Helping You Navigate Your Business Through COVID-19
Paychex cares about you and your employees. This high-level summary provides information to help you understand what recent legislation could mean for your business.
Business is Operating as Usual
Business is Operating as Usual
May Need to Reduce My Staff
May Need to Reduce My Staff
Suspending Business Operations
Suspending Business Operations
Need Additional Resources
Start by selecting one of the following that best describes your situation.
Review and Compare Available Programs
Review and Compare Available Programs
What is the best program for you?
BACK HOME
The Paycheck Protection Program is designed to provide quick assistance for small businesses to keep their workers on payroll. Please review the options available to you.
Need Additional Resources
Want to Find Out More?
What best describes you?
Recent Updates
Compare Programs
Helping You Navigate Your Business Through COVID-19
What best describes you?
Business Operating As Usual
May Need to Reduce Staff
Suspending Operations
Need Additional Resources
Business is Operating as Usual
Want to find out more?
Start by selecting one of the following that best describes your situation
Compare Programs
Helping You Navigate Your Business Through COVID-19
What best describes you?
What best describes you?
What best describes you?
Business Operating As Usual
May Need to Reduce Staff
Suspending Operations
Need Additional Resources
Helping You Navigate Your Business Through COVID-19
Paychex cares about you and your employees. This high-level summary provides information to help you understand what recent legislation could mean for your business.
Business is Operating as Usual
Business is Operating as Usual
May Need to Reduce My Staff
May Need to Reduce My Staff
Suspending Business Operations
Suspending Business Operations
Need Additional Resources
Start by selecting one of the following that best describes your situation.
Select from one of the following that best describes your current situation.
Review and Compare Available Programs
Review and Compare Available Programs
Recent Additions and Updates
BACK HOME
The Paycheck Protection Program is designed to provide quick assistance for small businesses to keep their workers on payroll. Please review the options available to you.
Need Additional Resources
Want to Find Out More?
What best describes you?
Recent Updates
Compare Programs
Helping You Navigate Your Business Through COVID-19
What best describes you?
Business Operating As Usual
May Need to Reduce Staff
Suspending Operations
Need Additional Resources
April 3, 2020
Paycheck Protection Program
New information is available for you when applying for a PPP loan.
HOME
Employee Relief Program
What Loans, Credits are Available for my Business?
If you have any employees unable to work for reasons attributed to COVID-19, help is available.
Business is Operating as Usual
Payroll Tax Deferral Period
Employee Retention Credit
Paycheck Protection Program
Families First Coronavirus Response Act
Economic Injury Disaster Loan Program
HOME
Business is Operating as Usual
What Loans, Credits are Available for my Business?
Economic Injury Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application. Details to note: • For most employers with not more than 500 employees, as well as for self-employed individuals, independent contractors, and private non-profits • Advanced funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt, including any other obligations that cannot be met due to revenue losses • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment • Businesses can apply for an EIDL and a PPP, but the funds cannot be used for the same purpose
Families First Coronavirus Response Act
This law will help businesses and employees by allowing tax credits for 100% of certain wages paid up to a maximum cap, to employees taking leave for qualifying reasons related to COVID-19. • There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act How Do the Tax Credits Work? • Private employers with fewer than 500 employees are eligible if they pay eligible employees for qualifying COVID-19 emergency sick time and expanded family leave, retain appropriate records, as well as track and report the applicable data • The tax credit is allowed against the employer share of Social Security and Medicare (FICA) taxes on 100 percent of the qualified wages paid under FFCRA • Employers qualifying for the tax FFCRA tax credits will be able to retain an amount of their FICA taxes owed equal to the amount of qualifying FFCRA wages paid instead of depositing those taxes with the IRS • Any credit amount exceeding the employer's payroll tax liability forthe period is eligible for an expedited refund from the IRS What Do Clients Need to Do to Track these Payments? Paychex has created three new earnings codes to track these different types of payments. Emergency Paid Sick Leave: Employee Employee is taking leave related to COVID-19 under the following qualifying reasons for EPSL under the FFCRA: A. Is subject to a federal, state, or local quarantine or isolation order B. Has been advised by a healthcare provider to self-quarantine C. Is experiencing COVID-19 symptoms and is seeking a medical diagnosis Emergency Paid Sick Leave: Family Employee is taking leave related to COVID-19 under the following qualifying reasons for EPSL under the FFCRA: • Is caring for an individual subject to an order described in “A” (above) or self-quarantine as described in “B” (above) • Is caring for a child whose school or place of care is closed (or childcare provider is unavailable) • Is experiencing any other substantially- similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury Expanded Family Medical Leave: Employee Employee is taking qualifying expanded family and medical leave related to COVID-19: • To care for a child whose school or place of care is closed (or childcare provider is unavailable) What's Next After ensuring employee eligibility for FFCRA leave, the type of leave based on the qualifying reason, and the appropriate rate and amount of pay, simply record the wages paid in the appropriate category. *Coding availability may vary based on platform
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from March 27, 2020, to Dec. 31, 2020. Read about the CARES Act Details to note: • Deferred repayment would be split and paid as follows: 50% due December 31, 2021; 50% due December 31, 2022. • Once an ER receives a decision on loan forgiveness, they are no longer eligible to defer their tax payments and will be required to follow the deposit structure for their deferred tax amount established through the program
Employee Retention Credit
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees. Read about the CARES Act Eligible employers can: • Take a refundable credit of 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes Exclusions: • Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA • This credit cannot be taken on any wages previously accounted for in a WOTC or Emergency Paid Sick Leave Credit
• For clients who do not use Paychex Flex®, please complete this form to be put in touch with a Service Specialist who can assist • If you are a former Paychex client who accessed records through Paychex Flex®, you can access all 2019 payroll records until June 1, 2020. If you were not a Paychex Flex user, please submit your contact information, and our Service Specialists will be in touch. Note: To get a report, you must have run payroll with Paychex in 2019. * If you need more information, check out our Q&A resource. Loan forgiveness Loan forgiveness for the first eight weeks under certain conditions (not all listed): • The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020. • Forgiveness will be reduced proportionally by any reduction in employees retained compared to the prior year, in general, and reduction in wages by more than 25% of prior year compensation • Borrowers are required to show documentation on expenses/employees See what you can expect with our PPP Loan Forgiveness Estimator Repayment for unforgiven loans Remainder of unforgiven portion of the PPP loan becomes a loan with a term of up to two years at a low interest rate of not more than 1%. It's important to note that a PPP loan cannot be combined with: • The Employee Retention Credit • The Social Security Payroll Tax Deferral after the date the lender grants PPP loan forgiveness. Consult with your CPA to determine what program is right for your business.
Paycheck Protection Program
Under the CARES Act, a PPP loan is designed to help small businesses keep employees on the payroll. Available through lenders approved by the SBA, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments during the covered period of the loan. If employers meet certain requirements, including keeping FTEs and wages at certain levels, the loan may be forgiven for eight full weeks of these costs. Details of Note: • For most ERs with not more than 500 EEs, partnerships and for self- employed individuals • Cannot combine a PPP loan with other loans in most circumstances • Cannot combine a PPP loan with the Employee Retention Credit • Borrowers can take the Social Security Payroll Tax Deferral until the date the lender grants PPP loan forgiveness.. SBA guidance clarifies calculation to use on PPP loan application Paychex previously created a specialized report (versions 1 and 2) that had payroll costs calculations that were needed to complete a PPP loan application. However, guidance issued April 6 by the SBA clarified how "payroll costs" should be calculated. The payroll costs calculation SHOULD NOT include employer paid FICA (Social Security and Medicare). Paychex is revising the report to implement this guidance and version 3 will be available April 8. If you already have version 1 or 2 of the report This new guidance does not impact any business that has been approved of a loan but lenders may require an updated report from borrowers if the loan has not been approved yet. The SBA guidance provides safe harbor for borrowers who applied on or prior to April 6, 2020. No action is required by these borrowers. Businesses who have version 1 or 2 of the report can use it to apply for PPP a loan. You would need to calculate the payroll costs: • Take the Total line of "Employer FICA Taxes" column • Divide by the number of months (generally 12) • Subtract it from the "Average Total Payroll Costs" to determine the new monthly average payroll costs How to Access the Report On April 8, Paychex will make version 3 of its PPP Data Report available. If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard.
Access to Paychex Flex
Access to Paychex Flex
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Sample Loan Calculation
Sample Loan Calculation
* Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
Max Loan Calculation
Joe's monthly payroll pre-COVID-19
Average monthly payroll costs using either 12-month lookback from loan origination date or last calendar year
x
2.5
Max Loan Amount
=
80EEs x $20/hr x 40hrs x 4 weeks
x
2.5
$256,000
$640,000
=
Funds can be used to pay covered expenses, which include payroll, benefits, rent/mortgage interest, and utilities during the covered period.
Eligible Use:
Borrowers are eligible for loan forgiveness for covered expenses paid during the eight-week period following the loan origination date, but must meet requirements on number of FTEs and wages paid.
Loan Forgiveness:
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
(40 EEs x $20/hr x 20 hrs/week x 4 weeks)
Joe has laid off 20 EEs, reduced hours by 50% for 40 EEs, had 10 EEs take Families First Coronavirus Response Act FMLA Leave due to school closures, and kept 10 EEs at full hours.
Important Note:
Joe has also paid out of pocket 2/3 wages for 10 EEs who took Families First Coronavirus Response Act FMLA Leave ($21,120). This amount is NOT included in “payroll costs” under CARES because Joe will get 100% of that back in a CREDIT he can immediately take against payroll taxes (ER & EE FICA and EE withholdings.) These workers count under CARES Act as FTEs. For April, Total Possible Expenses Eligible for Forgiveness: $96k payroll $20k rent $4k utilities $120k Eligible for Forgiveness Note: All qualifies because EEs were rehired and wages restored by June. Non-payroll expenses are not more than 25%.
April
Business is hit hard. Joe does the following:
See How Joe Handles May
See How Joe Handles May
Payroll Costs:
10 EEs Laid off = $0 50 EEs @ Reduced Hours = $120k (50 EEs x $20/hr x 30 hrs/week x 4 weeks) 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $152k
Joe: - Hires back 10 EEs (10 still laid off) - Restores some hours, so 50 EEs are at 75% of wages - Keeps 10 EEs at full hours/pay - Still has 10 EEs on Families First Coronavirus Response Act FMLA Leave
Important Note:
10 EEs on FF COVID Leave = $21,120 not part of “payroll costs” but do count as FTEs. Total Eligible for Forgiveness: $152k payroll $20k rent $4k utilities $176k but must be reduced due to continued reduction in FTEs.
(No penalty for reduction in wages as wages were 75% or more for each EE).
Reduction Math: 70 (current number of FTEs) ÷ (divided by) 80 previous number of FTEs
So, $176,000 x 7/8 = $154,000 eligible for forgiveness
May
Business is picking up, but not fully.
See How Joe Handles June
See How Joe Handles June
Joe is back to full employment, no FFCRA FMLA leaves, no layoffs, no reduced hours. Total Eligible for Forgiveness: $256k payroll $20k rent $4k utilities $280k (no reductions because back to full employment)
Important Note:
(80EEs x $20/hr x 40hrs x 4 weeks)
Only 8 weeks of covered costs can be forgiven. The 8-week period begins on the loan origination date. Assume Joe takes the loan on May 1. May Total Eligible for Forgiveness: $154k June Total Eligible for Forgiveness: $280k Total: $434k forgiven Note: Joe would have maximized the amount of his loan forgiveness even more if he did rehires and increased hours/wages back to pre-COVID levels by May 1. Under that scenario, his total eligible for forgiveness would have been $259k (May) and $280k (June) for a total of $539k forgiven. This is the benefit of the program – to encourage employers to bring employees back to work, even before business is back to normal.
June
Business is back and schools are out.
What Happens to the Rest?
What Happens to the Rest?
What Happens to the Rest?
So long as the proceeds were used for eligible expenses (payroll, benefits, rent/mortgage interest, utilities), the remainder becomes a 2-year term loan, at no more than 1% interest, which can be pre-paid without penalty.
Max Loan Amount
Recall:
$640,000
=
Remaining Balance
$206,000
=
Amount Forgiven
(if loan taken by May 1st)
$434,000
=
The CARES Act PPP functions to get cash quickly into the hands of small businesses and to incent them to maintain employees and wages during the period of business disruption caused by COVID-19.
Conclusion
Start Over
Start Over
Paycheck Protection Program
Scenario
Joe's Pizzeria
Prior to COVID-19, Joe had 80 EEs who work 40 hours/week at $20/hr of total "payroll costs."
The example below is based on current information about the CARES Act PPP program and is subject to change based upon future regulatory guidance. This does not constitute legal or tax advice. You should consult your CPA for advice on program details and guidance on whether the PPP loan program is right for your business.
This example includes a three-month look at the process
Let's Look at an Example Timeline
Interim Final Rule: partnerships and self-employed 1040 Schedule C filers. • A partnership is only eligible for one loan, not two separate ones • Self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized • Self-employed with no EEs: use 2019 Form 1040 Schedule C to assist in calculating their maximum loan amount • Self-employed with EEs: use 2019 Form 1040 Schedule C, and payroll records containing similar information as Form 941, along with evidence of any retirement and health insurance contributions, if applicable Loan forgiveness: documentation similar to any PPP loan required; and if the self-employed have EEs, submit Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that correspond to the covered period.
OVERVIEW
If you have any employees unable to work for reasons attributed to COVID-19, help is available.
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PREV
What Loans, Credits are Available for My Business?
Employee Relief Program
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
Business is Operating as Usual
What Loans and Credits are Available for Me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
For Sick Time and Employee Absences
• FLMA • PTO • Sick Time • Health Care
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Paychex Protection Program
Loan forgiveness for the first eight weeks under certain conditions (not all listed):
We’re working in concert with our industry coalition, the National Payroll Reporting Consortium (NPRC), to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA.
In the meantime, please process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences. As we receive guidance from the IRS, we will help you ensure you can take advantage of the benefits.
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020 • Forgiveness will be reduced/eliminated if employer reduces the number of employees or wages by more than 25%
Paychex Protection Program
Economic Industry Disaster Loan Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Paychex Protection Program
Available through the Small Business Administration, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments from Feb. 15, 2020 to June 30, 2020.
• For employers with fewer than 500 employees, and for self- employed individuals • Interest rate capped at 4% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Loan can’t exceed $10 million
Details to note:
Paychex Protection Program
• Repayment term is up to 10 years • Borrowers are required to show documentation on expenses/employees
Repayment for unforgiven loans
Employee Retention Credit
• Take a refundable credit of up to 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees.
