Dear business clients, 

We have been working closely with a number of lenders over the last few days.  While we are not bankers, we a great deal of  information surrounding the loans and tax credits that are available to small businesses.  If you are in need of some direction or advice, feel free to reach out and we will share what we know.  

We expect to know more about independent contractors early this coming week.  

Emergency Paid Sick Leave – Effective 04/01/2020

An employer with fewer than 500 employees must allow an eligible employee to take Emergency Paid Sick Leave. Certain public employers are covered as well.  All employees of the employer are counted toward the 500, not only the ones at any particular employee's work site.  An employer is not required to give Emergency Paid Sick Leave to an employee who is a healthcare provider or an emergency responder. 

An employee may use Emergency Paid Sick Leave if the employee is quarantined, a doctor advises the employee to self-quarantine, or the employee has COVID–19 symptoms and is waiting for a diagnosis. Under these circumstances, the employee must be paid at their regular rate of pay, up to a maximum of $511 per day or $5,110 total. An employer cannot require an employee to find a replacement worker to cover their shift.  An employer cannot require an employee to take other paid vacation, paid sick leave, or paid personal leave before taking Emergency Paid Sick Leave.

Employees may also use Emergency Paid Sick Leave if the employee is caring for an individual under quarantine or medical self-quarantine, or if the employee is caring for a child whose school or place of care has been closed or is unavailable due to COVID-19 precautions. The child must be the employee's biological child, adopted child, foster child, stepchild, or legal ward, or a child of the employee standing in place of a parent. The child must be under 18 years of age or incapable of self-care because of a mental or physical disability. Under these circumstances, the employee must be paid at their regular rate of pay, up to a maximum of $200 per day.

Emergency Paid Sick Leave must be in addition to any benefits that employees already accrue. Emergency Paid Sick Leave cannot reduce existing employee benefits or rights.

A full-time employee may take up to 80 hours of Emergency Paid Sick Leave. A part-time employee may take up to the amount of hours they work in an average two-week period. The employee must give the employer as much notice as is practical.

After taking Emergency Paid Sick Leave, the employer may require the employee to continue to notify the employer in order to continue receiving Emergency Paid Sick Leave.

Emergency Paid Sick Leave expires on December 31, 2020. Unused Emergency Paid Sick Leave does not rollover to the following year. Employers are not required to pay unused Emergency Paid Sick Leave if the employee's employment ends.

Employers receive refundable tax credits to offset the cost of providing employees with Emergency Paid Sick Leave, subject to certain caps. The tax credit is a dollar-for-dollar reduction to the employer's portion of social security tax. A self-employed individual may take their credit against their self-employment tax. 

Emergency Family Medical Leave – Effective 04/01/2020

An employer must give Emergency Family Medical Leave to eligible employees if the employer is a private employer and had fewer than 500 employees for each working day during each of 20 or more calendar weeks of the current or preceding year.  An employer is not required to give Emergency Paid Sick Leave to an employee who is a healthcare provider or an emergency responder. 

Emergency Family Medical Leave is available if an employee cannot work or telework because the employee needs to care for a child under 18 and the child's school or place of care is either closed or unavailable because of the COVID-19 public health emergency. 

An employee is eligible for Emergency Family Medical Leave if the employee worked at least 30 calendar days for the employer prior to taking leave. 

An employee may take up to 12 weeks of Emergency Family Medical Leave. The first 10 days of Emergency Family Medical Leave may be unpaid, but the employee must be allowed to use accrued paid leave in order to be paid during the first 10 days. 

After the first 10 days, the employer must continue to provide leave and pay the employee at least two-thirds of the employee's usual rate of pay for the employee's usual number of scheduled hours. If the employee's hours vary, then the employee's usual number of scheduled hours must be based on the employee's average scheduled hours during the last 6 months or the employer's reasonable expectation of hours to be worked at time of hire. The maximum required pay is $200 per day or $10,000 total to the employee. 

After returning from Emergency Family Medical Leave, the employer must restored the employee to the employee's former position. An employer with fewer than 25 employees need not restore the employee to their former position if the position no longer exists, although the employee must later be restored if the position is restored to exist before the earlier of 12 months or the end of the COVID-19 emergency. 

Employers receive refundable tax credits to offset the compensation paid to employees while on Emergency Family Medical Leave and the group health insurance cost that is allocable to the Emergency Family Medical Leave. The tax credit is a dollar-for-dollar reduction to the employer's portion of social security tax. A self-employed individual may take their credit against their self-employment tax. 

The Small Business Owner’s Guide to the CARES Act

The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was just signed into law are intended to assist business owners with whatever needs they have right now. When implemented, there will be many new resources available for small businesses, as well as certain nonprofits and other employers. This guide provides information about the major programs and initiatives that will soon be available from the Small Business Administration (SBA) to address these needs, as well as some additional tax provisions that are outside the scope of SBA.

