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CARES Act Introduces Forgivable Loans With Paycheck Protection Program

Mar 29, 2020 KSMLA Tags: ,
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On March 27, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. While the sweeping legislation introduces a multitude of significant measures, the Paycheck Protection Program is a lifeline for small businesses, injecting capital when they need it most. However, the hallmark of the program is that the loans can be partially or fully forgivable, provided certain criteria are satisfied.

What Is the Paycheck Protection Program?

Is My Business Eligible?

What Are the Borrower Requirements?

Borrowers must make a good faith certification to the following:

What Is the Maximum Loan Amount I Could Receive?


Salary, wages, and commission Compensation for an employee that exceeds $100K (prorated over the covered period from Feb. 15, 2020, to June 30, 2020)
Cash tips or equivalents Compensation to an employee with a principal residence outside the U.S.
Vacation or other leave Qualified sick wages or family leave wages paid under Families First Coronavirus Response Act for which the payroll credit is permitted
Allowance for dismissal or separation
Payments for group health (insurance premiums)
Retirement benefits
Payment of state or local tax assessed on compensation

How Can I Use the Loan Proceeds?

The loan proceeds can be used for the following:

How Much of My Loan Will Be Forgiven?

Maximum Forgiveness Amount

Reduction of Forgiveness Amount

Any balance remaining after the loan forgiveness would have a maximum maturity of 10 years.

Loan Forgiveness Application

Documentation is critical for loan forgiveness. Here is a list of documentation that would need to be submitted to your lender:

Lenders will have 60 days to render a forgiveness determination.

Need Guidance?

As a part of the Katz, Sapper & Miller network, we have access to more than 350 tax and accounting professionals who can assist you with cash flow modeling, navigating the SBA loan programs, and evaluating tax implications and employee benefit considerations that come from this time of uncertainty. Contact us today to discuss your situation.


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