Question 1

How do I calculate the maximum amount I can borrow?

Accepted Answer

The following methodology, which is one of the methodologies contained in the CARE Act, will be most useful for many applicants.
Step 1: Aggregate payroll costs (detailed below) from the last twelve months for employees whose principal place of residence is the United States.
Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year.
Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12).
Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5.
Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the 9 amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).

Question 2

The examples below illustrate this methodology.

Accepted Answer

Example 1:No employees make more than $100,000
 • Annual payroll: $120,000
 • Average monthly payroll: $10,000
 • Multiply by 2.5 = $25,000
 • The maximum loan amount is $25,000
 
Example 2: Some employees make more than $100,000
 • Annual payroll: $1,500,000
 • Subtract compensation amounts in excess of an annual salary of
 • $100,000: $1,200,000
 • Average monthly qualifying payroll: $100,000
 • Multiply by 2.5 = $250,000
 • The maximum loan amount is $250,000
Example 3:  No employees make more than $100,000, outstanding EIDL loan of $10,000.
 • Annual payroll: $120,000
 • Average monthly payroll: $10,000
 • Multiply by 2.5 = $25,000
 • Add EIDL loan of $10,000 = $35,000
 • The maximum loan amount is $35,000
Example 4: Some employees make more than $100,000, outstanding EIDL loan of $10,000
 • Annual payroll: $1,500,000
 • Subtract compensation amounts in excess of an annual salary of
 • $100,000: $1,200,000
 • Average monthly qualifying payroll: $100,000
 • Multiply by 2.5 = $250,000
 • Add EIDL loan of $10,000 = $260,000
 • The maximum loan amount is $260,000

Question 3

What qualifies as “payroll costs?”

Accepted Answer

Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; an allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on the compensation of employees; and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation.

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