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COVID-19 is taking a toll on our economy and as governments struggle to contain the spread of this virus businesses have taken a hit. Businesses are struggling to deal with the lost of business and yet have to pay business expenses that is ongoing. Businesses are faced with reduced workforce and\or closed shops altogether. Stock markets are taking a precipitous fall daily with grim future yet to come. U.S. Congress and the White House have responded with a relief effort to taxpayers in the sum of $2 trillion. For businesses the relief effort comes in the for of Emergency Loans known as The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (PPP), the initiative provides 100% federally guaranteed loans to small businesses. For guidelines recently released, please, visit initial guidelines available at www.treasury.gov. For the readers’ convenience, see bellow the full copy of the initial guidelines. The CARES Act is another way for Tax Professionals, Consultants, Lawyers, and CPAs to help businesses in this trying time.

Details of The Coronavirus Aid, Relief, and Economic Security (CARES) Act recently released by the U.S. Treasury Department – – Prepared by the U.S. CHAMBER OF COMMERCE CORONAVIRUS EMERGENCY LOANS:

Here are the questions you may be asking—and
what you need to know

You can apply through any existing SBA 7(a) lender or through any
federally insured depository institution, federally insured credit
union, and Farm Credit System institution that is participating.
Other regulated lenders will be available to make these loans
once they are approved and enrolled in the program. You should
consult with your local lender as to whether it is participating.
While the program is open until June 30, 2020, the government is
advising borrowers to apply as soon as possible given the loan
cap on the program.

Am I ELIGIBLE?
You are eligible if you are:
• A small business with fewer than 500 employees
• A small business that otherwise meets the SBA’s size standard
• A 501(c)(3) with fewer than 500 employees
• An individual who operates as a sole proprietor
• An individual who operates as an independent contractor
• An individual who is self-employed who regularly carries on any
trade or business
• A Tribal business concern that meets the SBA size standard
• A 501(c)(19) Veterans Organization that meets the SBA size standard
In addition, some special rules may make you eligible:
• If you are in the accommodation and food services sector (NAICS 72),
the 500-employee rule is applied on a per physical location basis
• If you are operating as a franchise or receive financial assistance
from an approved Small Business Investment Company the normal
affiliation rules do not apply
REMEMBER: The 500-employee threshold includes all employees:
full-time, part-time, and any other status.

What will lenders be LOOKING FOR?
Borrowers will need to complete the Paycheck Protection Loan
Application (which is available HERE) and payroll documentation
Lenders will also ask you for a good faith certification that:
1. The uncertainty of current economic conditions makes the loan
request necessary to support ongoing operations
2. The borrower will use the loan proceeds to retain workers and
maintain payroll or make mortgage, lease, and utility payments
3. Borrower does not have an application pending for a loan
duplicative of the purpose and amounts applied for here
4. From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not
received a loan duplicative of the purpose and amounts applied
for here (Note: There is an opportunity to fold emergency loans
made between Jan. 31, 2020 and the date this loan program
becomes available into a new loan)
If you are an independent contractor, sole proprietor, or self-employed
individual, lenders will also be looking for certain documents
(final requirements will be announced by the government) such as
payroll tax filings, Forms 1099-MISC, and income and expenses from
the sole proprietorship.

What lenders will NOT LOOK FOR
• That the borrower sought and was
unable to obtain credit elsewhere.
• A personal guarantee is not
required for the loan.
• No collateral is required for the loan.

How much can I BORROW?
Loans can be up to 2.5 x the borrower’s
average monthly payroll costs, not to
exceed $10 million.

How do I calculate my average monthly
PAYROLL COSTS? The sum of included payroll costs – the sum of non-included payroll costs = the payroll costs.

NON SEASONAL EMPLOYERS:
Maximum loan = 2.5 x Average total monthly payroll costs incurred during
the year prior to the loan date.
For businesses not operational in 2019:
2.5 x Average total monthly payroll costs incurred for January and February 2020.

SEASONAL EMPLOYERS:
Maximum loan = 2.5 x Average total monthly payments for payroll costs for
the 12-week period beginning February 15, 2019 or March 1, 2019 (decided by the loan recipient) and ending June 30, 2019
• Payments deferred for six months
• 0.50% fixed interest rate
• Loan is due in two years.

INCLUDED Payroll Cost:
1. For Employers: The sum of payments of any compensation with
respect to employees that is a:
• salary, wage, commission, or similar compensation;
• payment of cash tip or equivalent;
• payment for vacation, parental, family, medical, or sick leave
• allowance for dismissal or separation
• payment required for the provisions of group health care benefits,
including insurance premiums
• payment of any retirement benefit
• payment of state or local tax assessed on the compensation
of the employee.
2. For Sole Proprietors, Independent Contractors, and Self-Employed
Individuals: The sum of payments of any compensation to or
income of a sole proprietor or independent contractor that is a
wage, commission, income, net earnings from self-employment, or
similar compensation and that is in an amount that is not more than
$100,000 in one year, as pro-rated for the covered period.

EXCLUDED Payroll Cost:
1. Compensation of an individual employee in excess of an annual salary
of $100,000, as prorated for the period February 15, to June 30, 2020
2. Payroll taxes, railroad retirement taxes, and income taxes
3. Any compensation of an employee whose principal place of
residence is outside of the United States
4. Qualified sick leave wages for which a credit is allowed under section
7001 of the Families First Coronavirus Response Act (Public Law 116–
5 127); or qualified family leave wages for which a credit is allowed
under section 7003 of the Families First Coronavirus Response Act.

4. Will this loan be FORGIVEN? Borrowers are eligible to have their loans forgiven.
How Much?
A borrower is eligible for loan forgiveness equal to the amount the borrower spent on the following items during the 8-week period
beginning on the date of the origination of the loan:
• Payroll costs (using the same definition of payroll costs used to
determine loan eligibility)
• Interest on the mortgage obligation incurred in the ordinary
course of business
• Rent on a leasing agreement
• Payments on utilities (electricity, gas, water, transportation,
telephone, or internet)
• For borrowers with tipped employees, additional wages
paid to those employees
NOTE: The government is now advising that because of high participation,
it is anticipated that not more than 25% of the forgiven amount may be for
non-payroll costs. The loan forgiveness cannot exceed the principal.
How could the forgiveness be reduced?
The amount of loan forgiveness calculated above is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Specifically: Reduction based on reduction of number of employees; Reduction based on reduction in salaries.
What if I bring back employees or restore wages?
Reductions in employment or wages that occur between February 15,
2020 and April 26, 2020 (as compared to February 15, 2020) shall not reduce the amount of loan forgiveness IF by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages.
WHAT’S NEXT?
Look out for more information about eligible lenders and additional
guidance from the SBA soon. For more guidance and resources for small businesses, visit uschamber.com/co
Private lenders will ultimately issue PPP loans based on guidance from the
SBA and Treasury Department. More information, including from lenders, should be available once the guidance is issued.