Photo of a business owner calculating how much money or tax credits she could receive from the CARES act Paycheck Protection Program.

CARES Act Paycheck Protection Program and tax credit calculator for business owners

Many business initiatives are bundled into the Coronavirus Aid, Relief, and Economic Security (CARES) Act (PDF), which provides aid to businesses, consumers, and families affected by COVID-19.

With 800 pages of detail, the CARES Act can feel overwhelming as you try to maintain business during this historic crisis.

The U.S. Chamber of Commerce and others have emphasized how urgently businesses need this emergency assistance. Much of the relief flows from the Paycheck Protection Program (PPP for short; essentially a loan) and the Employee Retention Credit (a tax credit). Because a business can’t take advantage of both, we’ve built calculators to estimate which might be more valuable to you.

The initial $350 billion of PPP funding all had been claimed by mid-April, prompting Congress to add hundreds of billions more to the program. While the funds are available, apply for the PPP through your local Small Business Administration (SBA) approved lender.

Calculator: How big of a Paycheck Protection Program loan might your business receive?

Who's eligible

  • Commercial and nonprofit businesses, independent contractors, sole proprietors, and self-employed individuals.
  • You must have 500 or fewer employees. (Exceptions: For hotels, restaurants, and certain other businesses (PDF), that 500-employee limit applies per location.)

Paycheck Protection Program loan calculator

Put in your annual expenses in each of the categories below. You can enter either your 2019 or last 12 months of annual expenses.

Other guidelines:

  • No personal guarantee or collateral is necessary, but you must affirm:
    • you need the loan because of the current economic crisis,
    • you’re not double-dipping with multiple loans to cover the same costs,
    • and that you’ll use proceeds to retain workers, maintain payroll, or make mortgage interest, lease, and utility payments.
  • The loan is available on a first-come, first-served basis. (That’s why Congress already is contemplating another wave of economic stimulus for businesses that may not receive a portion of the PPP’s $349 billion.)
  • Loans can cover up to 2½ times average payroll costs (including compensation and other specified costs) from the prior 12 months or 2019. Seasonal businesses can use different time periods appropriate to their calculations.
  • Compensation costs will be capped at $100,000 annualized for each employee, and the total loan has a $10 million cap.

Calculator: How much of your Paycheck Protection Program loan might be forgiven?

  • Loan forgiveness is available for eligible costs within the first eight weeks after receiving the loan.
  • 75% of the loan must be spent on payroll.
  • You’ll have to repay the loan if it’s used for anything other than payroll, mortgage interest, rent, and utilities over the eight weeks after receiving it.
  • Saving jobs also may save you money. Your loan forgiveness will be reduced according to the percentage (if any) you reduce staffing, or if you cut salaries and wages by more than 25% for employees who earn less than $100,000. (You have until June 30, 2020, to restore full-time employment or salary for workers affected between February 15 and April 26.)

Paycheck Protection Program loan forgiveness calculator

Enter your estimated expenses and staffing adjustments for the eight-week period beginning when you receive your loan.

Calculator: Employee Retention Credit for shuttered businesses

The CARES Act also provides tax credits for wages (PDF). The Employee Retention Credit covers payroll tax for half the wages paid to employees from March 13 through December 31, 2020.

  • Limit: $10,000 per employee. So maximum credit amount is $5,000 per employee.
  • Businesses with 100 or fewer employees: The same credit is available for all wages whether employees are working or not.
  • Businesses with more than 100 employees: The credit is available only for employees not working.

Other guidelines:

  • Your business was fully or partially shut down due to COVID-19, or you lost more than half of your quarterly receipts (compared to the same quarter last year).
  • This credit isn’t available if you receive a PPP loan or are a government agency. It’s also unavailable for any wages already covered under the Families First Coronavirus Response Act. If you choose this route you may be eligible for other loans or grant programs.

Employee Retention Credit for shuttered businesses calculator

More SBA assistance

What’s next?

  • Reach out to your trusted business advisor.

1 For self-employed individuals without employees and file as a Schedule C, the Paycheck Protection Program loan will be based on your 2019 self-employment income (Schedule C line 31 net profit amount), capped at $100,000; the other inputs to this calculator will not apply.

2 For self-employed individuals who file a Schedule C, the amount of the PPP loan forgiveness related to owner compensation replacement will be based on 8/52 of your 2019 self-employment income, instead of your actual 2020 self-employment income during the eight-week period following the loan. If you file a Schedule C and don’t have employees, the only expenses which may be forgiven are self-employment income (based on 2019 self-employment income), rent, mortgage interest, and utilities paid during the eight-week period.

3 Enter average number of full time and full-time equivalent employees per month during the first eight weeks of the loan. (For employees let go February 15-April 26, 2020, include any number you plan to rehire or replace by June 30, 2020.)

4 Salary and wage reductions of more than 25% for employees earning under $100,000 also will reduce your loan forgiveness by the excess amount. Employees terminated February 15-April 26, 2020, can be rehired or replaced or their salaries reinstated by June 30, 2020, to be included in calculations.

5 For companies with more than 100 employees the credit is only available for employees paid but not actually working. For businesses with 100 or fewer employees, the credit is available whether the employee works or not.

6 This calculator assumes a credit of $5,000 per eligible employee for qualified wages and health insurance expenses between March 13, 2020, and December 31, 2020. Actual results may vary.

Calculators such as this are provided only as a general self-help tool. Results depend on many factors, including assumptions you provide. We do not guarantee their accuracy, or applicability to your circumstances. Assumed law is for illustrative purposes only and not an indication of future law. These tools are not offers, representations or warranties by any member companies of Principal.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

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