Struggling to get started? The following questions might help point you in the

right direction. Do you need:

• Capital to cover the cost of retaining employees? Then the Paycheck

Protection Program might be right for you.

• A quick infusion of a smaller amount of cash to cover you right now? You

might want to look into an Emergency Economic Injury Grant.

• To ease your fears about keeping up with payments on your current or

potential SBA loan? The Small Business Debt Relief Program could help.

Payment Protection Program (PPP) Loans

The program would provide cash-flow assistance through 100 percent federally guaranteed

loans to employers who maintain their payroll during this emergency. If employers maintain

their payroll, the loans would be forgiven, which would help workers remain employed, as well

as help affected small businesses and our economy to snap-back quicker after the crisis. PPP

has a host of attractive features, such as forgiveness of up to 8 weeks of payroll based on

employee retention and salary levels, no SBA fees and at least six months of deferral with

maximum deferrals of up to a year. Small businesses and other eligible entities will be able to

apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This

program is would be retroactive to February 15, 2020, in order to help bring workers who may

have already been laid off back onto payrolls. Loans are available through June 30, 2020.


QUESTION: What types of businesses and entities are eligible for a PPP loan?

• Businesses and entities must have been in operation on February 15, 2020.

• Small business concerns, as well as any business concern, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or Tribal business concern described in section 31(b)(2)(C) that has fewer than 500 employees or fewer employees than established by the relevant industry code.

• 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 North American Industry Classification System code beginning with 72, for which the affiliation rules are waived.

• Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives

funding through a Small Business Investment Company.

QUESTION: What are affiliation rules?

They become important when SBA is deciding whether a business’s affiliations preclude them from being considered “small.” Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Please see this resource for more on these rules and how they can impact your business’s eligibility.

QUESTION: What types of non-profits are eligible?

All 501(c)(3) non-profits with 500 employees or fewer, or more if SBA’s size standards for the non-profit allows. Please visit to find out your non-profit’s SBA size standards by number of employees. For example, churches and museums with fewer than 500 employees are eligible. You will need the 6-digit North American Industry Classification Code for your business.

QUESTION: How is the loan size determined?

Depending on your business’s situation, the loan size will be calculated in different ways (see below). The maximum loan size is always $10 million.

• If you were in business February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date.

• If you were not in business between February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020.

• If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum.

QUESTION: What costs are eligible for payroll?

• Compensation (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 employees

QUESTION: What costs are not eligible for payroll?

• Employee/owner compensation over $100,000

• Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code

• Compensation of employees whose principal place of residence is outside of the U.S

• Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act

QUESTION: What are allowable uses of loan proceeds?

• Payroll costs (as noted above)

• Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums

• Employee salaries, commissions, or similar compensations (see exclusions above)

• Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation)

• Rent (including rent under a lease agreement)

• Utilities

• Interest on any other debt obligations that were incurred before the covered period 

QUESTION: What are the loan term, interest rate, and fees?

The maximum term is 10 years, the maximum interest rate is 4 percent, zero loan fees, zero prepayment fee (SBA will establish application fees caps for lenders that charge).

QUESTION: How is the forgiveness amount calculated?

Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000):

• Payroll costs plus any payment of interest on any covered mortgage obligation (not including any prepayment or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation plus and any covered utility payment.

QUESTION: How do I get forgiveness on my PPP loan?

You must apply through your lender for forgiveness on your loan. In this application, you must include:

• Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings

• Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.

• Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.

QUESTION: What happens after the forgiveness period?

Any loan amounts not forgiven at the end of one year is carried forward as an ongoing loan with max terms of 10 years, at 4% max interest. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again.

QUESTION: Can I get more than one PPP loan?

No, an entity is limited to one PPP loan. Each loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans to the same entity.

QUESTION: What kind of lender can I get a PPP loan from?

All current SBA 7(a) lenders (see more about 7(a) here) are eligible lenders for PPP. The Department of Treasury will also be in charge of authorizing new lenders, including nonbank lenders, to help meet the needs of small business owners.

QUESTION: How does the PPP loan coordinate with SBA’s existing loans?

Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs).

QUESTION: How does the PPP loan work with the temporary Emergency Economic Injury Grants and the Small Business Debt Relief program?

Emergency Economic Injury Grant recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan. 

Small Business Debt Relief Program

This program will provide immediate relief to small businesses with non-disaster SBA loans, in

particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA

loans, including principal, interest, and fees, for six months. This relief will also be available to

new borrowers who take out loans within six months of the President signing the bill into law.

QUESTION: Which SBA loans are eligible for debt relief under this program?

7(a) loans not made under the Paycheck Protection Program (PPP), 504 loans, and microloans. Disaster loans are not eligible (see p. 7 for more information on these).

