About Stimulus and Me

The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.

We are committed to helping our small business customers experiencing hardships, including from the Coronavirus Disease (COVID-19). In the case of small business customers impacted by issues relating to COVID-19, they can call us to speak with a trained specialist to discuss options available for their small business lending and deposit products.

Business Owner Coronavirus Relief Programs

Economic Injury Disaster Loans (EIDL)

  • Up to $2 million in loan amount
  • Up to 30 years maturity
  • 2.75% for non profits
  • 3.75% for small businesses
  • Does require credit underwriting, collateral and personal guarantee
  • Non-forgivable loan
  • One time $10,000 emergency grant at time of application available

Paycheck Protection Program (PPP) - up to $350bn

  • For small businesses, nonprofits, sole proprietors and independent contractors with up to 500 employees (with limited exceptions)

  • Loan amount is the lesser of (a) $10 million or (b) 2.5 x average monthly payroll + an EIDL

  • Up to 2 years maturity at 0.5% interest rate

  • No standard credit underwriting, collateral and personal guarantee

  • Forgivable loans if you maintain payroll and wages; reduction in any forgiveness in relation to any reductions in payroll or wages

  • Meant to cover the next 8 weeks of allowable costs, but must maintain payroll levels and wages through June 30, 2020

Loans for Larger Businesses - up to $500bn

  • A program with wide discretion given to the Secretary of the Treasury to determine businesses that are eligible for the benefit

  • Program includes loans, guarantees or even investments

  • Non-forgivable loans up to 5 years

  • Terms, rates, and other criteria to be determined

  • Maintain 90% of late-March payroll through September 30, 2020

  • Limits on compensation above $425,000, stock buybacks, dividends and capital distributions while the loan is outstanding plus 1 year

  • Mid-size businesses 500 – 10,000 employees: rates up to 2% but also additional restrictions regarding collective bargaining and outsourced labor while the loan is outstanding plus 2 years

    • Additional requirement to remain neutral on union organizing efforts while the loan is outstanding

Tax Credits and Deferrals

  • The federal tax return filing and payment deadlines are now July 15, 2020

  • Existing SBA loan payments can be deferred for up to 6 months

  • Delays of payment of Employer Payroll Taxes to 2021 and 2022

    • Taxpayers that had indebtedness forgiven under the PPP are excluded from this benefit

  • Changes to Net Operating Loss Rules to use losses in 2019 and 2020 against past profits to claim refunds

  • Increases to the amount of interest expense businesses may deduct from 30% to 50% for 2019 and 2020

  • An employee retention tax credit of 50% up to $10,000 per employee on wages paid 3/13-12/31/2020 for COVID-19 impacted businesses

*As of 3/31/2020. Rules and regulations are not yet finalized and subject to change. Neither UBS Financial Services Inc. nor any of its employees provide tax or legal advice. You should consult with your personal tax or legal advisor regarding your personal circumstances.

How do I calculate Monthly Payroll?

Forgivable loans are for 8 weeks from origination, but employment retention is through June 30, 2020

To calculate monthly payroll, include these...

For business owners, with employees:

  • 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 employee compensation

For independent contractors or sole proprietors:

  • 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

…and exclude these

  • the portion of compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the Covered Period

  • taxes for payroll, railroad retirement and income

  • compensation of an employee whose principal place of

    residence is outside of the United States

  • qualified sick and family leave wages for which a credit is allowed due to the Families First Coronavirus Response Act

Covered Peroid

  • The Covered Period begins on February 15, 2020 and ends on June 30, 2020

  • Apply no later than June 30, 2020

What can be forgiven?

Forgive these costs…

  • payroll costs (see left)

  • costs that were established before February 15, 2020

    • mortgage interest obligation

    • rent on a leasing agreement

    • utilities: electricity, gas, water, transportation, phone or internet

  • additional wages paid to tipped employees

  • Note: any loan forgiveness is not to exceed the loan principal

    …for 8 Weeks from loan origination

Other Points

  • A personal guarantee is not required for the loan.
  • Loans are nonrecourse to the company unless the proceeds are used for an unauthorized purpose.
  • The lender will not consider that the borrower sought and was unable to obtain credit elsewhere.
  • No collateral is required for the loan.
  • Loan forgiveness is not taxable.
  • Loan forgiveness may not be combined with the Payroll Tax Deferral.
  • Employer Retention Credit is not available to employers who receive a Paycheck Protection Program loan (“PPP”).
  • Also available for self-employed individuals.
  • Loan may be used for salaries, paid sick or medical leave, insurance premiums, and mortgage, rent and utility payments.
  • Employee count is calculated per location for businesses in the hospitality and restaurant industries and certain others.
  • Good faith certification required. Businesses cannot get both Economic Injury Disaster Loan (“EIDL”) and PPP loans at the same time. You can apply for the EIDL loan now and the PPP loan when it becomes available. If you qualify and accept the EIDL loan, and you subsequently qualify for the PPP loan, you can re-finance the EIDL loan with the PPP loan, OR you can apply for both loans and decide which one you take if you qualify for both. Loans are limited to one per Taxpayer Identification Number.

Frequently Asked Questions

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocates $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses.


The Small Business Administration (“SBA”) will be releasing more details including the list of lenders offering loans under the program.

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The CARES Act focuses on helping small employers with less than 500 employees keep their doors open and retain their staff. Let’s first take a look at the forgivable loan being offered. Known as SBA 7(a) loans, the rules move the processing of these loans from the overburdened SBA to the banks and credit unions you work with.

Under the CARES Act, employers can defer paying the 6.2% match for the remainder of the year and will pay in those taxes in equal installments over 2021 and 2022.

And if your practice revenue for any quarter is less than half of the revenue for the same quarter in 2019, you might be eligible for a credit of 50% of the payroll cost of your retained employees, up to $5k per employee. You would file for this tax credit on your quarterly payroll tax form.

That would reduce the amount your practice would get under this program.

Small businesses with 500 or fewer employees during the “covered period” – February 15 through June 30, 2020 are eligible. Some industries may qualify with more employees, depending on the SBA’s applicable industry size standards, accessible here. The 500-employee threshold includes all employees: full-time, part-time, and any other status.

Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals.

Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a NAICS code beginning with 72 (Accommodation and Food Services companies).

Affiliation rules are also waived for franchises with codes assigned by the SBA, as reflected on the SBA franchise registry, and businesses that receive financial assistance from one or more small business investment companies (SBIC).

Along with small businesses, nonprofit organizations also are eligible. The CARES Act recommends that the SBA issue guidance to lenders to prioritize small businesses and entities in underserved and rural markets, including small business concerns owned and controlled by veterans and members of the military community, women or socially and economically disadvantaged individuals and businesses in operation for less than 2 years.

    • The Act offers a loan of up to $10 million based on a formula, which is essentially 2 ½ times the average monthly payroll incurred within the 1 year period before the date on which the loan is made, plus certain other costs. Compensation of an individual employee in excess of $100,000 is not included. Seasonal businesses may use the period February 15, 2019 – June 30, 2019 or March 1, 2019 – June 30, 2019 to calculate the average payroll.

      What is included in the monthly payroll calculation:

      • Salary, wage, commission and similar compensation, cash tips, vacation pay and sick/family leave, unless you took a credit under the Families First Act.
      • Severance pay, health insurance premiums and other group health care benefits, retirement pay and state and local tax assessed on the compensation of employees.

      What is excluded in monthly payroll calculation:

      • 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, payroll taxes, railroad retirement taxes, income taxes and any compensation of an employee whose principal place of residence is outside of the United States.
      • 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.

Payroll costs (as defined above), group healthcare benefits, insurance premiums, and interest (but not principal) on mortgages or other debt incurred prior to February 15, 2020, rent on any lease in force prior to February 15, 2020, and utility payments.

Loans will be forgiven if employment and wage levels are maintained. There is a cure period for reductions that occur between February 15, 2020 and 30 days after March 27, 2020 as long as released employees are rehired or salary reductions are reversed by June 30, 2020. Reductions in employment or wages that occur during the period beginning on February 15, 2020, and ending 30 days after March 27, 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.

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:

For the reduction in the forgiveness of the loan for employee headcount, the calculation is as follows:

  • Average number of full time equivalent employees per month for the 8 week period beginning on the date of the origination of the loan divided by the average number of full time equivalent employees per month during the period 2/15/2019 – 6/30/2019, or, at your choice, the average number of full time equivalent employees per month during January and February 2020.

For the reduction relating to wages:

  • The loan forgiveness is reduced by any reduction in total salary of any employee during the 8 week period beginning on the date of the origination of the loan that is in excess of 25% of the total salary of that employee during the most recent full quarter during which the employee was employed prior to the loan, which would be the first quarter of 2020. For the purpose of this calculation, anyone who has an annualized salary in 2019 of more than $100,000 is not included.

Any loan amount remaining after this forgiveness is applied will be carried forward with a maximum maturity of 10 years and a maximum interest rate of 4% with an option to defer payments of interest and principal not more than 1 year.

Another opportunity allows employers to defer paying the matching social security tax for the remainder of 2020, and will pay those taxes over the following two years. Currently, employees have Social Security Taxes withheld from their pay at a rate of 6.2%. The employer then matches those taxes, so the government gets 12.4% in Social Security taxes for each dollar an employee earns.