eligible borrowers would be required to make good faith certification that they have been affected by COVID-19 and will use funds to retain workers and maintain payroll and other debt obligations.
  • Loan Forgiveness – Provides a process by which borrowers would be eligible for loan forgiveness in an amount equal to the amount spent by the borrower during an eight-week period after the origination date of the loan on the following items:
    • Payroll costs
    • Interest payment on any mortgage incurred prior to February 15, 2020
    • Payment of rent on any lease in force prior to February 15, 2020
    • Payment on any utility for which service began before February 15, 2020
  • The amount forgiven would be reduced in proportion to any reduction in employees retained compared to the prior year and to the reduction in pay of any employee beyond 25% of her prior year compensation.  For purposes of this formula, employees earning over $100,000 per year are excluded.
    • Borrowers that rehire workers previously laid off will not be penalized for having reduced payroll at the beginning of the period.
  • Have a maturity rate of 2 years and 1% interest if not forgiven. From February 15, 2020 through June 30, 2020 with respect to covered loans, the SBA will not collect any fees otherwise applicable. The includes no prepayment fees. Interest rates cannot exceed 4%
  • A COD exclusion of small business Payroll Protection loans forgiven under the Act.

Loans for Small Business Economic
Injury Disaster Loans (EIDL) Loan up to $2 million

Those suffering substantial
economic injury in all 50 states, DC, and the territories may apply for an

Those eligible for an EIDL and who
have been in operation since January 31, 2020, when the public health crisis
was announced.

Economic Injury Disaster Loans (EIDL) Grants up to $10,000

If interested apply at

Establishes an emergency
grant to allow an eligible entity that has applied for an EIDL loan to request
an advance on that loan of no more than $10,000, which the SBA must distribute
within three days.  The advanced amount shall be
reduced from any other loan forgiveness amount for payroll costs including the
PPP loan see above.

The grant may be used for:

  • (A.) providing paid sick leave to employees unable to work due to the direct effect of the COVID–19;
    • maintaining payroll to retain employees during business disruptions or substantial slowdowns;
    • meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains;
    • making rent or mortgage payments; and
    • repaying obligations that cannot be met due to revenue losses.

EIDLS smaller than $200,000 can be
approved without a personal guarantee. They are also not requiring real estate
as collateral and will take a general security interest in business property.

  • The statutory limit for EIDL interest rates is 4% per annum. However, the SBA has lower rates specific for business concerns impacted by COVID-19: 3.75% for small business concerns and 2.75% for nonprofits.
  • Proceeds of EIDLs may not be used for certain expenses. Recipients cannot use EIDLs to:
    • Refinance indebtedness incurred prior to the disaster event
    • Make payments on loans owned by another federal agency (including the SBA) or an SBIC
    • Pay, directly or indirectly, any obligations resulting from a federal, state, or local tax penalty as a result of negligence or fraud, or any non-tax criminal fine, civil fine, or penalty for non-compliance with a law, regulation, or order of a federal, state, regional, or local agency or similar matter
    • Repair physical damage
    • Pay dividends or other disbursements to owners, partners, officers, or stockholders, except for reasonable remuneration directly related to their performance of services for the business concern

are links with additional resources you will need to contact your local banking
partners for how to apply for the PPP loan:




Other Tax Provisions for

  • Tax Stimulus Payments -Tax credit rebates of up to $1,200 per individual and $500 per child for taxpayers with AGI under $75,000 if single, $150,000 if married filing joint and $112,500 for head of household.


  • Penalty-free withdrawals from retirement funds of up to $100,000 (income recognized over a three-year period);
  • A temporary waiver of RMD requirements in 2020;
  • $300 Above the Line Charitable Contribution Deduction; Relaxation of the Charitable Contribution Limitation.  The CARES Act would allow a permanent “above the line” charitable contribution deduction for up to $300 of cash contributions to certain section 501(c)(3) public charities beginning in 2020, even if the individual takes the standard deduction

