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

Updated June 25, 2020

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.

The CARES Act and its multiple updates 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, 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.

PPP Flexibility Act

The Paycheck Protection Program (PPP) Flexibility Act, signed June 5, made major adjustments to the CARES Act. While the funds are available, apply for the PPP through your local Small Business Administration (SBA) approved lender by August 8, 2020 (extended from June 30th).

The U.S. Chamber of Commerce and others have emphasized how urgently businesses need this emergency assistance. Much of the relief flows from the PPP (a forgivable 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.

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 2019 annual expenses in each of the categories below.

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.
  • Loans can cover up to 2½ times 2019 average payroll costs (including compensation and other specified costs). 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 or 24 weeks after receiving the loan, depending on which forgiveness period applies to you.
  • 60% of the forgiveness amount must be spent on payroll.
  • Up to 40% of the forgiveness amount may be spent on mortgage interest, rent, and utilities over the forgiveness period.
  • 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 December 31, 2020, to restore full-time employment or salary for workers affected between February 15 and April 26. See our PPP overview for more detail (PDF).

Paycheck Protection Program loan forgiveness calculator

Enter your estimated expenses and staffing adjustments for your applicable forgiveness 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 financial professional.

1 For self-employed individuals without employees and who file 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 is based on your 2019 self-employment income, instead of your actual 2020 self-employment income during the forgiveness period following the loan. If you use an eight-week forgiveness period, the forgivable payroll amount is limited to 8/52 of your net income from self-employment in 2019, up to $15,385 (the eight-week equivalent of $100,000). If you use a 24-week forgiveness period, the forgivable payroll amount is 2.5 times your 2019 average monthly compensation, up to $20,833 (which was your maximum loan amount if you have no employees). 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 forgiveness period.

3 Enter average number of full time and full-time equivalent employees per month during the forgiveness period of the loan. (For employees let go February 15-April 26, 2020, include any number you plan to rehire or replace by December 31, 2020. Certain other exceptions may apply. See FAQ A-19 (PDF).)

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 December 31, 2020 to be included in calculations. Certain other exceptions may apply. See FAQ A-19 and A-20 (PDF).

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

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