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Here are some questions that I’ve been getting regarding the Cares Act for small businesses. 

Isaac, Is there a provision for new hires that have not previously been on a payroll or have been functioning…

Great Question. The way it works is in two parts:

1. How much you qualify for.

2. What you can spend it on to be forgivable.


  1. How much you qualify for: You will take the last 12 months of payroll (and related payroll expenses such as health insurance, payroll taxes, retirement matches) and add them up. Take that total and divide by 12 to get a 1 month average. Then multiply that by 2.5.  That is the amount you qualify for.

For purposes of calculating “Average Monthly Payroll”, the Paycheck Protection Program Application Form states that “most Applicants will use the average monthly payroll for 2019, excluding costs over $100,000 on an annualized basis for each employee.”


  1. You can spend that on any business expenses you wish, but there are only certain expenses that qualify for forgiveness. This includes payroll, rent, utilities, interest, health insurance, payroll taxes. If you spend the “loan” on these expenses, then that amount will be forgiven.


To answer your question, if your new hire is replacing a prior employee so payroll was the same, then that new employee will be covered. If you added a brand new position on your staff in Feb 2020, then the last 12 months will not have them as a very significant part of the payroll.  However, you can spend the money to pay that new hire, and that amount will qualify to be forgiven.


Good day, is an application already established for the PPP Loan?

Not yet.  I talked with multiple banks on Friday (3/27/20) and they were just finding out about the process.  Any current applications available are for the SBA Economic Injury Disaster Loan.  Banks should start taking action on the Payroll Protection Plan on Friday April 3rd for small businesses and sole proprietors, and April 10th for qualified self-employed and Independent contractors.  This will go through any bank that is insured through the FDIC.



Do self-employed or sole proprietors qualify for the payroll protection plan?

Yes.  Owners qualify for the loan so long as not in excess of $100,000.  Payroll costs include: employee salary, wages and commissions; payment of cash tips; payment of vacation; parental, family, medical or sick-leave; allowance for dismissal or separation; payment required for group health benefits (including insurance premiums); payment of retirement benefits; or payment of state or local tax assessed on employee compensation; and sole proprietor income or independent contractor compensation not in excess of $100,000.


What are the Terms of the Loan?

The Loan (if not forgiven) will have an interest rate of 0.50% fixed rate. over a 2 year period. All payments are deferred for 6 months; however, interest will continue to accrue over this period. (See Facts Sheet). 


 You can ask your questions by commenting below or emailing at Isaac@ccsklaw.com or calling 219-230-3600

Full Text of the Law: https://www.congress.gov/bill/116th-congress/house-bill/748/text

PPP Loan Application: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

New question for update:

How is this affected by employees that have already claimed unemployment? And, while I realize the compensation varies by office, given the loan structure, approximately how long will this type of loan sustain payroll expenses?


The government wants you to hire back those employees that were getting unemployment.  The driving force behind the PPP is that employers keep paying their employees (in order to support the unemployment rates). So a business that has enough money to continue paying for their employees can use the PPP money on other qualified expenses, such as rent and utilities.  But if the business has to choose between spending the PPP money on employees or other qualified expenses, any amount not paid to employees is reduced from the loan forgiveness, so the business should pay its employees. If the business decides to pay for other expenses, the amount forgiven will be reduced by the amount not paid to employees (not as a dollar-for-dollar, but this is the concept).  

The length of time that this will help sustain is dependant on the number of employees you have compared to last year, and whether you have an income source that this is supplementing. Theoretically, if you business was exactly the same as last year (which most businesses are not), then it would be 2.5 months of payroll.

Again, feel free to contact us by commenting below or email: Isaac@ccsklaw.com

New Update about Banks and Timing

Just want to be clear that the 1-3 day payout period mentioned in the video is after someone has been approved. However, I’ve spoken with several banks and they have not yet been given the directions on how to administer the funds yet. Further, they are overwhelmed with calls right now. So do not hold it against your bank if they are still putting together the program this week!

Update on PPP Loan: Big Changes as of April 3

Yesterday, the SBA released a Interim Final Rule that changed some rules on the PPP Loan application.  The largest two are:

  1. The SBA has now determined that a 1% interest rate is appropriate (not the 0.5% as previously stated by the SBA).
  2. Further, Independent Contractors do NOT count as employees for purposes of PPP loan calculations. Independent Contractors have to apply on their own.

Read More: https://content.sba.gov/sites/default/files/2020-04/PPP–IFRN%20FINAL.pdf