QUESTION: How does debt relief under this program work with a PPP loan?

Borrowers may separately apply for and take out a PPP loan, but debt relief under this program will not apply to a PPP loan.

QUESTION: How do I know if I’m eligible for a 7(a), 504, or microloan?

In general, businesses must meet size standards, be based in the U.S., be able to repay, and have a sound business purpose. Each program has different requirements, see for more details.

QUESTION: What is a 7(a) loan and how do I apply?

7(a) loans are an affordable loan product of up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing, providing short-term or long-term working capital and to purchase an existing business, refinance current business debt, or purchase furniture, fixtures and supplies. In the program, banks share a portion of the risk of the loan with SBA. There are many different types of 7(a) loans, you can visit this site to find the one that’s best for you. You apply for a 7(a) loan with a bank or a mission-based lender. 

QUESTION: What is a 504 loan and how do I apply?

The 504 Loan Program provides loans of up to $5.5 million to approved small businesses with longterm, fixed-rate financing used to acquire fixed assets for expansion or modernization. It is a good option if you need to purchase real estate, buildings, and machinery. You apply through a Certified Development Company, which is a nonprofit corporation that promotes economic development. SBA has a free referral service tool called Lender Match to help find a lender near you.

QUESTION: What is a microloan and how do I apply?

The Microloan Program provides loans up to $50,000 to help small businesses and certain not-forprofit childcare centers to start up and expand. The average microloan is about $13,000. These loans are delivered through mission-based lenders who are also able to provide business counseling.

Economic Injury Disaster Loans & Emergency Economic Injury Grants

These grants provide an emergency advance of up to $10,000 to small businesses and private

non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury

Disaster Loan (EIDL). To access the advance, you must first apply for an EIDL and then request

the advance. The advance does not need to be repaid under any circumstance, and may be

used to keep employees on payroll, to pay for sick leave, meet increased production costs due

to supply chain disruptions, or pay business obligations, including debts, rent and mortgage


QUESTION: Are businesses and private non-profits in my state eligible for an EIDL related to COVID19?

Yes, those suffering substantial economic injury in all 50 states, DC, and the territories may apply for an EIDL.

QUESTION: What is an EIDL and what is it used for?

EIDLs are lower interest loans of up to $2 million, with principal and interest deferment

available for up to 4 years, that are available to pay for expenses that could have been met

had the disaster not occurred, including payroll and other operating expenses.

QUESTION: Who is eligible for an EIDL?

Those eligible are the following with 500 or fewer employees:

• Small business concerns (including sole proprietorships, with or without


• Independent contractors

• Cooperatives and employee owned businesses

• Private non-profits

• Tribal small businesses

QUESTION: My private non-profit is not a 501(c)(3). Is it still eligible for an EIDL and a grant?

Yes, if you are a private non-profit with an effective ruling letter from the IRS, granting tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, or if you can provide satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law.

QUESTION: Who is eligible for an Emergency Economic Injury Grant?

Those eligible for an EIDL and who have been in operation since January 31, 2020.

QUESTION: How long are Emergency Economic Injury Grants available?

January 31, 2020 – December 31, 2020. The grants are backdated to January 31, 2020 to allow those who have already applied for EIDLs to be eligible to also receive a grant.

QUESTION: If I get an EIDL and/or an Emergency Economic Injury Grant, can I get a PPP loan?

Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID19 related EIDL and/or Emergency Grant between January 31, 2020 and until the PPP loans are available, you

may also apply for a PPP loan. If you ultimately receive a PPP loan it will  refinance the EIDL into

a PPP loan, any advance amount received under the Emergency Economic Injury Grant

Program would be subtracted from the amount forgiven in the PPP.

QUESTION: How do I know if my business is a small business?

Please visit to find out if your business meets SBA’s

small business size standards. You will need the 6-digit North American Industry

Classification Code for your business and your business’ 3-year average annual revenue.

QUESTION: How do I apply for an economic injury disaster loan?

To apply for an EIDL online, please visit

Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship

This provision would provide a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis. 

Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship are eligible for the credit. For employers with 100 or fewer full- time employees, all employee wages are eligible, regardless of whether an employee is furloughed. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee. Wages do not include those taken into account for purposes of the payroll credits for required paid sick leave or required paid family leave, nor for wages taken into account for the employer credit for paid family and medical leave (IRC sec. 45S). 

The credit is not available to employers receiving assistance through the Paycheck Protection Program. The credit is provided through December 31, 2020. 


Note – This information is supplied to inform our clients and partners.  However, the exact terms of loans are determined solely by the lender(s) and Professional Accounting and Tax Services Inc. can make no representation as to the accuracy or completeness of any information contained herein.

Please review our EIDL vs PPP document below: