Update: What To Know About The CARES Act

Update, 1/14/21: The Paycheck Protection Program began a phased reopening for loan applications on January 11; the program will be open to all participating lenders and eligible borrowers, including both first and second draw applicants, on January 19. First draw applicants can access the loan application here. There is a separate application form for eligible businesses seeking a second draw loan. Need to find an SBA-approved lender? We can help.

Update 12/22/20: The Consolidated Appropriations Act, 2021, which includes funding for another round of Paycheck Protection Program (PPP) loans among other stimulus measures, was approved by Congress. The Act now goes to the president for his signature. We continue to actively update our existing PPP resources on this site as additional guidance is released.

Update 12/21/20: With a $900 billion financial aid bill expected to be voted on by Congress that includes new Paycheck Protection Program funding, U.S. small businesses such as restaurants and live venues hurt during the COVID-19 pandemic are one step closer to gaining access to relief. If the bill passes, the next step would be a presidential signature.

Update, 8/7/20: As of August 8, the SBA will no longer be accepting applications for Paycheck Protection Program loans. Learn about other small business financing options.

Update 7/4/2020: On July 4, 2020, President Trump signed into law an extension of the Paycheck Protection Program (PPP) loan application deadline to August 8.  Looking to apply for a loan? Find an SBA-approved lender. If you’re not sure if PPP is the right approach for your small business, start your research with these resources: maximizing PPP loan forgiveness and explore other small business financing options.

Update 7/2/2020: The Paycheck Protection Program is currently not accepting applications for loans, as the deadline to have a loan approved. As of July 1, both the U.S. Senate and House of Representatives have passed an extension of the application deadline to August 8. This now goes for President Trump's signature to become law. If you are planning to apply for a loan should the program reopen to new applications, get a head start: find an SBA-approved lender. While we await further news, you can learn more about maximizing PPP loan forgiveness and explore other small business financing options.

Update 6/30: As of June 30, 2020 applications for loans through the Paycheck Protection Program are closed. Looking for funding? Learn more about small business funding options that are still available.

Update, 6/9: The Paycheck Protection Program (PPP) Flexibility Act, which was signed into law June 5, 2020, made some significant changes to the PPP loan and loan forgiveness process. Read this blog post to learn more about the Flexibility Act. For additional PPP Loan Forgiveness support, check out the FAQs and forgiveness estimator on our Maximizing Loan Forgiveness hub.

Update, 5/23/20: Late Friday, May 22 the U.S. Treasury and the Small Business Administration issued two Interim Final Rules: the highly anticipated Interim Final Rule on Loan Forgiveness, and an Interim Final Rule on Loan Review Procedures and Related Borrower Responsibilities. We are working through the new guidance to finalize our reporting, loan forgiveness estimations, and will produce additional content and resources to help you as you seek loan forgiveness. For additional information on maximizing loan forgiveness, please visit our Paycheck Protection Program Loan Forgiveness hub.

Update, 5/18/20: Late Friday, May 15, 2020, the U.S. Treasury and the Small Business Administration released the application for Paycheck Protection Program loan forgiveness application. We are working through the information available to update our loan forgiveness estimator. As a reminder, restoring employee full time equivalent levels and salary/hourly wage levels by June 30, 2020 can help maximize your opportunity for loan forgiveness. Visit our Maximizing Loan Forgiveness hub for the latest updates on PPP forgiveness.

Update, 4/10/2020: We know that navigating the various relief options can be a challenge. Jackson Lewis has published a flow chart to help businesses understand their eligibility and opportunity for forgiveness under the Paycheck Protection Program.

Update 4/6/2020: We’ve created a specialized report that is currently available for SurePayroll users to help make applying for a Paycheck Protection Program (PPP) loan simpler. Log into your account to get your report today! Note that household employers are not eligible for a PPP loan.

Update, 3/30/2020: To learn more about coronavirus emergency loans, including eligibility and loan forgiveness requirements, please view the U.S. Chamber of Commerce Coronavirus Emergency Loans Small Business Guide and Checklist.

Hold on! Help is on the way. With many of our clients struggling with business disruptions, we know the hard decisions you face every day, especially about whether to lay off employees. The Coronavirus Aid, Relief, and Economic Security Act (CARES) is a financial stimulus package designed to help. Small businesses will be able to get a loan of up to $10 million to stay afloat to help offset the financial challenges created by the COVID-19 pandemic. The CARES Act is now law, but there are still many questions on timing and administration. However, it’s important to understand that significant financial relief is on its way.

As you read about these measures, while weighing heavy decisions about what steps to take next with your business or employees, we encourage you to consider if these forthcoming provisions can impact those choices. 

Small business loans with eight weeks of covered costs forgiven

A key piece of the largest relief bill in recent memory is the more than $370 billion in funding for small businesses. Businesses with fewer than 500 employees are eligible for up to $10 million in loans, which can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities.

The loans, available at financial institutions currently extending SBA loans and other non-traditional lenders, would be completely forgiven if the employer continues to keep the employees or hires back those who already have been laid off, and uses the funds for covered expenses.

Recipients of a loan made under the Paycheck Protection Program will be eligible for loan forgiveness in an amount equal to the sum of the following costs incurred and payments made during an 8-week period beginning on the date of the loan origination:

• payroll costs (including insurance premiums);
• interest payments on any covered mortgage obligation incurred before February 15, 2020;
• payment of rent under a lease in force prior to February 15, 2020; and
• utility payments for which service began before February 15, 2020.

Any loan amounts not forgiven at the end of one year is carried forward as an ongoing loan with terms of a max of 10 years, at max 4% interest.

Credits for retaining employees

Another bright spot for qualified business owners would be an employee retention credit, giving eligible employers a tax credit for keeping American workers employed during the COVID-19 crisis. Employers may be eligible for a refundable credit of up to 50% of qualified wages up to $10,000 per employee against applicable employment taxes.

Please note: the CARES Act employer credits cannot be combined with Small Business Administration (SBA) loans. The details on all of this can be complex.  We will be posting updates regularly to keep you informed as the situation unfolds.

More comprehensive coverage components

Other relief efforts proposed include:

• Recovery rebates for individuals
  • Direct payments to individuals, based on their 2019 tax filing returns, or their 2018 tax filings, if 2019 has yet to be filed.
• Delayed employer payroll taxes
  • Would allow employers to defer payment of the employer share of the Social Security tax (6.2%) paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022; employers would still be responsible for FICA tax on employee wages.
• Relief for retirement plan participants impacted by COVID-19:
  • Enhanced loan availability and relief for outstanding loan repayments.
  • Allows COVID-related distributions and waived early withdrawal penalty.
  • Waived Required Minimum Distribution (RMD) for 2020 calendar year.
• Coverage of COVID-19 diagnostic testing by health plans at no charge
  • Clarifies that COVID-19 diagnostic testing will be covered at no charge to health plan members if the developer requests emergency authorization from the FDA or if the test is developed and authorized by the state even if the test has not received approval from the FDA.
• Expansion of unemployment insurance
  • Additional financial assistance to those on unemployment for qualifying individuals, as well as extended time for unemployment benefits.

What is next for the CARES Act?

Now that it’s been signed into law, our government and regulatory bodies will have a period of time to issue further guidance to let companies such as SurePayroll, and our parent company Paychex, know how to interpret the law. 

The process and timing associated with getting access to the funds associated with the CARES Act is one of many unanswered questions that require further discussion with our contacts at the Small Business Administration and the IRS. Be confident that our compliance and legal teams are in active communication with our contacts at these agencies and will update you as soon as instructions are available. We expect a chaotic few weeks before the processes for the SBA loans are established and implemented.  In the interim, if you need access to capital you could consider your financial institution. Finally, the CARES Act increases the maximum 401(k) loan that may be taken from a 401(k) account to $100,000 (formerly $50,000) as a short-term opportunity to gain access to cash. 

What other federal legislation addresses COVID-19?

The Families First Coronavirus Response Act (FFCRA) is previously passed legislation that is expected to take effect April 1. For more information about that new law, read this article. For all COVID-19 resources provided by SurePayroll:

• Online resource center
• Customer support center
• A letter from GM John Cumbee