Other Tax Provisions for Small

  • 50% Employee Retention Credit for Employers Closed Due to Covid-19.  The CARES Act provides eligible employers with a refundable payroll tax credit equal to 50% of certain “qualified wages” (including certain health plan expenses) paid to its employees in a calendar quarter if the employer is engaged in an active trade or business in 2020 and, during the applicable calendar quarter, either (i) the operation of that trade or business is fully or partially suspended due to a governmental order related to COVID-19 or (ii) the gross receipts for that trade or business are less than 50% of gross receipts for the same calendar quarter of the prior year. The employee retention credit is available for employers with more than 500 employees, but for employers with more than 100 employees, the credit is available only with respect to wages paid to an employee that is not providing services due to the circumstances described in (i) and (ii) above.  The credit is capped at $5,000 (50% of $10,000 qualified wages) per employee for all calendar quarters.  The credit is not available if the employer is a borrower under the Payroll Protection Loan Program described above.  Further, the amount of the credit is reduced by any credits allowed under Section 7001 or 7003 of the Families First Coronavirus Relief Act (i.e., the sick leave and family leave credits).
  • Deferral of 50% of an employers’ payroll tax deposits for 2020 would permit employers and self-employed individuals (other than taxpayers who have had indebtedness forgiven under the CARES Act) to delay payment of the 6.2% employer share of the Social Security tax (but not the 1.45% employer share of the Medicare tax) from the date of enactment through the end of 2020.  The tax would be payable over the following two years with half paid by December 31, 2021 and the other half by December 31, 2022.
  • NOLs; Excess Business Losses.  The CARES Act would allow a business losses from 2018, 2019, and 2020 to be carried back for five years, and would allow NOLs to fully reduce taxable income (rather than only 80% of taxable income under current law).
  • Tax-Free Employer Repayment of Employee Student Loans.  Under the CARES Act, an employer’s repayment of up to $5,250 of an employee’s student loan debt would be tax-free to the employee if made after the enactment of the CARES Act and before January 1, 2021 (i.e., the repayment is excluded from the employee’s income).
  • Qualified improvement property changed to 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property.

The full text of the CARES Act is
available at:


Families First Coronavirus Response Act goes into effect 4/1/2020 to 12/31/2020


Small businesses with fewer than 50 employees will be eligible for an
exemption from the leave where the requirements would jeopardize the ability of
the business to continue.

Employers will be provided refundable tax credits against their employer portion of Social Security taxes for 100% of the qualified sick leave and family leave wages paid in accordance with the Act. If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. Any tax credit received by the employer cannot be used as a basis for loan forgiveness under the Payment Protection Program described above.

  • Health insurance costs paid through payroll are also
    included in the credit.
  • Self-employed individuals receive an equivalent

Paid Sick Leave Credit

For an employee who is unable to work
because of Coronavirus quarantine or self-quarantine or has Coronavirus
symptoms and is seeking a medical diagnosis, eligible employers may receive a
refundable sick leave credit for sick leave at the employee’s regular rate of
pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.  part-time employees are eligible for a number of hours equal to
the number of hours they work, on average, over a two-week period.

An eligible employee may take paid sick leave if he/she is unable to work
(including telework) because:

  1. The employee is
    subject to a federal, state, or local quarantine or isolation due to COVID-19;
  2. A health care
    provider advised the employee to self-quarantine due to concerns related to
    COVID-19 (self-imposed quarantine without medical advice does not qualify under
    the Act);
  3. The employee is
    experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  4. The employee is
    caring for an individual (not limited to family members, although there is a
    stray reference to family members elsewhere in the Act, so stay tuned) who is
    either subject to a federal, state, or local quarantine or isolation due to
    COVID-19 or has been advised to self-quarantine due to concerns related to
  5. The employee is
    caring for the employee’s child whose school has been closed or place of care
    is unavailable due to COVID-19 precautions; or
  6. The employee is
    experiencing any other substantially similar condition specified by the
    Secretary of Health and Human Services in consultation with the Secretaries of
    Treasury and Labor. The precise meaning of this sixth reason will be clarified
    by the Secretary of Health and Human Services.

Child Care Leave Credit

Full-time eligible employee unable to work (or telework) due to a need
for leave to care for a child under 18 years of age if the child’s school or
place of care has been closed, or the childcare provider is unavailable, due to
a public health emergency will be entitled to 80 hours (10 days) of Federal
Paid Sick Leave and up to 12 weeks of job-protected Emergency Family and
Medical Leave Act (FMLA) leave, with the first 10 days (2 weeks) paid as
Federal Paid Sick Leave at their full rate, but not more than $200 per day and
$2,000 in the aggregate per employee (although the employee can elect to use
other sick pay, vacation, or PTO instead), and the remaining 74 days (10 weeks)
paid by the employer at two-thirds of their regular pay up to a maximum
entitlement of $200 per day and $10,000 in the aggregate per employee, all for
a total leave payout of no more than $12,000 in the aggregate per employee.


If an eligible employer pays $10,000 in sick leave and is otherwise
required to deposit $8,000 in taxes, the employer could use the entire $8,000
of taxes in order to make qualified leave payments and could file a request for
an accelerated credit for the remaining $2,000.

The full text of the FFCR Act is
available at: