CARES Act Calculator for PPP and SBA Loans

By Ben Geier, CEPF®

It’s no secret that the COVID-19 pandemic has caused serious problems for the economy, and small businesses in particular are taking it on the chin. The federal government, though, is offering coronavirus crisis relief. Small business owners now want to know how much money they can get from the Small Business Administration’s Paycheck Protection Program (PPP).

The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act contains numerous programs designed to help small businesses. The most prominent of these is the PPP, which the SBA classifies as a 7(a) loan. It is designed to help small businesses impacted by the crisis make sure they are able to continue to meet their payroll obligations without having to cut salaries or lay any workers off. It also allows small businesses to rehire already laid-off workers and restore any salaries that had been cut.

The maximum amount of money you can borrow from the PPP is equal to 2.5 times your payroll or $10 million, whichever is lower. Salaries above $100,000 do not count toward your total. The calculator below will tell you how much you’ll be able to borrow through the PPP (make sure to exclude any of those high salaries for the most accurate total).

Who Qualifies for a PPP Loan

Small business with 500 or fewer employees may be eligible. Small businesses, sole proprietors, S corporations, C corporations, LLCs, independent contractors, self-employed people and private nonprofits can all qualify. What’s more, tribal groups and veteran groups are also eligible.

Restaurants and hospitality businesses also make the cut if they have 500 or fewer employees per location. Details on the size standards and exceptions are on the SBA website.

Owners more than 60 days delinquent on child support obligations, farms and ranches, sex businesses, lobbyists, gambling establishments and businesses involved in illegal activities don’t qualify.

Loans offered by the PPP are 100% forgivable if businesses meet certain criteria. This means that the loan essentially functions as a grant — aka free money — if you meet the conditions laid out in the CARES Act.

Up to eight weeks of payroll, mortgage interest, rent and utilities covered by the PPP loan will be forgiven as loans as the full-time headcount and payroll at a firm stay the same as they were on average between February 15, 2019 and June 30, 2019 (or January 1, 2020 to February 15, 2020 if you launched your business just this year.) Businesses that have already cut salary or laid off employees have until June 30, 2020 to rehire their staff and reinstate salaries to pre-crisis levels.

Any part of the loan that is not forgiven (you’ll have to request forgiveness from the SBA and prove that you used the money to cover payroll, etc.) will be due in two years, with payments deferred for six months. The interest rate is fixed at 1.00%. Remember that if you don’t maintain headcount and payroll at pre-pandemic levels, the amount that is forgiven will be reduced.

You can submit an application for a PPP loan through a local lender.

• A financial advisor can help both your small business and your personal finances. To find a fiduciary financial advisor who’s a good fit for your needs and concerns, use SmartAsset’s pro matching tool. It is free, takes five minutes and will recommend up to three advisors vetted by us. Get started now.
• The government has various other programs too, including SBA 7(a) loans. Consider all options when you are thinking about how to get help for your small business.
• Some states are offering help as well, including New York, California and Texas. If you live in a state with programs, look into those in addition to the federal options.

Photo credit: ©iStock/Stork

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