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on an employee if employer has taken a WOTC or Emergency Paid Sick Leave Credit
Eligible employees can:
Exclusions:
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from April 1, 2020, to Dec. 31, 2020.
• Deferred repayment would be split and paid in 2021 and 2022 • Deferral not available to employers who have an SBA Paycheck Protection Program loan forgiven
Details to note:
Family First Coronavirus Response Act
This new law will help businesses and employees by allowing tax credits for 100% of certain wages paid due to employee absences related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Extension Act
How Do the Tax Credits Work?
• All employers are eligible if they make qualified emergency paid leave payments to employees • Qualified wages paid under the FFCRA may be credited against the employee and employer share of Social Security and Medicare • Credit amount cannot exceed the employer’s payroll tax liability for the period
What Do Paychex Clients Need to do to Track these Payments?
Paychex has created three new earnings to track these different types of payments:
• Sick Time – Employee • Sick Time – Dependent Care • Extended Family Medical Leave - Child Care
Simply record the time used by your employee in each category and our system will apply the proper tax treatment.
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
Economic Industry Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For employers with fewer than 500 employees and self-employed individuals • Funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment)
Details to note:
For Sick Time and Employee Absences
We’re working with the National Payroll Reporting Consortium (NPRC) to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA. Continue to process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
• All applicable employers must provide the up to 80 hours of sick time benefits
• Employers with fewer than 50 employees may be exempt under certain conditions if meeting the requirements would jeopardize the viability of their business
• Employers with less than 25 employees may be exempt from certain provisions around FMLA job protection
The FFCRA applies to private employers with fewer than 500 employees and certain public-sector employers.
Details of note:
Exemptions:
For complete definitions of qualified leave and employee eligibility, read the FFCRA article.
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
Paychex Protection Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Economic Industry Disaster Loan Program
Business is Operating as Usual
For Employees taking qualified leave time under the FFCRA
Continue to process your payroll as normal, but use earnings codes related to eligible COVID-19 leaves
FFCRA Provisions for Employee Absences
The FFCRA generally applies to private employers with fewer than 500 employees and certain public-sector employers. Emergency Paid Sick Leave Act • FTEs with 80 hours • PTEs eligible for amount up to two-week equivalent of regularly scheduled hours • Depending on reason for leave, compensation capped at either $200 or $511 per day Emergency Family and Medical Leave Expansion Act Generally, employers subject to FFCRA must provide 12 weeks of expanded FML to eligible employees who request leave to care for a child whose school or childcare is closed or unavailable. • This leave is not in addition to unpaid leave that may be taken for other reasons under the federal FMLA • The first 10 days (2 weeks) of expanded FML are unpaid • After 10 days, the rate of pay would be not less than two-thirds of the employee's current rate of pay for the number of hours they otherwise would be scheduled to work • Maximum pay is $200 per day under the FFCRA
HOME
See How Joe Handles May
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
(40 EEs x $20/hr x 20 hrs/week x 4 weeks)
Joe has laid off 20 EEs, reduced hours by 50% for 40 EEs, had 10 EEs take Families First Coronavirus Response Act FMLA Leave due to school closures, and kept 10 EEs at full hours.
Important Note:
Joe has also paid out of pocket 2/3 wages for 10 EEs who took Families First Coronavirus Response Act FMLA Leave ($21,120). This amount is NOT included in “payroll costs” under CARES because Joe will get 100% of that back in a CREDIT he can immediately take against payroll taxes (ER & EE FICA and EE withholdings.) These workers count under CARES Act as FTEs. For April, Total Possible Expenses Eligible for Forgiveness: $96k payroll $20k rent $4k utilities $120k Eligible for Forgiveness Note: All qualifies because EEs were rehired and wages restored by June. Non-payroll expenses are not more than 25%.
April
Payroll Costs:
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k (40 EEs x $20/hr x 20 hrs/week x 4 weeks) 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
- Hires back 10 EEs (10 still laid off) - Restores some hours, so 50 EEs are at 75% of wages - Keeps 10 EEs at full hours/pay - Still has 10 EEs on Families First Coronavirus Response Act FMLA Leave
Important Note:
10 EEs on FF COVID Leave = $21,120 not part of “payroll costs” but do count as FTEs. Total Eligible for Forgiveness: $152k payroll $20k rent $4k utilities $176k BUT must be reduced due to continued reduction in FTEs.
Reduction Math: Total Costs X 70 (current # of FTEs) So, $176,000 x 7/8 = $154,000 eligible for forgiveness Eligible for Forgiveness 80 (previous # of FTEs)
May
Joe is back to full employment, no FFCRA FMLA leaves, no layoffs, no reduced hours. Total Eligible for Forgiveness: $256k payroll $20k rent $4k utilities $280k (no reductions because back to full employment)
Important Note:
Only 8 weeks of covered costs can be forgiven. The 8-week period begins on the loan origination date. May Total Eligible for Forgiveness: $154k June Total Eligible for Forgiveness: $280k $434k total forgiven Note: Joe would have maximized the amount of his loan forgiveness even more if he did rehires and increased hours/wages back to pre-COVID levels by May 1. Under that scenario, his total eligible for forgiveness would have been $259k (May) and $280k (June) for a total of $539k forgiven. This is the benefit of the program – to encourage employers to bring employees back to work, even before business is back to normal.
June
The CARES Act PPP functions to get cash quickly into the hands of SMB and to incent them to maintain employees and wages during the period of business disruption caused by COVID-19.
See what happens next
Let's Look at an Example Timeline
What Happens to the Rest?
So long as the proceeds were used for eligible expenses (payroll, rent/mortgage interest, utilities) from February 15 – June 30, 2020, the remainder becomes a 10-year term loan, at no more than 4% interest, which can be pre-paid without penalty.
Max Loan Amount
Recall:
$640,000
=
Remaining Balance
$206,000
=
Amount Forgiven
(if loan taken by May 1st)
$434,000
=
Max Loan Calculation
Joe's monthly payroll pre-covid
Joe's Pizzeria
Average monthly payroll costs using 12-month lookback from loan origination date
x
2.5
Max Loan Amount
=
80ee’s x $20/hr x 40hrs x 4 weeks
x
2.5
$256,000
$640,000
=
Can be used to pay any eligible expenses incurred from 2/15/20 – 6/30/20
Eligible Use:
How much can be forgiven? It depends!! On what? WHEN Joe’s Pizzeria takes the loan, and WHAT Joe’s Pizzeria numbers are for FTEs and salary/wages.
Loan Forgiveness:
Scenario
Paychex Protection Program
May
May
HOME
Average monthly payroll costs using either 12-month lookback from loan origination date or last calendar year
Prior to COVID-19, Joe had 80 EEs ho work 40 hours/week at $20/hr of total "payroll costs."
Let's Look at an Example Timeline
Business is hit hard. Joe does the following:
Business is hit hard. Joe does the following:
MaY
April
Business is picking up, but not fully. Joe:
Business is back and schools are out. No FF COVID leave
Read more
80EEs x $20/hr x 40hrs x 4 weeks
(80EEs x $20/hr x 40hrs x 4 weeks)
May
JUNE
JUNE
Conclusion
The CARES Act PPP functions to get cash quickly into the hands of SMBs and to incent them to maintain employees and wages during the period of business disruption caused by COVID-19.
May
May
Outcome
Outcome
Max Loan Calculation
Joe's monthly payroll pre-COVID-19
Average monthly payroll costs using either 12-month lookback from loan origination date or last calendar year
x
2.5
Max Loan Amount
=
80EEs x $20/hr x 40hrs x 4 weeks
x
2.5
$256,000
$640,000
=
Funds can be used to pay covered expenses, which include payroll, benefits, rent/mortgage interest, and utilities during the covered period.
Eligible Use:
Borrowers are eligible for loan forgiveness for covered expenses paid during the eight-week period following the loan origination date, but must meet requirements on number of FTEs and wages paid.
Loan Forgiveness:
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
(40 EEs x $20/hr x 20 hrs/week x 4 weeks)
Joe has laid off 20 EEs, reduced hours by 50% for 40 EEs, had 10 EEs take Families First Coronavirus Response Act FMLA Leave due to school closures, and kept 10 EEs at full hours.
Important Note:
Joe has also paid out of pocket 2/3 wages for 10 EEs who took Families First Coronavirus Response Act FMLA Leave ($21,120). This amount is NOT included in “payroll costs” under CARES because Joe will get 100% of that back in a CREDIT he can immediately take against payroll taxes (ER & EE FICA and EE withholdings.) These workers count under CARES Act as FTEs. For April, Total Possible Expenses Eligible for Forgiveness: $96k payroll $20k rent $4k utilities $120k Eligible for Forgiveness Note: All qualifies because EEs were rehired and wages restored by June. Non-payroll expenses are not more than 25%.
April
Business is hit hard. Joe does the following:
See How Joe Handles May
See How Joe Handles May
Payroll Costs:
10 EEs Laid off = $0 50 EEs @ Reduced Hours = $120k (50 EEs x $20/hr x 30 hrs/week x 4 weeks) 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $152k
Joe: - Hires back 10 EEs (10 still laid off) - Restores some hours, so 50 EEs are at 75% of wages - Keeps 10 EEs at full hours/pay - Still has 10 EEs on Families First Coronavirus Response Act FMLA Leave
Important Note:
10 EEs on FF COVID Leave = $21,120 not part of “payroll costs” but do count as FTEs. Total Eligible for Forgiveness: $152k payroll $20k rent $4k utilities $176k but must be reduced due to continued reduction in FTEs.
(No penalty for reduction in wages as wages were 75% or more for each EE).
Reduction Math: 70 (current number of FTEs) ÷ (divided by) 80 previous number of FTEs
So, $176,000 x 7/8 = $154,000 eligible for forgiveness
May
Business is picking up, but not fully.
See How Joe Handles June
See How Joe Handles June
Joe is back to full employment, no FFCRA FMLA leaves, no layoffs, no reduced hours. Total Eligible for Forgiveness: $256k payroll $20k rent $4k utilities $280k (no reductions because back to full employment)
Important Note:
(80EEs x $20/hr x 40hrs x 4 weeks)
Only 8 weeks of covered costs can be forgiven. The 8-week period begins on the loan origination date. Assume Joe takes the loan on May 1. May Total Eligible for Forgiveness: $154k June Total Eligible for Forgiveness: $280k Total: $434k forgiven Note: Joe would have maximized the amount of his loan forgiveness even more if he did rehires and increased hours/wages back to pre-COVID levels by May 1. Under that scenario, his total eligible for forgiveness would have been $259k (May) and $280k (June) for a total of $539k forgiven. This is the benefit of the program – to encourage employers to bring employees back to work, even before business is back to normal.
June
Business is back and schools are out.
What Happens to the Rest?
What Happens to the Rest?
What Happens to the Rest?
So long as the proceeds were used for eligible expenses (payroll, benefits, rent/mortgage interest, utilities), the remainder becomes a 2-year term loan, at no more than 1% interest, which can be pre-paid without penalty.
Max Loan Amount
Recall:
$640,000
=
Remaining Balance
$206,000
=
Amount Forgiven
(if loan taken by May 1st)
$434,000
=
Start Over
Start Over
Paycheck Protection Program
Scenario
Joe's Pizzeria
Prior to COVID-19, Joe had 80 EEs who work 40 hours/week at $20/hr of total "payroll costs."
The example below is based on current information about the CARES Act PPP program and is subject to change based upon future regulatory guidance. This does not constitute legal or tax advice. You should consult your CPA for advice on program details and guidance on whether the PPP loan program is right for your business.
This example includes a three-month look at the process
Let's Look at an Example Timeline
MaY
JUNE
The CARES Act PPP functions to get cash quickly into the hands of small businesses and to incent them to maintain employees and wages during the period of business disruption caused by COVID-19.
Conclusion
If you have any employees unable to work for any reason, including reasons attributed to COVID-19 (personal health, to care for a child impacted by school and daycare closures, or under quarantine) employees are to be paid using available sick and PTO time.
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
Business is Operating as Usual
HOME
Paycheck Protection Program
Loan Forgiveness Loan forgiveness for the first eight weeks under certain conditions (not all listed):
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020. • Forgiveness will be reduced proportionally by any reduction in employees retained compared to the prior year, in general, and reduction in wages by more than 25% of prior year compensation • Borrowers are required to show documentation on expenses/employees
Paycheck Protection Program
Economic Injury Disaster Loan Program
Employee Retention Credit
Payroll Tax Deferral Period
Families First Coronavirus Response Act
Paycheck Protection Program
Under the CARES Act, a PPP loan is designed to help small businesses keep employees on the payroll. Available through lenders approved by the SBA, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments during the covered period of the loan. If employers meet certain requirements, including keeping FTEs and wages at certain levels, the loan may be forgiven for eight full weeks of these costs.
• For most ERs with not more than 500 EEs, and for partnerships and self-employed • Maximum loan amount equal 250% of average monthly defined payroll costs • Cannot combine a PPP loan with the Employee Retention Credit • Borrowers can take the Social Security Payroll Tax Deferral until the date the lender grants PPP loan forgiveness
Details to note: Check out a specialized report to help with loan process
Paycheck Protection Program
Remainder of unforgiven portion of the PPP loan becomes a loan with a term of up to two years at a low interest rate of not more than 1%.
Repayment for unforgiven loans
Employee Retention Credit
• Take a refundable credit of 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees. Read about the CARES Act
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on any wages previously accounted for in a WOTC or Emergency Paid Sick Leave Credit
Eligible employers can:
Exclusions:
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from March 27, 2020, to Dec. 31, 2020. Read about the CARES Act
• Deferred repayment would be split and paid as follows: 50% due December 31, 2021; 50% due December 31, 2022. • Once an ER receives a decision on loan forgiveness, they are no longer eligible to defer their tax payments and will be required to follow the deposit structure for their deferred tax amount established through the program.
Details to note:
How Do the Tax Credits Work?
• Private employers with fewer than 500 employees are eligible if they pay eligible employees for qualifying COVID-19 emergency sick time and expanded family leave, retain appropriate records, as well as track and report the applicable data • The tax credit is allowed against the employer share of Social Security and Medicare (FICA) taxes on 100 percent of the qualified wages paid under FFCRA • Employers qualifying for the tax FFCRA tax credits will be able to retain an amount of their FICA taxes owed equal to the amount of qualifying FFCRA wages paid instead of depositing those taxes with the IRS • Any credit amount exceeding the employer's payroll tax liability for the period is eligible for an expedited refund from the IRS
What Clients Need to Do?
Economic Injury Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For most employers with not more than 500 employees, and for and self-employed individuals • For most employers with not more than 500 employees, as well as for self-employed individuals, independent contractors, and private non-profits • Advanced funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt, including any other obligations that cannot be met due to revenue losses • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment • Businesses can apply for an EIDL and a PPP, but the funds cannot be used for the same purpose
Details to note:
Paycheck Protection Program
Employee Retention Credit
Payroll Tax Deferral Period
Families First Coronavirus Response Act
Economic Industry Disaster Loan Program
It's important to note that a PPP loan cannot be combined with: • The Employee Retention Credit • The Social Security Payroll Tax Deferral after the date the lender grants PPP loan forgiveness Consult with your CPA to determine what program is right for your business.
Paycheck Protection Program
Applying for a Paycheck Protection Program loan?
SBA guidance clarifies calculation to use on PPP loan application Paychex previously created a specialized report (versions 1 and 2) that had payroll costs calculations that were needed to complete a PPP loan application. However, guidance issued April 6 by the SBA clarified how "payroll costs" should be calculated. The payroll costs calculation SHOULD NOT include employer paid FICA (Social Security and Medicare). Paychex is revising the report to implement this guidance and version 3 will be available April 8.
HOME
How Do I Apply for a Loan?
Employee Relief Program
What Loans, Credits are Available for my Business?
Before taking action, there is help available.
May Need to Reduce My Staff
Applying for a Paycheck Protection Program loan?
Paycheck Protection Program
• For clients who do not use Paychex Flex®, please complete this form to be put in touch with a Service Specialist who can assist • If you are a former Paychex client who accessed records through Paychex Flex®, you can access all 2019 payroll records until June 1, 2020. If you were not a Paychex Flex user, please submit your contact information, and our Service Specialists will be in touch. Note: To get a report, you must have run payroll with Paychex in 2019. * If you need more information, check out our Q&A resource.
On April 8, Paychex will make version 3 of its PPP Data Report available. If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard.
Access to Paychex Flex
Access to Paychex Flex
Applying for a Paycheck Protection Program loan?
Paycheck Protection Program
If you already have version 1 or 2 of the report This new guidance does not impact any business that has been approved of a loan but lenders may require an updated report from borrowers if the loan has not been approved yet. The SBA guidance provides safe harbor for borrowers who applied on or prior to April 6, 2020. No action is required by these borrowers. Businesses who have version 1 or 2 of the report can use it to apply for PPP a loan. You would need to calculate the payroll costs: • Take the Total line of "Employer FICA Taxes" column • Divide by the number of months (generally 12) • Subtract it from the "Average Total Payroll Costs" to determine the new monthly average payroll costs
How to Access the Report
Sample Loan Calculation
Sample Loan Calculation
Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
*Coding availability may vary based on platform
*Coding availability may vary based on platform
Employee is taking leave related to COVID-19 under the following qualifying reasons:
Emergency Paid Sick Leave - Employee
A. - Is subject to a federal, state, or local quarantine or isolation order B. - Has been advised by a healthcare provider to self-quarantine C. - Is experiencing COVID-19 symptoms and is seeking a medical diagnosis
More Codes
More Codes
Employee is taking leave related to COVID-19 under the following qualifying reasons:
• Is caring for an individual subject to an order described in “A” (previous page) or self-quarantine as described in “B” (previous page) • Is caring for a child whose school or place of care is closed (or childcare provider is unavailable) • Is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury
Emergency Paid Sick Leave - Family
More Codes
More Codes
Paychex has created three new earnings codes to track these different types of payments:
Employee is taking qualifying expanded family and medical leave related to COVID-19:
• To care for a child whose school or place of care is closed (or childcare provider is unavailable)
Expanded Family and Medical Leave - Employee
Review Codes
Whats Next: After ensuring employee eligibility for FFCRA leave, the type of leave based on the qualifying reason, and the appropriate rate and amount of pay, simply record the wages paid in the appropriate category.
Review Codes
Interim Final Rule: partnerships and self-employed 1040 Schedule C filers.
Loan forgiveness: documentation similar to any PPP loan required; and if the self-employed have EEs, submit Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that correspond to the covered period.
• A partnership is only eligible for one loan, not two separate ones • Self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized • Self-employed with no EEs: use 2019 Form 1040 Schedule C to assist in calculating their maximum loan amount • Self-employed with EEs: use 2019 Form 1040 Schedule C, and payroll processor records (similar information as Form 941), plus information of any retirement and health insurance contributions, if applicable
How Do the Tax Credits Work?
How Do the Tax Credits Work?
What Clients Need to Do?
What Clients Need to Do?
Families First Coronavirus Response Act
This law will help businesses and employees by allowing tax credits for 100% of certain wages paid up to a maximum cap, to employees taking leave for qualifying reasons related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act
*Coding availability may vary based on platform
See what you can expect with our PPP Loan Forgiveness Estimator
If you have any employees unable to work for any reason, including reasons attributed to COVID-19 (personal health, to care for a child impacted by school and daycare closures, or under quarantine) employees are to be paid using available sick and PTO time.
NEXT
PREV
What Loans and Credits are Available for Me?
What Options are Available for My Employees?
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
Business is Operating as Usual
What Loans and Credits are Available for Me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
For Employees taking qualified leave time under the FFCRA
• FLMA • PTO • Sick Time • Health Care
HOME
Paychex Protection Program
Loan forgiveness for the first eight weeks under certain conditions (not all listed):
We’re working in concert with our industry coalition, the National Payroll Reporting Consortium (NPRC), to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA.
In the meantime, please process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences. As we receive guidance from the IRS, we will help you ensure you can take advantage of the benefits.
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020 • Forgiveness will be reduced/eliminated if employer reduces the number of employees or wages by more than 25%
Paychex Protection Program
Economic Industry Disaster Loan Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Paychex Protection Program
Available through the Small Business Administration, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments from Feb. 15, 2020 to June 30, 2020.
• For employers with fewer than 500 employees, and for self- employed individuals • Interest rate capped at 4% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Loan can’t exceed $10 million
Details to note:
Paychex Protection Program
• Repayment term is up to 10 years • Borrowers are required to show documentation on expenses/employees
Repayment for unforgiven loans
Employee Retention Credit
• Take a refundable credit of up to 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees.
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on an employee if employer has taken a WOTC or Emergency Paid Sick Leave Credit
Eligible employees can:
Exclusions:
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from April 1, 2020, to Dec. 31, 2020.
• Deferred repayment would be split and paid in 2021 and 2022 • Deferral not available to employers who have an SBA Paycheck Protection Program loan forgiven
Details to note:
Family First Coronavirus Response Act
This new law will help businesses and employees by allowing tax credits for 100% of certain wages paid due to employee absences related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Extension Act
How Do the Tax Credits Work?
• All employers are eligible if they make qualified emergency paid leave payments to employees • Qualified wages paid under the FFCRA may be credited against the employee and employer share of Social Security and Medicare • Credit amount cannot exceed the employer’s payroll tax liability for the period
What Do Paychex Clients Need to do to Track these Payments?
Paychex has created three new earnings to track these different types of payments:
• Sick Time – Employee • Sick Time – Dependent Care • Extended Family Medical Leave - Child Care
Simply record the time used by your employee in each category and our system will apply the proper tax treatment.
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
Economic Industry Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For employers with fewer than 500 employees and self-employed individuals • Funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment)
Details to note:
For employees taking qualified leave time under the FFCRA
Continue to process your payroll as normal, but use earnings codes related to eligible COVID-19 leaves
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
• FTEs with 80 hours • PTEs eligible for amount up to two-week equivalent of regularly scheduled hours • Depending on reason for leave, compensation capped at either $200 or $511 per day
Emergency Paid Sick Leave Act
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
Paychex Protection Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Economic Industry Disaster Loan Program
Payroll Tax Deferral Period
Employee Retention Credit
Paycheck Protection Program
Families First Coronavirus Response Act
Economic Injury Disaster Loan Program
HOME
May Need to Reduce My Staff
What Loans, Credits are Available for my Business?
HOME
Economic Injury Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application. Details to note: • For most employers with not more than 500 employees, as well as for self-employed individuals, independent contractors, and private non-profits • Advanced funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt, including any other obligations that cannot be met due to revenue losses • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment • Businesses can apply for an EIDL and a PPP, but the funds cannot be used for the same purpose
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from March 27, 2020, to Dec. 31, 2020. Read about the CARES Act Details to note: • Deferred repayment would be split and paid as follows: 50% due December 31, 2021; 50% due December 31, 2022. • Once an ER receives a decision on loan forgiveness, they are no longer eligible to defer their tax payments and will be required to follow the deposit structure for their deferred tax amount established through the program
Employee Retention Credit
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees. Read about the CARES Act Eligible employers can: • Take a refundable credit of 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes Exclusions: • Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA • This credit cannot be taken on any wages previously accounted for in a WOTC or Emergency Paid Sick Leave Credit
Families First Coronavirus Response Act
This law will help businesses and employees by allowing tax credits for 100% of certain wages paid up to a maximum cap, to employees taking leave for qualifying reasons related to COVID-19. • There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act How Do the Tax Credits Work? • Private employers with fewer than 500 employees are eligible if they pay eligible employees for qualifying COVID-19 emergency sick time and expanded family leave, retain appropriate records, as well as track and report the applicable data • The tax credit is allowed against the employer share of Social Security and Medicare (FICA) taxes on 100 percent of the qualified wages paid under FFCRA • Employers qualifying for the tax FFCRA tax credits will be able to retain an amount of their FICA taxes owed equal to the amount of qualifying FFCRA wages paid instead of depositing those taxes with the IRS • Any credit amount exceeding the employer's payroll tax liability forthe period is eligible for an expedited refund from the IRS What Do Clients Need to Do to Track these Payments? Paychex has created three new earnings codes to track these different types of payments. Emergency Paid Sick Leave: Employee Employee is taking leave related to COVID-19 under the following qualifying reasons for EPSL under the FFCRA: A. Is subject to a federal, state, or local quarantine or isolation order B. Has been advised by a healthcare provider to self-quarantine C. Is experiencing COVID-19 symptoms and is seeking a medical diagnosis Emergency Paid Sick Leave: Family Employee is taking leave related to COVID-19 under the following qualifying reasons for EPSL under the FFCRA: • Is caring for an individual subject to an order described in “A” (above) or self-quarantine as described in “B” (above) • Is caring for a child whose school or place of care is closed (or childcare provider is unavailable) • Is experiencing any other substantially- similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury Expanded Family Medical Leave: Employee Employee is taking qualifying expanded family and medical leave related to COVID-19: • To care for a child whose school or place of care is closed (or childcare provider is unavailable) What's Next After ensuring employee eligibility for FFCRA leave, the type of leave based on the qualifying reason, and the appropriate rate and amount of pay, simply record the wages paid in the appropriate category. *Coding availability may vary based on platform
More Details
More Details
• This leave is not in addition to unpaid leave that may be taken for other reasons under the federal FMLA • The first 10 days (2 weeks) of expanded FML are unpaid • After 10 days, the rate of pay would be not less than two-thirds of the employee's current rate of pay for the number of hours they otherwise would be scheduled to work • Maximum pay is $200 per day under the FFCRA
Emergency Family and Medical Leave Expansion Act
Generally, employers subject to FFCRA must provide 12 weeks of expanded FML to eligible employees who request leave to care for a child whose school or childcare is closed or unavailable.
FFCRA Provisions for Employee Absences
• For clients who do not use Paychex Flex®, please complete this form to be put in touch with a Service Specialist who can assist • If you are a former Paychex client who accessed records through Paychex Flex®, you can access all 2019 payroll records until June 1, 2020. If you were not a Paychex Flex user, please submit your contact information, and our Service Specialists will be in touch. Note: To get a report, you must have run payroll with Paychex in 2019. * If you need more information, check out our Q&A resource. Loan forgiveness Loan forgiveness for the first eight weeks under certain conditions (not all listed): • The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020. • Forgiveness will be reduced proportionally by any reduction in employees retained compared to the prior year, in general, and reduction in wages by more than 25% of prior year compensation • Borrowers are required to show documentation on expenses/employees See what you can expect with our PPP Loan Forgiveness Estimator Repayment for unforgiven loans Remainder of unforgiven portion of the PPP loan becomes a loan with a term of up to two years at a low interest rate of not more than 1%. It's important to note that a PPP loan cannot be combined with: • The Employee Retention Credit • The Social Security Payroll Tax Deferral after the date the lender grants PPP loan forgiveness. Consult with your CPA to determine what program is right for your business.
Paycheck Protection Program
Under the CARES Act, a PPP loan is designed to help small businesses keep employees on the payroll. Available through lenders approved by the SBA, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments during the covered period of the loan. If employers meet certain requirements, including keeping FTEs and wages at certain levels, the loan may be forgiven for eight full weeks of these costs. Details of Note: • For most ERs with not more than 500 EEs, partnerships and for self-employed individuals • Interest rate capped at 0.5% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Borrowers can take the Social Security Payroll Tax Deferral until the date the lender grants PPP loan forgiveness.. SBA guidance clarifies calculation to use on PPP loan application Paychex previously created a specialized report (versions 1 and 2) that had payroll costs calculations that were needed to complete a PPP loan application. However, guidance issued April 6 by the SBA clarified how "payroll costs" should be calculated. The payroll costs calculation SHOULD NOT include employer paid FICA (Social Security and Medicare). Paychex is revising the report to implement this guidance and version 3 will be available April 8. If you already have version 1 or 2 of the report This new guidance does not impact any business that has been approved of a loan but lenders may require an updated report from borrowers if the loan has not been approved yet. The SBA guidance provides safe harbor for borrowers who applied on or prior to April 6, 2020. No action is required by these borrowers. Businesses who have version 1 or 2 of the report can use it to apply for PPP a loan. You would need to calculate the payroll costs: • Take the Total line of "Employer FICA Taxes" column • Divide by the number of months (generally 12) • Subtract it from the "Average Total Payroll Costs" to determine the new monthly average payroll costs How to Access the Report On April 8, Paychex will make version 3 of its PPP Data Report available. If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard.
* Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
Access to Paychex Flex
Access to Paychex Flex
Sample Loan Calculation
Sample Loan Calculation
Interim Final Rule: partnerships and self-employed 1040 Schedule C filers. • A partnership is only eligible for one loan, not two separate ones • Self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized • Self-employed with no EEs: use 2019 Form 1040 Schedule C to assist in calculating their maximum loan amount • Self-employed with EEs: use 2019 Form 1040 Schedule C, and payroll records containing similar information as Form 941, along with evidence of any retirement and health insurance contributions, if applicable Loan forgiveness: documentation similar to any PPP loan required; and if the self-employed have EEs, submit Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that correspond to the covered period.
OVERVIEW
Before taking action, there is help available.
NEXT
PREV
Employee Relief Program
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
May Need to Reduce My Staff
What Loans and Credits are Available for Me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
For Sick Time and Employee Absences
• FLMA • PTO • Sick Time • Health Care
HOME
Paychex Protection Program
Loan forgiveness for the first eight weeks under certain conditions (not all listed):
We’re working in concert with our industry coalition, the National Payroll Reporting Consortium (NPRC), to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA.
In the meantime, please process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences. As we receive guidance from the IRS, we will help you ensure you can take advantage of the benefits.
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020 • Forgiveness will be reduced/eliminated if employer reduces the number of employees or wages by more than 25%
Paychex Protection Program
Economic Industry Disaster Loan Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Paychex Protection Program
Available through the Small Business Administration, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments from Feb. 15, 2020 to June 30, 2020.
• For employers with fewer than 500 employees, and for self- employed individuals • Interest rate capped at 4% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Loan can’t exceed $10 million
Details to note:
Paychex Protection Program
• Repayment term is up to 10 years • Borrowers are required to show documentation on expenses/employees
Repayment for unforgiven loans
Employee Retention Credit
• Take a refundable credit of up to 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees.
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on an employee if employer has taken a WOTC or Emergency Paid Sick Leave Credit
Eligible employees can:
Exclusions:
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from April 1, 2020, to Dec. 31, 2020.
• Deferred repayment would be split and paid in 2021 and 2022 • Deferral not available to employers who have an SBA Paycheck Protection Program loan forgiven
Details to note:
Family First Coronavirus Response Act
This new law will help businesses and employees by allowing tax credits for 100% of certain wages paid due to employee absences related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Extension Act
How Do the Tax Credits Work?
• All employers are eligible if they make qualified emergency paid leave payments to employees • Qualified wages paid under the FFCRA may be credited against the employee and employer share of Social Security and Medicare • Credit amount cannot exceed the employer’s payroll tax liability for the period
What Do Paychex Clients Need to do to Track these Payments?
Paychex has created three new earnings to track these different types of payments:
• Sick Time – Employee • Sick Time – Dependent Care • Extended Family Medical Leave - Child Care
Simply record the time used by your employee in each category and our system will apply the proper tax treatment.
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
Economic Industry Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For employers with fewer than 500 employees and self-employed individuals • Funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment)
Details to note:
For Sick Time and Employee Absences
We’re working with the National Payroll Reporting Consortium (NPRC) to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA. Continue to process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
• All applicable employers must provide the up to 80 hours of sick time benefits
• Employers with fewer than 50 employees may be exempt under certain conditions if meeting the requirements would jeopardize the viability of their business
• Employers with less than 25 employees may be exempt from certain provisions around FMLA job protection
The FFCRA applies to private employers with fewer than 500 employees and certain public-sector employers.
Details of note:
Exemptions:
For complete definitions of qualified leave and employee eligibility, read the FFCRA article.
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
Paychex Protection Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Economic Industry Disaster Loan Program
How Do I Apply for a Loan?
FFCRA Provisions for Employee Absences
• All applicable employers must provide the up to 80 hours of sick time benefits
• Employers with fewer than 50 employees may be exempt under certain conditions if meeting the requirements would jeopardize the viability of their business
• Employers with less than 25 employees may be exempt from certain provisions around FMLA job protection
The FFCRA applies to private employers with fewer than 500 employees and certain public-sector employers.
For complete definitions of qualified leave and employee eligibility, read the FFCRA article.
Details of note:
Exemptions:
How Do I Apply for a Loan?
Paychex is actively monitoring the requirements for the new Paycheck Protection Program loan. We anticipate having a “ready to apply” package available soon for you, including the payroll data required, to make the application process as simple as possible.
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
Check back here daily for more information.
What Loans, Credits are Available for My Business?
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May Need to Reduce My Staff
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For Employees taking qualified leave time under the FFCRA
Continue to process your payroll as normal, but use earnings codes related to eligible COVID-19 leaves
FFCRA Provisions for Employee Absences
The FFCRA generally applies to private employers with fewer than 500 employees and certain public-sector employers. Emergency Paid Sick Leave Act • FTEs with 80 hours • PTEs eligible for amount up to two-week equivalent of regularly scheduled hours • Depending on reason for leave, compensation capped at either $200 or $511 per day Emergency Family and Medical Leave Expansion Act Generally, employers subject to FFCRA must provide 12 weeks of expanded FML to eligible employees who request leave to care for a child whose school or childcare is closed or unavailable. • This leave is not in addition to unpaid leave that may be taken for other reasons under the federal FMLA • The first 10 days (2 weeks) of expanded FML are unpaid • After 10 days, the rate of pay would be not less than two-thirds of the employee's current rate of pay for the number of hours they otherwise would be scheduled to work • Maximum pay is $200 per day under the FFCRA
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
HOME
Paycheck Protection Program
Economic Injury Disaster Loan Program
Employee Retention Credit
Payroll Tax Deferral Period
Families First Coronavirus Response Act
Employee Retention Credit
• Take a refundable credit of 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees. Read about the CARES Act
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on any wages previously accounted for in a WOTC or Emergency Paid Sick Leave Credit
Eligible employers can:
Exclusions:
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from March 27, 2020, to Dec. 31, 2020. Read about the CARES Act
• Deferred repayment would be split and paid as follows: 50% due December 31, 2021; 50% due December 31, 2022. • Once an ER receives a decision on loan forgiveness, they are no longer eligible to defer their tax payments and will be required to follow the deposit structure for their deferred tax amount established through the program.
Details to note:
Economic Injury Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For most employers with not more than 500 employees, and for and self-employed individuals • For most employers with not more than 500 employees, as well as for self-employed individuals, independent contractors, and private non-profits • Advanced funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt, including any other obligations that cannot be met due to revenue losses • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment • Businesses can apply for an EIDL and a PPP, but the funds cannot be used for the same purpose
Details to note:
Paycheck Protection Program
Employee Retention Credit
Payroll Tax Deferral Period
Families First Coronavirus Response Act
Economic Industry Disaster Loan Program
Before taking action, there is help available.
May Need to Reduce My Staff
May Need to Reduce My Staff
How Do I Apply for a Loan?
You can access immediate funding for your small business through the CARES Act with a Paycheck Protection Program loan. We are here to help you get the information you need to apply. The SBA has released the application and guidelines for small business to immediately access loans for payroll and operating costs. We are here to help you quickly access the information you will need to apply. Consult with your CPA to see if this program is right for you. A list of participating lenders can be found at www.sba.gov. Check back frequently for updated information on the Paycheck Protection Program.
HOME
Paycheck Protection Program
Remainder of unforgiven portion of the PPP loan becomes a loan with a term of up to two years at a low interest rate of not more than 1%.
Repayment for unforgiven loans
It's important to note that a PPP loan cannot be combined with: • The Employee Retention Credit • The Social Security Payroll Tax Deferral after the date the lender grants PPP loan forgiveness Consult with your CPA to determine what program is right for your business.
Paycheck Protection Program
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020. • Forgiveness will be reduced proportionally by any reduction in employees retained compared to the prior year, in general, and reduction in wages by more than 25% of prior year compensation • Borrowers are required to show documentation on expenses/employees
Loan Forgiveness Loan forgiveness for the first eight weeks under certain conditions (not all listed):
Applying for a Paycheck Protection Program loan?
Paycheck Protection Program
• For clients who do not use Paychex Flex®, please complete this form to be put in touch with a Service Specialist who can assist • If you are a former Paychex client who accessed records through Paychex Flex®, you can access all 2019 payroll records until June 1, 2020. If you were not a Paychex Flex user, please submit your contact information, and our Service Specialists will be in touch. Note: To get a report, you must have run payroll with Paychex in 2019. * If you need more information, check out our Q&A resource.
On April 8, Paychex will make version 3 of its PPP Data Report available. If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard.
How to Access the Report
Access to Paychex Flex
Access to Paychex Flex
Applying for a Paycheck Protection Program loan?
Paycheck Protection Program
If you already have version 1 or 2 of the report This new guidance does not impact any business that has been approved of a loan but lenders may require an updated report from borrowers if the loan has not been approved yet. The SBA guidance provides safe harbor for borrowers who applied on or prior to April 6, 2020. No action is required by these borrowers. Businesses who have version 1 or 2 of the report can use it to apply for PPP a loan. You would need to calculate the payroll costs: • Take the Total line of "Employer FICA Taxes" column • Divide by the number of months (generally 12) • Subtract it from the "Average Total Payroll Costs" to determine the new monthly average payroll costs
Applying for a Paycheck Protection Program loan?
Paycheck Protection Program
SBA guidance clarifies calculation to use on PPP loan application Paychex previously created a specialized report (versions 1 and 2) that had payroll costs calculations that were needed to complete a PPP loan application. However, guidance issued April 6 by the SBA clarified how "payroll costs" should be calculated. The payroll costs calculation SHOULD NOT include employer paid FICA (Social Security and Medicare). Paychex is revising the report to implement this guidance and version 3 will be available April 8.
Paycheck Protection Program
Under the CARES Act, a PPP loan is designed to help small businesses keep employees on the payroll. Available through lenders approved by the SBA, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments during the covered period of the loan. If employers meet certain requirements, including keeping FTEs and wages at certain levels, the loan may be forgiven for eight full weeks of these costs.
• For most ERs with not more than 500 EEs, and for partnerships and self-employed • Maximum loan amount equal 250% of average monthly defined payroll costs • Cannot combine a PPP loan with the Employee Retention Credit • Borrowers can take the Social Security Payroll Tax Deferral until the date the lender grants PPP loan forgiveness
Details to note: Check out a specialized report to help with loan process
Sample Loan Calculation
Sample Loan Calculation
Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
*Coding availability may vary based on platform
Paychex has created three new earnings codes to track these different types of payments:
What Clients Need to Do?
Employee is taking qualifying expanded family and medical leave related to COVID-19:
• To care for a child whose school or place of care is closed (or childcare provider is unavailable)
Expanded Family and Medical Leave - Employee
Whats Next: After ensuring employee eligibility for FFCRA leave, the type of leave based on the qualifying reason, and the appropriate rate and amount of pay, simply record the wages paid in the appropriate category.
Review Codes
Review Codes
Employee is taking leave related to COVID-19 under the following qualifying reasons:
• Is caring for an individual subject to an order described in “A” (previous page) or self-quarantine as described in “B” (previous page) • Is caring for a child whose school or place of care is closed (or childcare provider is unavailable) • Is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury
Emergency Paid Sick Leave - Family
More Codes
More Codes
Employee is taking leave related to COVID-19 under the following qualifying reasons:
A. - Is subject to a federal, state, or local quarantine or isolation order B. - Has been advised by a healthcare provider to self-quarantine C. - Is experiencing COVID-19 symptoms and is seeking a medical diagnosis
Emergency Paid Sick Leave - Employee
More Codes
More Codes
How Do the Tax Credits Work?
• Private employers with fewer than 500 employees are eligible if they pay eligible employees for qualifying COVID-19 emergency sick time and expanded family leave, retain appropriate records, as well as track and report the applicable data • The tax credit is allowed against the employer share of Social Security and Medicare (FICA) taxes on 100 percent of the qualified wages paid under FFCRA • Employers qualifying for the tax FFCRA tax credits will be able to retain an amount of their FICA taxes owed equal to the amount of qualifying FFCRA wages paid instead of depositing those taxes with the IRS • Any credit amount exceeding the employer's payroll tax liability for the period is eligible for an expedited refund from the IRS
*Coding availability may vary based on platform
How Do the Tax Credits Work?
How Do the Tax Credits Work?
What Clients Need to Do?
What Clients Need to Do?
Families First Coronavirus Response Act
This law will help businesses and employees by allowing tax credits for 100% of certain wages paid up to a maximum cap, to employees taking leave for qualifying reasons related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act
*Coding availability may vary based on platform
Interim Final Rule: partnerships and self-employed 1040 Schedule C filers.
Loan forgiveness: documentation similar to any PPP loan required; and if the self-employed have EEs, submit Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that correspond to the covered period.
• A partnership is only eligible for one loan, not two separate ones • Self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized • Self-employed with no EEs: use 2019 Form 1040 Schedule C to assist in calculating their maximum loan amount • Self-employed with EEs: use 2019 Form 1040 Schedule C, and payroll processor records (similar information as Form 941), plus information of any retirement and health insurance contributions, if applicable
See what you can expect with our PPP Loan Forgiveness Estimator
If you have any employees unable to work for any reason, including reasons attributed to COVID-19 (personal health, to care for a child impacted by school and daycare closures, or under quarantine) employees are to be paid using available sick and PTO time.
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What Loans and Credits are Available for Me?
What Options are Available for My Employees?
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
May Need to Reduce My Staff
What Loans and Credits are Available for Me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
For Employees taking qualified leave time under the FFCRA
• FLMA • PTO • Sick Time • Health Care
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Paychex Protection Program
Loan forgiveness for the first eight weeks under certain conditions (not all listed):
We’re working in concert with our industry coalition, the National Payroll Reporting Consortium (NPRC), to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA.
In the meantime, please process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences. As we receive guidance from the IRS, we will help you ensure you can take advantage of the benefits.
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020 • Forgiveness will be reduced/eliminated if employer reduces the number of employees or wages by more than 25%
Paychex Protection Program
Economic Industry Disaster Loan Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Paychex Protection Program
Available through the Small Business Administration, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments from Feb. 15, 2020 to June 30, 2020.
• For employers with fewer than 500 employees, and for self- employed individuals • Interest rate capped at 4% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Loan can’t exceed $10 million
Details to note:
Paychex Protection Program
• Repayment term is up to 10 years • Borrowers are required to show documentation on expenses/employees
Repayment for unforgiven loans
Employee Retention Credit
• Take a refundable credit of up to 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees.
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on an employee if employer has taken a WOTC or Emergency Paid Sick Leave Credit
Eligible employees can:
Exclusions:
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from April 1, 2020, to Dec. 31, 2020.
• Deferred repayment would be split and paid in 2021 and 2022 • Deferral not available to employers who have an SBA Paycheck Protection Program loan forgiven
Details to note:
Family First Coronavirus Response Act
This new law will help businesses and employees by allowing tax credits for 100% of certain wages paid due to employee absences related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Extension Act
How Do the Tax Credits Work?
• All employers are eligible if they make qualified emergency paid leave payments to employees • Qualified wages paid under the FFCRA may be credited against the employee and employer share of Social Security and Medicare • Credit amount cannot exceed the employer’s payroll tax liability for the period
What Do Paychex Clients Need to do to Track these Payments?
Paychex has created three new earnings to track these different types of payments:
• Sick Time – Employee • Sick Time – Dependent Care • Extended Family Medical Leave - Child Care
Simply record the time used by your employee in each category and our system will apply the proper tax treatment.
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
Economic Industry Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For employers with fewer than 500 employees and self-employed individuals • Funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment)
Details to note:
For employees taking qualified leave time under the FFCRA
Continue to process your payroll as normal, but use earnings codes related to eligible COVID-19 leaves
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
• FTEs with 80 hours • PTEs eligible for amount up to two-week equivalent of regularly scheduled hours • Depending on reason for leave, compensation capped at either $200 or $511 per day
Emergency Paid Sick Leave Act
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
Paychex Protection Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Economic Industry Disaster Loan Program
Payroll Tax Deferral Period
Employee Retention Credit
Paycheck Protection Program
Families First Coronavirus Response Act
Economic Injury Disaster Loan Program
HOME
May Need to Reduce My Staff
What Loans, Credits are Available for my Business?
HOME
Economic Injury Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application. Details to note: • For most employers with not more than 500 employees, as well as for self-employed individuals, independent contractors, and private non-profits • Advanced funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt, including any other obligations that cannot be met due to revenue losses • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment • Businesses can apply for an EIDL and a PPP, but the funds cannot be used for the same purpose
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from March 27, 2020, to Dec. 31, 2020. Details to note: • Deferred repayment would be split and paid as follows: 50% due December 31, 2021; 50% due December 31, 2022. • Once an ER receives a decision on loan forgiveness, they are no longer eligible to defer their tax payments and will be required to follow the deposit structure for their deferred tax amount established through the program
Employee Retention Credit
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees. Read about the CARES Act Eligible employers can: • Take a refundable credit of 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes Exclusions: • Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA • This credit cannot be taken on any wages previously accounted for in a WOTC or Emergency Paid Sick Leave Credit
• For clients who do not use Paychex Flex®, please complete this form to be put in touch with a Service Specialist who can assist • If you are a former Paychex client who accessed records through Paychex Flex®, you can access all 2019 payroll records until June 1, 2020. If you were not a Paychex Flex user, please submit your contact information, and our Service Specialists will be in touch. Note: To get a report, you must have run payroll with Paychex in 2019. * If you need more information, check out our Q&A resource. Loan forgiveness Loan forgiveness for the first eight weeks under certain conditions (not all listed): • The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020. • Forgiveness will be reduced proportionally by any reduction in employees retained compared to the prior year, in general, and reduction in wages by more than 25% of prior year compensation • Borrowers are required to show documentation on expenses/employees See what you can expect with our PPP Loan Forgiveness Estimator Repayment for unforgiven loans Remainder of unforgiven portion of the PPP loan becomes a loan with a term of up to two years at a low interest rate of not more than 1%. It's important to note that a PPP loan cannot be combined with: • The Employee Retention Credit • The Social Security Payroll Tax Deferral after the date the lender grants PPP loan forgiveness. Consult with your CPA to determine what program is right for your business.
Paycheck Protection Program
Under the CARES Act, a PPP loan is designed to help small businesses keep employees on the payroll. Available through lenders approved by the SBA, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments during the covered period of the loan. If employers meet certain requirements, including keeping FTEs and wages at certain levels, the loan may be forgiven for eight full weeks of these costs. Details of Note: • For most employers with not more than 500 employees, and for self-employed individuals • Interest rate capped at 0.5% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Borrowers can take the Social Security Payroll Tax Deferral until the date the lender grants PPP loan forgiveness.. SBA guidance clarifies calculation to use on PPP loan application Paychex previously created a specialized report (versions 1 and 2) that had payroll costs calculations that were needed to complete a PPP loan application. However, guidance issued April 6 by the SBA clarified how "payroll costs" should be calculated. The payroll costs calculation SHOULD NOT include employer paid FICA (Social Security and Medicare). Paychex is revising the report to implement this guidance and version 3 will be available April 8. If you already have version 1 or 2 of the report This new guidance does not impact any business that has been approved of a loan but lenders may require an updated report from borrowers if the loan has not been approved yet. The SBA guidance provides safe harbor for borrowers who applied on or prior to April 6, 2020. No action is required by these borrowers. Businesses who have version 1 or 2 of the report can use it to apply for PPP a loan. You would need to calculate the payroll costs: • Take the Total line of "Employer FICA Taxes" column • Divide by the number of months (generally 12) • Subtract it from the "Average Total Payroll Costs" to determine the new monthly average payroll costs How to Access the Report On April 8, Paychex will make version 3 of its PPP Data Report available. If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard.
Access to Paychex Flex
Access to Paychex Flex
Sample Loan Calculation
Sample Loan Calculation
* Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
Families First Coronavirus Response Act
This law will help businesses and employees by allowing tax credits for 100% of certain wages paid up to a maximum cap, to employees taking leave for qualifying reasons related to COVID-19. • There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act How Do the Tax Credits Work? • Private employers with fewer than 500 employees are eligible if they pay eligible employees for qualifying COVID-19 emergency sick time and expanded family leave, retain appropriate records, as well as track and report the applicable data • The tax credit is allowed against the employer share of Social Security and Medicare (FICA) taxes on 100 percent of the qualified wages paid under FFCRA • Employers qualifying for the tax FFCRA tax credits will be able to retain an amount of their FICA taxes owed equal to the amount of qualifying FFCRA wages paid instead of depositing those taxes with the IRS • Any credit amount exceeding the employer's payroll tax liability forthe period is eligible for an expedited refund from the IRS What Do Clients Need to Do to Track these Payments? Paychex has created three new earnings codes to track these different types of payments. Emergency Paid Sick Leave: Employee Employee is taking leave related to COVID-19 under the following qualifying reasons for EPSL under the FFCRA: A. Is subject to a federal, state, or local quarantine or isolation order B. Has been advised by a healthcare provider to self-quarantine C. Is experiencing COVID-19 symptoms and is seeking a medical diagnosis Emergency Paid Sick Leave: Family Employee is taking leave related to COVID-19 under the following qualifying reasons for EPSL under the FFCRA: • Is caring for an individual subject to an order described in “A” (above) or self-quarantine as described in “B” (above) • Is caring for a child whose school or place of care is closed (or childcare provider is unavailable) • Is experiencing any other substantially- similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury Expanded Family Medical Leave: Employee Employee is taking qualifying expanded family and medical leave related to COVID-19: • To care for a child whose school or place of care is closed (or childcare provider is unavailable) What's Next After ensuring employee eligibility for FFCRA leave, the type of leave based on the qualifying reason, and the appropriate rate and amount of pay, simply record the wages paid in the appropriate category. *Coding availability may vary based on platform
More Details
More Details
• This leave is not in addition to unpaid leave that may be taken for other reasons under the federal FMLA • The first 10 days (2 weeks) of expanded FML are unpaid • After 10 days, the rate of pay would be not less than two-thirds of the employee's current rate of pay for the number of hours they otherwise would be scheduled to work • Maximum pay is $200 per day under the FFCRA
Emergency Family and Medical Leave Expansion Act
Generally, employers subject to FFCRA must provide 12 weeks of expanded FML to eligible employees who request leave to care for a child whose school or childcare is closed or unavailable.
FFCRA Provisions for Employee Absences
Scenario
Paychex Protection Program
HOME
Max Loan Calculation
Joe's monthly payroll pre-COVID-19
Average monthly payroll costs using either 12-month lookback from loan origination date or last calendar year
x
2.5
Max Loan Amount
=
80EEs x $20/hr x 40hrs x 4 weeks
x
2.5
$256,000
$640,000
=
Funds can be used to pay covered expenses, which include payroll, benefits, rent/mortgage interest, and utilities during the covered period.
Eligible Use:
Borrowers are eligible for loan forgiveness for covered expenses paid during the eight-week period following the loan origination date, but must meet requirements on number of FTEs and wages paid.
Loan Forgiveness:
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
(40 EEs x $20/hr x 20 hrs/week x 4 weeks)
Joe has laid off 20 EEs, reduced hours by 50% for 40 EEs, had 10 EEs take Families First Coronavirus Response Act FMLA Leave due to school closures, and kept 10 EEs at full hours.
Important Note:
Joe has also paid out of pocket 2/3 wages for 10 EEs who took Families First Coronavirus Response Act FMLA Leave ($21,120). This amount is NOT included in “payroll costs” under CARES because Joe will get 100% of that back in a CREDIT he can immediately take against payroll taxes (ER & EE FICA and EE withholdings.) These workers count under CARES Act as FTEs. For April, Total Possible Expenses Eligible for Forgiveness: $96k payroll $20k rent $4k utilities $120k Eligible for Forgiveness Note: All qualifies because EEs were rehired and wages restored by June. Non-payroll expenses are not more than 25%.
April
Business is hit hard. Joe does the following:
See How Joe Handles May
See How Joe Handles May
Payroll Costs:
10 EEs Laid off = $0 50 EEs @ Reduced Hours = $120k (50 EEs x $20/hr x 30 hrs/week x 4 weeks) 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $152k
Joe: - Hires back 10 EEs (10 still laid off) - Restores some hours, so 50 EEs are at 75% of wages - Keeps 10 EEs at full hours/pay - Still has 10 EEs on Families First Coronavirus Response Act FMLA Leave
Important Note:
10 EEs on FF COVID Leave = $21,120 not part of “payroll costs” but do count as FTEs. Total Eligible for Forgiveness: $152k payroll $20k rent $4k utilities $176k but must be reduced due to continued reduction in FTEs.
(No penalty for reduction in wages as wages were 75% or more for each EE).
Reduction Math: 70 (current number of FTEs) ÷ (divided by) 80 previous number of FTEs
So, $176,000 x 7/8 = $154,000 eligible for forgiveness
May
Business is picking up, but not fully.
See How Joe Handles June
See How Joe Handles June
Joe is back to full employment, no FFCRA FMLA leaves, no layoffs, no reduced hours. Total Eligible for Forgiveness: $256k payroll $20k rent $4k utilities $280k (no reductions because back to full employment)
Important Note:
(80EEs x $20/hr x 40hrs x 4 weeks)
Only 8 weeks of covered costs can be forgiven. The 8-week period begins on the loan origination date. Assume Joe takes the loan on May 1. May Total Eligible for Forgiveness: $154k June Total Eligible for Forgiveness: $280k Total: $434k forgiven Note: Joe would have maximized the amount of his loan forgiveness even more if he did rehires and increased hours/wages back to pre-COVID levels by May 1. Under that scenario, his total eligible for forgiveness would have been $259k (May) and $280k (June) for a total of $539k forgiven. This is the benefit of the program – to encourage employers to bring employees back to work, even before business is back to normal.
June
Business is back and schools are out.
What Happens to the Rest?
What Happens to the Rest?
What Happens to the Rest?
So long as the proceeds were used for eligible expenses (payroll, benefits, rent/mortgage interest, utilities), the remainder becomes a 2-year term loan, at no more than 1% interest, which can be pre-paid without penalty.
Max Loan Amount
Recall:
$640,000
=
Remaining Balance
$206,000
=
Amount Forgiven
(if loan taken by May 1st)
$434,000
=
Start Over
Start Over
Paycheck Protection Program
Scenario
Joe's Pizzeria
Prior to COVID-19, Joe had 80 EEs who work 40 hours/week at $20/hr of total "payroll costs."
The example below is based on current information about the CARES Act PPP program and is subject to change based upon future regulatory guidance. This does not constitute legal or tax advice. You should consult your CPA for advice on program details and guidance on whether the PPP loan program is right for your business.
This example includes a three-month look at the process
Let's Look at an Example Timeline
Let's Look at an Example Timeline
This example includes a three-month look at the process
Conclusion
The CARES Act PPP functions to get cash quickly into the hands of SMBs and to incent them to maintain employees and wages during the period of business disruption caused by COVID-19.
What Happens to the Rest?
So long as the proceeds were used for eligible expenses (payroll, benefitsrent/mortgage interest, utilities) during an eight-week period from loan origination, the remainder becomes a 2-year term loan, at no more than 1% interest, which can be pre-paid without penalty.
Max Loan Amount
Recall:
$640,000
=
Remaining Balance
$206,000
=
Amount Forgiven
(if loan taken by May 1st)
$434,000
=
June
June
Start Over
Start Over
Payroll Costs:
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
(40 EEs x $20/hr x 20 hrs/week x 4 weeks)
Joe has laid off 20 EEs, reduced hours by 50% for 40 EEs, had 10 EEs take Families First Coronavirus Response Act FMLA Leave due to school closures, and kept 10 EEs at full hours.
Important Note:
Joe has also paid out of pocket 2/3 wages for 10 EE’s who took Families First Coronavirus Response Act FMLA Leave ($21,120). This amount is NOT included in “payroll costs” under CARES because Joe will get 100% of that back in a CREDIT he can immediately take against payroll taxes (ER & EE FICA and EE withholdings.) These workers do count under CARES Act as FTEs. For April, Total Possible Expenses Eligible for Forgiveness: $96k payroll $20k rent $4k utilities $120k Eligible for Forgiveness Note: All qualifies because EEs were rehired and wages restored by June. Non-payroll expenses are not more than 25%.
Business is hit hard. Joe does the following:
April
MaY
MaY
Payroll Costs:
20 EEs Laid off = $0 50 EEs @ Reduced Hours = $120k (40 EEs x $20/hr x 30 hrs/week x 4 weeks) 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $152k
- Hires back 10 EEs (10 still laid off) - Restores some hours, so 50 EEs are at 75% of wages - Keeps 10 EEs at full hours/pay - Still has 10 EEs on Families First Coronavirus Response Act FMLA Leave
Important Note:
Still has 10 EEs on FF COVID Leave = $21,120 not part of “payroll costs” but do count as FTEs. Total Eligible for Forgiveness: $152k payroll $20k rent $4k utilities $176k BUT must be reduced due to continued reduction in FTEs. (No penalty for reduction in wages as wages were 75% or more for each EE).
Reduction Math: 70(current # FTEs) ÷ (dividied by) 80 (current # FTEs) So, $176,000 x 7/8 = $154,000 eligible for forgiveness
May
Business is picking up, but not fully.
April
April
JUNE
JUNE
Joe is back to full employment, no FFCRA FMLA leaves, no layoffs, no reduced hours. Total Eligible for Forgiveness: $256k payroll $20k rent $4k utilities $280k (no reductions because back to full employment)
(80EEs x $20/hr x 40hrs x 4 weeks)
Total: $434k forgiven
Important Note:
Only 8 weeks of covered costs can be forgiven. The 8-week period begins on the loan origination date. Assume Joe takes the loan on May 1. May Total Eligible for Forgiveness: $154k June Total Eligible for Forgiveness: $280k Note: Joe would have maximized the amount of his loan forgiveness even more if he did rehires and increased hours/wages back to pre-COVID levels by May 1. Under that scenario, his total eligible for forgiveness would have been $259k (May) and $280k (June) for a total of $539k forgiven. This is the benefit of the program – to encourage employers to bring employees back to work, even before business is back to normal.
Business is back and schools are out.
June
May
May
Outcome
Outcome
Max Loan Calculation
Joe's monthly payroll pre-COVID-19
Joe's Pizzeria
Average monthly payroll costs using either 12-month lookback from loan origination date or last calendar year
Prior to COVID-19, Joe had 80 EEs who work 40 hours/week at $20/hr of total "payroll costs."
The example below is based on current information about the CARES Act PPP program and is subject to change based upon future regulatory guidance. This does not constitute legal or tax advice. You should consult your CPA for advice on program details and guidance on whether the PPP loan program is right for your business.
x
2.5
Max Loan Amount
=
80EEs x $20/hr x 40hrs x 4 weeks
x
2.5
$256,000
$640,000
=
Funds can be used to pay covered expenses, which include payroll, benefits, rent/mortgage interest, and utilities during the covered period.
Eligible Use:
Borrowers are eligible for loan forgiveness for covered expenses paid during the eight-week period following the loan origination date, but must meet requirements on number of FTEs and wages paid.
Loan Forgiveness:
The CARES Act PPP functions to get cash quickly into the hands of small businesses and to incent them to maintain employees and wages during the period of business disruption caused by COVID-19.
Conclusion
OVERVIEW
If you have any employees unable to work for any reason, including reasons attributed to COVID-19 (personal health, to care for a child impacted by school and daycare closures, or under quarantine) employees are to be paid using available sick and PTO time.
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What Loans and Credits are Available for Me?
What Options are Available for My Employees?
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
May Need to Reduce My Staff
What Loans and Credits are Available for Me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
For Sick Time and Employee Absences
• FLMA • PTO • Sick Time • Health Care
HOME
Paychex Protection Program
Loan forgiveness for the first eight weeks under certain conditions (not all listed):
We’re working in concert with our industry coalition, the National Payroll Reporting Consortium (NPRC), to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA.
In the meantime, please process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences. As we receive guidance from the IRS, we will help you ensure you can take advantage of the benefits.
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020 • Forgiveness will be reduced/eliminated if employer reduces the number of employees or wages by more than 25%
Paychex Protection Program
Economic Industry Disaster Loan Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Paychex Protection Program
Available through the Small Business Administration, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments from Feb. 15, 2020 to June 30, 2020.
• For employers with fewer than 500 employees, and for self- employed individuals • Interest rate capped at 4% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Loan can’t exceed $10 million
Details to note:
Paychex Protection Program
• Repayment term is up to 10 years • Borrowers are required to show documentation on expenses/employees
Repayment for unforgiven loans
Employee Retention Credit
• Take a refundable credit of up to 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees.
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on an employee if employer has taken a WOTC or Emergency Paid Sick Leave Credit
Eligible employees can:
Exclusions:
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from April 1, 2020, to Dec. 31, 2020.
• Deferred repayment would be split and paid in 2021 and 2022 • Deferral not available to employers who have an SBA Paycheck Protection Program loan forgiven
Details to note:
Family First Coronavirus Response Act
This new law will help businesses and employees by allowing tax credits for 100% of certain wages paid due to employee absences related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Extension Act
How Do the Tax Credits Work?
• All employers are eligible if they make qualified emergency paid leave payments to employees • Qualified wages paid under the FFCRA may be credited against the employee and employer share of Social Security and Medicare • Credit amount cannot exceed the employer’s payroll tax liability for the period
What Do Paychex Clients Need to do to Track these Payments?
Paychex has created three new earnings to track these different types of payments:
• Sick Time – Employee • Sick Time – Dependent Care • Extended Family Medical Leave - Child Care
Simply record the time used by your employee in each category and our system will apply the proper tax treatment.
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
Economic Industry Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For employers with fewer than 500 employees and self-employed individuals • Funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment)
Details to note:
Paychex Protection Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Economic Industry Disaster Loan Program
HOME
Other Financing Options
How Do I Apply for a Loan?
What Loans, Credits are Available for my Business?
Hold on! We can help with the loan application process. The IRS and SBA have issued updated guidance on how to apply for a Paycheck Protection Program Loan.
Suspending Business Operations
• This leave is not in addition to unpaid leave that may be taken for other reasons under the federal FMLA • The first 10 days (2 weeks) of expanded FML are unpaid • After 10 days, the rate of pay would be not less than two-thirds of the employee's current rate of pay for the number of hours they otherwise would be scheduled to work • Maximum pay is $200 per day under the FFCRA
Generally, employers subject to FFCRA must provide 12 weeks of expanded FML to eligible employees who request leave to care for a child whose school or childcare is closed or unavailable.
Emergency Family and Medical Leave Expansion Act
FFCRA Provisions for Employee Absences
• FTEs with 80 hours • PTEs eligible for amount up to two-week equivalent of regularly scheduled hours • Depending on reason for leave, compensation capped at either $200 or $511 per day
Emergency Paid Sick Leave Act
More Details
More Details
FFCRA Provisions for Employee Absences
For employees taking qualified leave time under the FFCRA
Continue to process your payroll as normal, but use earnings codes related to eligible COVID-19 leaves
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
OVERVIEW
Before taking action, there is help available.
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PREV
What Options are Available for My Employees?
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
May Need to Reduce My Staff
What Loans and Credits are Available for Me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
For Sick Time and Employee Absences
• FLMA • PTO • Sick Time • Health Care
HOME
Paychex Protection Program
Loan forgiveness for the first eight weeks under certain conditions (not all listed):
We’re working in concert with our industry coalition, the National Payroll Reporting Consortium (NPRC), to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA.
In the meantime, please process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences. As we receive guidance from the IRS, we will help you ensure you can take advantage of the benefits.
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020 • Forgiveness will be reduced/eliminated if employer reduces the number of employees or wages by more than 25%
Paychex Protection Program
Economic Industry Disaster Loan Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Paychex Protection Program
Available through the Small Business Administration, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments from Feb. 15, 2020 to June 30, 2020.
• For employers with fewer than 500 employees, and for self- employed individuals • Interest rate capped at 4% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Loan can’t exceed $10 million
Details to note:
Paychex Protection Program
• Repayment term is up to 10 years • Borrowers are required to show documentation on expenses/employees
Repayment for unforgiven loans
Employee Retention Credit
• Take a refundable credit of up to 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees.
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on an employee if employer has taken a WOTC or Emergency Paid Sick Leave Credit
Eligible employees can:
Exclusions:
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from April 1, 2020, to Dec. 31, 2020.
• Deferred repayment would be split and paid in 2021 and 2022 • Deferral not available to employers who have an SBA Paycheck Protection Program loan forgiven
Details to note:
Family First Coronavirus Response Act
This new law will help businesses and employees by allowing tax credits for 100% of certain wages paid due to employee absences related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Extension Act
How Do the Tax Credits Work?
• All employers are eligible if they make qualified emergency paid leave payments to employees • Qualified wages paid under the FFCRA may be credited against the employee and employer share of Social Security and Medicare • Credit amount cannot exceed the employer’s payroll tax liability for the period
What Do Paychex Clients Need to do to Track these Payments?
Paychex has created three new earnings to track these different types of payments:
• Sick Time – Employee • Sick Time – Dependent Care • Extended Family Medical Leave - Child Care
Simply record the time used by your employee in each category and our system will apply the proper tax treatment.
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
Economic Industry Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For employers with fewer than 500 employees and self-employed individuals • Funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment)
Details to note:
For Sick Time and Employee Absences
We’re working with the National Payroll Reporting Consortium (NPRC) to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA. Continue to process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
• All applicable employers must provide the up to 80 hours of sick time benefits
• Employers with fewer than 50 employees may be exempt under certain conditions if meeting the requirements would jeopardize the viability of their business
• Employers with less than 25 employees may be exempt from certain provisions around FMLA job protection
The FFCRA applies to private employers with fewer than 500 employees and certain public-sector employers.
Details of note:
Exemptions:
For complete definitions of qualified leave and employee eligibility, read the FFCRA article.
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
Paychex Protection Program
Employee Retention Credit
Payroll Tax Deferral Period
Family First Coronavirus Response Act
Economic Industry Disaster Loan Program
How Do I Apply for a Loan?
FFCRA Provisions for Employee Absences
• All applicable employers must provide the up to 80 hours of sick time benefits
• Employers with fewer than 50 employees may be exempt under certain conditions if meeting the requirements would jeopardize the viability of their business
• Employers with less than 25 employees may be exempt from certain provisions around FMLA job protection
The FFCRA applies to private employers with fewer than 500 employees and certain public-sector employers.
For complete definitions of qualified leave and employee eligibility, read the FFCRA article.
Details of note:
Exemptions:
How Do I Apply for a Loan?
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
What Loans and Credits are Available for Me?
You can access immediate funding for your small business through the CARES Act with a Paycheck Protection Program loan. We are here to help you get the information you need to apply. The SBA has released the application and guidelines for small business to immediately access loans for payroll and operating costs. We are here to help you quickly access the information you will need to apply. Consult with your CPA to see if this program is right for you. A list of participating lenders can be found at www.sba.gov. Check back frequently for updated information on the Paycheck Protection Program.
Payroll Tax Deferral Period
Employee Retention Credit
Paycheck Protection Program
Families First Coronavirus Response Act
Economic Injury Disaster Loan Program
HOME
Suspending Business Operations
What Loans, Credits are Available for my Business?
HOME
Economic Injury Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application. Details to note: • For most employers with not more than 500 employees, as well as for self-employed individuals, independent contractors, and private non-profits • Advanced funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt, including any other obligations that cannot be met due to revenue losses • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment • Businesses can apply for an EIDL and a PPP, but the funds cannot be used for the same purpose
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from March 27, 2020, to Dec. 31, 2020. Read about the CARES Act Details to note: • Deferred repayment would be split and paid as follows: 50% due December 31, 2021; 50% due December 31, 2022. • Once an ER receives a decision on loan forgiveness, they are no longer eligible to defer their tax payments and will be required to follow the deposit structure for their deferred tax amount established through the program
Employee Retention Credit
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees. Read about the CARES Act Eligible employers can: • Take a refundable credit of 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes Exclusions: • Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA • This credit cannot be taken on any wages previously accounted for in a WOTC or Emergency Paid Sick Leave Credit
• For clients who do not use Paychex Flex®, please complete this form to be put in touch with a Service Specialist who can assist • If you are a former Paychex client who accessed records through Paychex Flex®, you can access all 2019 payroll records until June 1, 2020. If you were not a Paychex Flex user, please submit your contact information, and our Service Specialists will be in touch. Note: To get a report, you must have run payroll with Paychex in 2019. * If you need more information, check out our Q&A resource. Loan forgiveness Loan forgiveness for the first eight weeks under certain conditions (not all listed): • The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020. • Forgiveness will be reduced proportionally by any reduction in employees retained compared to the prior year, in general, and reduction in wages by more than 25% of prior year compensation • Borrowers are required to show documentation on expenses/employees See what you can expect with our PPP Loan Forgiveness Estimator Repayment for unforgiven loans Remainder of unforgiven portion of the PPP loan becomes a loan with a term of up to two years at a low interest rate of not more than 1%. It's important to note that a PPP loan cannot be combined with: • The Employee Retention Credit • The Social Security Payroll Tax Deferral after the date the lender grants PPP loan forgiveness. Consult with your CPA to determine what program is right for your business.
Paycheck Protection Program
Under the CARES Act, a PPP loan is designed to help small businesses keep employees on the payroll. Available through lenders approved by the SBA, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments during the covered period of the loan. If employers meet certain requirements, including keeping FTEs and wages at certain levels, the loan may be forgiven for eight full weeks of these costs. Details of Note: • For most ERs with not more than 500 EEs, partnerships and for self-employed individuals • Interest rate capped at 0.5% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Borrowers can take the Social Security Payroll Tax Deferral until the date the lender grants PPP loan forgiveness. SBA guidance clarifies calculation to use on PPP loan application Paychex previously created a specialized report (versions 1 and 2) that had payroll costs calculations that were needed to complete a PPP loan application. However, guidance issued April 6 by the SBA clarified how "payroll costs" should be calculated. The payroll costs calculation SHOULD NOT include employer paid FICA (Social Security and Medicare). Paychex is revising the report to implement this guidance and version 3 will be available April 8. If you already have version 1 or 2 of the report This new guidance does not impact any business that has been approved of a loan but lenders may require an updated report from borrowers if the loan has not been approved yet. The SBA guidance provides safe harbor for borrowers who applied on or prior to April 6, 2020. No action is required by these borrowers. Businesses who have version 1 or 2 of the report can use it to apply for PPP a loan. You would need to calculate the payroll costs: • Take the Total line of "Employer FICA Taxes" column • Divide by the number of months (generally 12) • Subtract it from the "Average Total Payroll Costs" to determine the new monthly average payroll costs How to Access the Report On April 8, Paychex will make version 3 of its PPP Data Report available. If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard.
Access to Paychex Flex
Access to Paychex Flex
Sample Loan Calculation
Sample Loan Calculation
* Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
Families First Coronavirus Response Act
This law will help businesses and employees by allowing tax credits for 100% of certain wages paid up to a maximum cap, to employees taking leave for qualifying reasons related to COVID-19. • There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act How Do the Tax Credits Work? • Private employers with fewer than 500 employees are eligible if they pay eligible employees for qualifying COVID-19 emergency sick time and expanded family leave, retain appropriate records, as well as track and report the applicable data • The tax credit is allowed against the employer share of Social Security and Medicare (FICA) taxes on 100 percent of the qualified wages paid under FFCRA • Employers qualifying for the tax FFCRA tax credits will be able to retain an amount of their FICA taxes owed equal to the amount of qualifying FFCRA wages paid instead of depositing those taxes with the IRS • Any credit amount exceeding the employer's payroll tax liability forthe period is eligible for an expedited refund from the IRS What Do Clients Need to Do to Track these Payments? Paychex has created three new earnings codes to track these different types of payments. Emergency Paid Sick Leave: Employee Employee is taking leave related to COVID-19 under the following qualifying reasons for EPSL under the FFCRA: A. Is subject to a federal, state, or local quarantine or isolation order B. Has been advised by a healthcare provider to self-quarantine C. Is experiencing COVID-19 symptoms and is seeking a medical diagnosis Emergency Paid Sick Leave: Family Employee is taking leave related to COVID-19 under the following qualifying reasons for EPSL under the FFCRA: • Is caring for an individual subject to an order described in “A” (above) or self-quarantine as described in “B” (above) • Is caring for a child whose school or place of care is closed (or childcare provider is unavailable) • Is experiencing any other substantially- similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury Expanded Family Medical Leave: Employee Employee is taking qualifying expanded family and medical leave related to COVID-19: • To care for a child whose school or place of care is closed (or childcare provider is unavailable) What's Next After ensuring employee eligibility for FFCRA leave, the type of leave based on the qualifying reason, and the appropriate rate and amount of pay, simply record the wages paid in the appropriate category. *Coding availability may vary based on platform
Interim Final Rule: partnerships and self-employed 1040 Schedule C filers. • A partnership is only eligible for one loan, not two separate ones • Self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized • Self-employed with no EEs: use 2019 Form 1040 Schedule C to assist in calculating their maximum loan amount • Self-employed with EEs: use 2019 Form 1040 Schedule C, and payroll records containing similar information as Form 941, along with evidence of any retirement and health insurance contributions, if applicable Loan forgiveness: documentation similar to any PPP loan required; and if the self-employed have EEs, submit Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that correspond to the covered period.
OVERVIEW
Hold on! We can help with the loan application process The IRS and SBA have issued updated guidance on how to apply for a Paycheck Protection Program Loan.
NEXT
PREV
What Loans, Credits are Available for My Business?
How do I Apply for a Loan?
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
Suspending Business Operations
What Loans and Credits are Available for Me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
For Sick Time and Employee Absences
• FLMA • PTO • Sick Time • Health Care
HOME
We’re working in concert with our industry coalition, the National Payroll Reporting Consortium (NPRC), to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA.
In the meantime, please process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences. As we receive guidance from the IRS, we will help you ensure you can take advantage of the benefits.
Other Financing Options
Other Finance Options
• Your local financial institution • Loan or withdrawal from 401(k) account, with maximum amount temporarily increased to $100,000
How do I apply for a loan?
FFCRA Provisions for Employee Absences
• All applicable employers must provide the up to 80 hours of sick time benefits
• Employers with fewer than 50 employees may be exempt under certain conditions if meeting the requirements would jeopardize the viability of their business
• Employers with less than 25 employees may be exempt from certain provisions around FMLA job protection
The FFCRA applies to private employers with fewer than 500 employees and certain public-sector employers.
For complete definitions of qualified leave and employee eligibility, read the FFCRA article.
Details of note:
Exemptions:
For Sick Time and Employee Absences
We’re working with the National Payroll Reporting Consortium (NPRC) to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA. Continue to process your payroll as normal, but keep track of any wages that are paid for COVID-19-related absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
FFCRA Provisions for Employee Absences
Economic Industry Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For employers with fewer than 500 employees and self-employed individuals • Funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment)
Details to note:
What Do Paychex Clients Need to do to Track these Payments?
Paychex has created three new earnings to track these different types of payments:
Simply record the time used by your employee in each category and our system will apply the proper tax treatment.
• Sick Time – Employee • Sick Time – Dependent Care • Extended Family Medical Leave - Child Care
How Do the Tax Credits Work?
• All employers are eligible if they make qualified emergency paid leave payments to employees • Qualified wages paid under the FFCRA may be credited against the employee and employer share of Social Security and Medicare • Credit amount cannot exceed the employer’s payroll tax liability for the period
How Do the Tax Credits Work?
How Do the Tax Credits Work?
What Do Paychex Clients Need to do to Track these Payments?
What Do Paychex Clients Need to do to Track these Payments?
Family First Coronavirus Response Act
This new law will help businesses and employees by allowing tax credits for 100% of certain wages paid due to employee absences related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Extension Act
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from April 1, 2020, to Dec. 31, 2020.
• Deferred repayment would be split and paid in 2021 and 2022 • Deferral not available to employers who have an SBA Paycheck Protection Program loan forgiven
Details to note:
Employee Retention Credit
• Take a refundable credit of up to 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on an employee if employer has taken a WOTC or Emergency Paid Sick Leave Credit
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees.
Eligible employees can:
Exclusions:
Paychex Protection Program
• Repayment term is up to two years, with complete payment deferment for at least six months.
Repayment for unforgiven loans
Paychex Protection Program
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020 • Forgiveness will be reduced proportionally by any reduction in employees retained compared to the prior year and reduction in wages by more than 25% of prior year compensation • Borrowers are required to show documentation on expenses/employees
Loan forgiveness for the first eight weeks under certain conditions (not all listed):
Paycheck Protection Program
Available through the Small Business Administration, this loan can help with most payroll/benefits, mortgage interest, rent, and utility payments and will be available to borrowers beginning on April 3, 2020 until June 30, 2020.
• For most employers with not more than 500 employees, and for self-employed individuals • Interest rate capped at 0.5% • Maximum loan amount equal to 250% of average monthly defined payroll costs • Loan can’t exceed $10 million
Details to note:
Economic Industry Disaster Loan Program
Economic Industry Disaster Loan Program
Family First Coronavirus Response Act
Family First Coronavirus Response Act
Payroll Tax Deferral Period
Payroll Tax Deferral Period
Employee Retention Credit
Employee Retention Credit
Paycheck Protection Program
Paychex Protection Program
You can access immediate funding for your small business through the CARES Act with a Paycheck Protection Program loan. We are here to help you get the information you need to apply. The SBA has released the application and guidelines for small business to immediately access loans for payroll and operating costs. We are here to help you quickly access the information you will need to apply. Consult with your CPA to see if this program is right for you. A list of participating lenders can be found at www.sba.gov. Check back frequently for updated information on the Paycheck Protection Program.
Suspending Business Operations
How Do I Apply for a Loan?
You can access immediate funding for your small business through the CARES Act with a Paycheck Protection Program loan. We are here to help you get the information you need to apply. The SBA has released the application and guidelines for small business to immediately access loans for payroll and operating costs. We are here to help you quickly access the information you will need to apply. Consult with your CPA to see if this program is right for you. A list of participating lenders can be found at www.sba.gov. Check back frequently for updated information on the Paycheck Protection Program.
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*Product availability may vary
If you have any employees unable to work for any reason, including reasons attributed to COVID-19 (personal health, to care for a child impacted by school and daycare closures, or under quarantine) employees are to be paid using available sick and PTO time.
What Loans and Credits are available for me?
Family First Coronavirus Relief Act – provides protection for employers and employees impacted by COVID-19: personal illness, dependent care, government closures, etc.
CARES Act – a bill intended to protect employers from having to terminate and/or layoff employees
Suspending Business Operations
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Paycheck Protection Program
Economic Injury Disaster Loan Program
Employee Retention Credit
Payroll Tax Deferral Period
Families First Coronavirus Response Act
Employee Retention Credit
• Take a refundable credit of 50% of qualified wages/health plan expenses up to $10,000 per employee against applicable employment taxes
Provides for a refundable credit against employer payroll taxes for employers who complied with government order to partially or fully suspend operations or who recognized significant reduction in gross receipts, but who retained their employees. Read about the CARES Act
• Employer cannot receive the Employee Retention Credit if they receive a Paycheck Protection Program Loan from the SBA
• This credit cannot be taken on any wages previously accounted for in a WOTC or Emergency Paid Sick Leave Credit
Eligible employers can:
Exclusions:
Payroll Tax Deferral Period
Employer can defer payment of applicable employer payroll taxes (employer portion of Social Security) incurred from March 27, 2020, to Dec. 31, 2020. Read about the CARES Act
• Deferred repayment would be split and paid as follows: 50% due December 31, 2021; 50% due December 31, 2022. • Once an ER receives a decision on loan forgiveness, they are no longer eligible to defer their tax payments and will be required to follow the deposit structure for their deferred tax amount established through the program.
Details to note:
Economic Injury Disaster Loan Program
Authorizes the SBA to advance as much as $10,000 to qualified recipients within three days of receiving application.
• For most employers with not more than 500 employees, and for and self-employed individuals • For most employers with not more than 500 employees, as well as for self-employed individuals, independent contractors, and private non-profits • Advanced funds can be used to pay sick leave to employees affected by COVID-19, retain employees, pay rent/mortgage, and other debt, including any other obligations that cannot be met due to revenue losses • Maximum loan amount is $2 million • Advanced funds do not require repayment (any additional loan balance requires repayment • Businesses can apply for an EIDL and a PPP, but the funds cannot be used for the same purpose
Details to note:
Paycheck Protection Program
Employee Retention Credit
Payroll Tax Deferral Period
Families First Coronavirus Response Act
Economic Industry Disaster Loan Program
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Suspending Business Operations
Other Finance Options
• Your local financial institution • Loan or withdrawal from 401(k) account, with maximum amount temporarily increased to $100,000 *Product availability may vary
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Paycheck Protection Program
Remainder of unforgiven portion of the PPP loan becomes a loan with a term of up to two years at a low interest rate of not more than 1%.
Repayment for unforgiven loans
It's important to note that a PPP loan cannot be combined with: • The Employee Retention Credit • The Social Security Payroll Tax Deferral after the date the lender grants PPP loan forgiveness Consult with your CPA to determine what program is right for your business.
Paycheck Protection Program
• The portion of the loan used to maintain payroll, pay mortgage interest or rent, and utilities (provided service began before Feb. 15, 2020) could be forgiven if workers continue to be employed through June 30, 2020. • Forgiveness will be reduced proportionally by any reduction in employees retained compared to the prior year, in general, and reduction in wages by more than 25% of prior year compensation • Borrowers are required to show documentation on expenses/employees
Loan Forgiveness Loan forgiveness for the first eight weeks under certain conditions (not all listed):
Applying for a Paycheck Protection Program loan?
Paycheck Protection Program
• For clients who do not use Paychex Flex®, please complete this form to be put in touch with a Service Specialist who can assist • If you are a former Paychex client who accessed records through Paychex Flex®, you can access all 2019 payroll records until June 1, 2020. If you were not a Paychex Flex user, please submit your contact information, and our Service Specialists will be in touch. Note: To get a report, you must have run payroll with Paychex in 2019. * If you need more information, check out our Q&A resource.
On April 8, Paychex will make version 3 of its PPP Data Report available. If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard.
How to Access the Report
Access to Paychex Flex
Access to Paychex Flex
Applying for a Paycheck Protection Program loan?
Paycheck Protection Program
If you already have version 1 or 2 of the report This new guidance does not impact any business that has been approved of a loan but lenders may require an updated report from borrowers if the loan has not been approved yet. The SBA guidance provides safe harbor for borrowers who applied on or prior to April 6, 2020. No action is required by these borrowers. Businesses who have version 1 or 2 of the report can use it to apply for PPP a loan. You would need to calculate the payroll costs: • Take the Total line of "Employer FICA Taxes" column • Divide by the number of months (generally 12) • Subtract it from the "Average Total Payroll Costs" to determine the new monthly average payroll costs
Applying for a Paycheck Protection Program loan?
Paycheck Protection Program
SBA guidance clarifies calculation to use on PPP loan application Paychex previously created a specialized report (versions 1 and 2) that had payroll costs calculations that were needed to complete a PPP loan application. However, guidance issued April 6 by the SBA clarified how "payroll costs" should be calculated. The payroll costs calculation SHOULD NOT include employer paid FICA (Social Security and Medicare). Paychex is revising the report to implement this guidance and version 3 will be available April 8.
Paycheck Protection Program
Under the CARES Act, a PPP loan is designed to help small businesses keep employees on the payroll. Available through lenders approved by the SBA, this loan can help with payroll/benefits, mortgage interest, rent, and utility payments during the covered period of the loan. If employers meet certain requirements, including keeping FTEs and wages at certain levels, the loan may be forgiven for eight full weeks of these costs.
• For most ERs with not more than 500 EEs, and for partnerships and self-employed • Maximum loan amount equal 250% of average monthly defined payroll costs • Cannot combine a PPP loan with the Employee Retention Credit • Borrowers can take the Social Security Payroll Tax Deferral until the date the lender grants PPP loan forgiveness
Details to note: Check out a specialized report to help with loan process
Sample Loan Calculation
Sample Loan Calculation
Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
*Coding availability may vary based on platform
Paychex has created three new earnings codes to track these different types of payments:
What Clients Need to Do?
Employee is taking qualifying expanded family and medical leave related to COVID-19:
• To care for a child whose school or place of care is closed (or childcare provider is unavailable)
Expanded Family and Medical Leave - Employee
Whats Next: After ensuring employee eligibility for FFCRA leave, the type of leave based on the qualifying reason, and the appropriate rate and amount of pay, simply record the wages paid in the appropriate category.
Review Codes
Review Codes
Employee is taking leave related to COVID-19 under the following qualifying reasons:
• Is caring for an individual subject to an order described in “A” (previous page) or self-quarantine as described in “B” (previous page) • Is caring for a child whose school or place of care is closed (or childcare provider is unavailable) • Is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury
Emergency Paid Sick Leave - Family
More Codes
More Codes
Employee is taking leave related to COVID-19 under the following qualifying reasons:
A. - Is subject to a federal, state, or local quarantine or isolation order B. - Has been advised by a healthcare provider to self-quarantine C. - Is experiencing COVID-19 symptoms and is seeking a medical diagnosis
Emergency Paid Sick Leave - Employee
More Codes
More Codes
How Do the Tax Credits Work?
• Private employers with fewer than 500 employees are eligible if they pay eligible employees for qualifying COVID-19 emergency sick time and expanded family leave, retain appropriate records, as well as track and report the applicable data • The tax credit is allowed against the employer share of Social Security and Medicare (FICA) taxes on 100 percent of the qualified wages paid under FFCRA • Employers qualifying for the tax FFCRA tax credits will be able to retain an amount of their FICA taxes owed equal to the amount of qualifying FFCRA wages paid instead of depositing those taxes with the IRS • Any credit amount exceeding the employer's payroll tax liability for the period is eligible for an expedited refund from the IRS
*Coding availability may vary based on platform
How Do the Tax Credits Work?
How Do the Tax Credits Work?
What Clients Need to Do?
What Clients Need to Do?
Families First Coronavirus Response Act
This law will help businesses and employees by allowing tax credits for 100% of certain wages paid up to a maximum cap, to employees taking leave for qualifying reasons related to COVID-19.
• There are two credits available, one each under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act
*Coding availability may vary based on platform
Interim Final Rule: partnerships and self-employed 1040 Schedule C filers.
Loan forgiveness: documentation similar to any PPP loan required; and if the self-employed have EEs, submit Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll processor records that correspond to the covered period.
• A partnership is only eligible for one loan, not two separate ones • Self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized • Self-employed with no EEs: use 2019 Form 1040 Schedule C to assist in calculating their maximum loan amount • Self-employed with EEs: use 2019 Form 1040 Schedule C, and payroll processor records (similar information as Form 941), plus information of any retirement and health insurance contributions, if applicable
See what you can expect with our PPP Loan Forgiveness Estimator
Scenario
Paychex Protection Program
HOME
Max Loan Calculation
Joe's monthly payroll pre-COVID-19
Average monthly payroll costs using either 12-month lookback from loan origination date or last calendar year
x
2.5
Max Loan Amount
=
80EEs x $20/hr x 40hrs x 4 weeks
x
2.5
$256,000
$640,000
=
Funds can be used to pay covered expenses, which include payroll, benefits, rent/mortgage interest, and utilities during the covered period.
Eligible Use:
Borrowers are eligible for loan forgiveness for covered expenses paid during the eight-week period following the loan origination date, but must meet requirements on number of FTEs and wages paid.
Loan Forgiveness:
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
(40 EEs x $20/hr x 20 hrs/week x 4 weeks)
Joe has laid off 20 EEs, reduced hours by 50% for 40 EEs, had 10 EEs take Families First Coronavirus Response Act FMLA Leave due to school closures, and kept 10 EEs at full hours.
Important Note:
Joe has also paid out of pocket 2/3 wages for 10 EEs who took Families First Coronavirus Response Act FMLA Leave ($21,120). This amount is NOT included in “payroll costs” under CARES because Joe will get 100% of that back in a CREDIT he can immediately take against payroll taxes (ER & EE FICA and EE withholdings.) These workers count under CARES Act as FTEs. For April, Total Possible Expenses Eligible for Forgiveness: $96k payroll $20k rent $4k utilities $120k Eligible for Forgiveness Note: All qualifies because EEs were rehired and wages restored by June. Non-payroll expenses are not more than 25%.
April
Business is hit hard. Joe does the following:
See How Joe Handles May
See How Joe Handles May
Payroll Costs:
10 EEs Laid off = $0 50 EEs @ Reduced Hours = $120k (50 EEs x $20/hr x 30 hrs/week x 4 weeks) 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $152k
Joe: - Hires back 10 EEs (10 still laid off) - Restores some hours, so 50 EEs are at 75% of wages - Keeps 10 EEs at full hours/pay - Still has 10 EEs on Families First Coronavirus Response Act FMLA Leave
Important Note:
10 EEs on FF COVID Leave = $21,120 not part of “payroll costs” but do count as FTEs. Total Eligible for Forgiveness: $152k payroll $20k rent $4k utilities $176k but must be reduced due to continued reduction in FTEs.
(No penalty for reduction in wages as wages were 75% or more for each EE).
Reduction Math: 70 (current number of FTEs) ÷ (divided by) 80 previous number of FTEs
So, $176,000 x 7/8 = $154,000 eligible for forgiveness
May
Business is picking up, but not fully.
See How Joe Handles June
See How Joe Handles June
Joe is back to full employment, no FFCRA FMLA leaves, no layoffs, no reduced hours. Total Eligible for Forgiveness: $256k payroll $20k rent $4k utilities $280k (no reductions because back to full employment)
Important Note:
(80EEs x $20/hr x 40hrs x 4 weeks)
Only 8 weeks of covered costs can be forgiven. The 8-week period begins on the loan origination date. Assume Joe takes the loan on May 1. May Total Eligible for Forgiveness: $154k June Total Eligible for Forgiveness: $280k Total: $434k forgiven Note: Joe would have maximized the amount of his loan forgiveness even more if he did rehires and increased hours/wages back to pre-COVID levels by May 1. Under that scenario, his total eligible for forgiveness would have been $259k (May) and $280k (June) for a total of $539k forgiven. This is the benefit of the program – to encourage employers to bring employees back to work, even before business is back to normal.
June
Business is back and schools are out.
What Happens to the Rest?
What Happens to the Rest?
What Happens to the Rest?
So long as the proceeds were used for eligible expenses (payroll, benefits, rent/mortgage interest, utilities), the remainder becomes a 2-year term loan, at no more than 1% interest, which can be pre-paid without penalty.
Max Loan Amount
Recall:
$640,000
=
Remaining Balance
$206,000
=
Amount Forgiven
(if loan taken by May 1st)
$434,000
=
Start Over
Start Over
Paycheck Protection Program
Scenario
Joe's Pizzeria
Prior to COVID-19, Joe had 80 EEs who work 40 hours/week at $20/hr of total "payroll costs."
The example below is based on current information about the CARES Act PPP program and is subject to change based upon future regulatory guidance. This does not constitute legal or tax advice. You should consult your CPA for advice on program details and guidance on whether the PPP loan program is right for your business.
This example includes a three-month look at the process
Let's Look at an Example Timeline
Let's Look at an Example Timeline
This example includes a three-month look at the process
Conclusion
The CARES Act PPP functions to get cash quickly into the hands of SMBs and to incent them to maintain employees and wages during the period of business disruption caused by COVID-19.
What Happens to the Rest?
So long as the proceeds were used for eligible expenses (payroll, benefitsrent/mortgage interest, utilities) during an eight-week period from loan origination, the remainder becomes a 2-year term loan, at no more than 1% interest, which can be pre-paid without penalty.
Max Loan Amount
Recall:
$640,000
=
Remaining Balance
$206,000
=
Amount Forgiven
(if loan taken by May 1st)
$434,000
=
June
June
Start Over
Start Over
Payroll Costs:
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
(40 EEs x $20/hr x 20 hrs/week x 4 weeks)
Joe has laid off 20 EEs, reduced hours by 50% for 40 EEs, had 10 EEs take Families First Coronavirus Response Act FMLA Leave due to school closures, and kept 10 EEs at full hours.
Important Note:
Joe has also paid out of pocket 2/3 wages for 10 EE’s who took Families First Coronavirus Response Act FMLA Leave ($21,120). This amount is NOT included in “payroll costs” under CARES because Joe will get 100% of that back in a CREDIT he can immediately take against payroll taxes (ER & EE FICA and EE withholdings.) These workers do count under CARES Act as FTEs. For April, Total Possible Expenses Eligible for Forgiveness: $96k payroll $20k rent $4k utilities $120k Eligible for Forgiveness Note: All qualifies because EEs were rehired and wages restored by June. Non-payroll expenses are not more than 25%.
Business is hit hard. Joe does the following:
April
MaY
MaY
Payroll Costs:
20 EEs Laid off = $0 50 EEs @ Reduced Hours = $120k (40 EEs x $20/hr x 30 hrs/week x 4 weeks) 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $152k
- Hires back 10 EEs (10 still laid off) - Restores some hours, so 50 EEs are at 75% of wages - Keeps 10 EEs at full hours/pay - Still has 10 EEs on Families First Coronavirus Response Act FMLA Leave
Important Note:
Still has 10 EEs on FF COVID Leave = $21,120 not part of “payroll costs” but do count as FTEs. Total Eligible for Forgiveness: $152k payroll $20k rent $4k utilities $176k BUT must be reduced due to continued reduction in FTEs. (No penalty for reduction in wages as wages were 75% or more for each EE).
Reduction Math: 70(current # FTEs) ÷ (dividied by) 80 (current # FTEs) So, $176,000 x 7/8 = $154,000 eligible for forgiveness
May
Business is picking up, but not fully.
April
April
JUNE
JUNE
Joe is back to full employment, no FFCRA FMLA leaves, no layoffs, no reduced hours. Total Eligible for Forgiveness: $256k payroll $20k rent $4k utilities $280k (no reductions because back to full employment)
(80EEs x $20/hr x 40hrs x 4 weeks)
Total: $434k forgiven
Important Note:
Only 8 weeks of covered costs can be forgiven. The 8-week period begins on the loan origination date. Assume Joe takes the loan on May 1. May Total Eligible for Forgiveness: $154k June Total Eligible for Forgiveness: $280k Note: Joe would have maximized the amount of his loan forgiveness even more if he did rehires and increased hours/wages back to pre-COVID levels by May 1. Under that scenario, his total eligible for forgiveness would have been $259k (May) and $280k (June) for a total of $539k forgiven. This is the benefit of the program – to encourage employers to bring employees back to work, even before business is back to normal.
Business is back and schools are out.
June
May
May
Outcome
Outcome
Max Loan Calculation
Joe's monthly payroll pre-COVID-19
Joe's Pizzeria
Average monthly payroll costs using either 12-month lookback from loan origination date or last calendar year
Prior to COVID-19, Joe had 80 EEs who work 40 hours/week at $20/hr of total "payroll costs."
The example below is based on current information about the CARES Act PPP program and is subject to change based upon future regulatory guidance. This does not constitute legal or tax advice. You should consult your CPA for advice on program details and guidance on whether the PPP loan program is right for your business.
x
2.5
Max Loan Amount
=
80EEs x $20/hr x 40hrs x 4 weeks
x
2.5
$256,000
$640,000
=
Funds can be used to pay covered expenses, which include payroll, benefits, rent/mortgage interest, and utilities during the covered period.
Eligible Use:
Borrowers are eligible for loan forgiveness for covered expenses paid during the eight-week period following the loan origination date, but must meet requirements on number of FTEs and wages paid.
Loan Forgiveness:
The CARES Act PPP functions to get cash quickly into the hands of small businesses and to incent them to maintain employees and wages during the period of business disruption caused by COVID-19.
Conclusion
Need Additional Resources
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We Can Help
Employee Resources
Business Resources
Before taking action, there is help available.
Business Resources
If you are working with your CPA/accountant and have decided the Paycheck Protection Program loan is best for you, know that Paychex is ready to assist you with the requirements for loan forgiveness. We plan to provide you with a “ready to submit” documentation package of payroll information. If you also have your 401(k) or health insurance with us, we’ll provide that information, too.
Paychex Resources
• 24/7 support and service – call, email, or chat with us • Online resource center • Customer support center
Employee Resources
• Paycards through Skylight® PayOptions™ eliminates need for an employee bank account. • Pay-on-demand, powered by PayActiv, gives employees access to earned wages before payday. • FinFit is a financial wellness tool that also offers short-term loans for emergencies.
HOME
We Can Help
Employee Resources
Business Resources
Before taking action, there is help available.
Need Additional Resources
*Product availability may vary
* Product availability may vary
*Product availability may vary
If you are working with your CPA/accountant and have decided the Paycheck Protection Program loan is best for you, know that we are ready to assist you with the requirements for the loan application. Paychex has created a specialized report that has payroll costs calculations you’ll need to complete a PPP application.
Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
• If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard. Access the Report • If you do not use Paychex Flex, please complete this form to be put in touch with a Service Specialist who can assist. If you also have your 401(k) or health insurance with us, we’ll provide that information, too.
Need Additional Resources
Business Resources
If you are working with your CPA/accountant and have decided the Paycheck Protection Program loan is best for you, know that we are ready to assist you with the requirements for loan forgiveness. Paychex has created a specialized report that has payroll costs calculations you’ll need to complete a PPP application. If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard. Access the Report If you do not use Paychex Flex, please complete this form to be put in touch with a Service Specialist who can assist. If you also have your 401(k) or health insurance with us, we’ll provide that information, too Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
HOME
If you are working with your CPA/accountant and have decided the Paycheck Protection Program loan is best for you, know that we are ready to assist you with the requirements for the loan application. Paychex has created a specialized report that has payroll costs calculations you’ll need to complete a PPP application. • If you use Paychex Flex®, the new report is available within the Quick Reports section of your dashboard. Access the Report • If you do not use Paychex Flex, please complete this form to be put in touch with a Service Specialist who can assist. If you also have your 401(k) or health insurance with us, we’ll provide that information, too Oasis clients can visit the Client Services Website or contact their Payroll Representative to download their reporting package.
Need Additional Resources
Employee Resources
• Paycards through Skylight® PayOptions™ eliminates need for an employee bank account. • Pay-on-demand, powered by PayActiv, gives employees access to earned wages before payday. • FinFit is a financial wellness tool that also offers short-term loans for emergencies.
HOME
*Product availability may vary
* Product availability may vary
Need Additional Resources
Paychex Resources
• 24/7 support and service – call, email, or chat with us. • Online resource center • Customer support center
HOME
Max Loan Calculation
Joe's monthly payroll pre-COVID-19
Joe's Pizzeria
Average monthly payroll costs using either 12-month lookback from loan origination date or last calendar year
x
2.5
Max Loan Amount
=
80ee’s x $20/hr x 40hrs x 4 weeks
x
2.5
$256,000
$640,000
=
Borrowers have eight weeks from loan origination to use the funds on covered expenses to be eligible for complete loan forgiveness.
Let's Look at an Example Timeline
June
Read More
Business is back and schools are out. No FF COVID leave
Joe brings back all EEs at full hours/wages.
May
Business is picking up, but not fully. Joe:
Hires back 10 EEs (10 still laid off) Brings back shifts to get up to 75% of hours/wages for 50 EEs (the 40 with reduced hours from April plus 10 he brought back from layoff) Maintains full hours for 10 EEs Still has 10 EEs on FF COVID FMLA
Read More
April
Read more
Business is hit hard. Joe does the following:
Lays off 20 EEs Reduces hours by 50% for 40 EEs. Maintains full hours for 10 EEs Has 10 EEs take Families First COVID FMLA Leave due to school closures
Payroll Costs:
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
(40 EEs x $20/hr x 20 hrs/week x 4 weeks)
Joe has laid off 20 EEs, reduced hours by 50% for 40 EEs, had 10 EEs take FF COVID FMLA Leave due to school closures, and kept 10 EEs at full hours.
Important Note:
Joe has also paid out of pocket 2/3 wages for 10 EEs who took FF COVID FMLA Leave. $21,120. This amount is NOT included in “payroll costs” under CARES because Joe will get 100% of that back in a CREDIT he can immediately take against payroll taxes (ER & EE FICA and EE withholdings.) These workers do count under CARES Act as FTEs. For April, Total Possible Expenses Eligible for Forgiveness: $96k payroll $20k rent $4k utilities $120k Eligible for Forgiveness Note: All qualifies because EEs were rehired and wages restored by June.
April
+
Payroll Costs:
20 EEs Laid off = $0 40 EEs @ Reduced Hours = $64k (40 EEs x $20/hr x 20 hrs/week x 4 weeks) 10 EEs @ Full Hours = $32k Total “Payroll Costs” = $96k
Joe: - Hires back 10 EEs (10 still laid off) - Restores some hours, so 50 EEs are at 75% of wages - Keeps 10 EEs at full hours/pay - Has 10 EEs still on Families First COVID FMLA
Important Note:
10 EEs on FF COVID Leave = $21,120 not part of “payroll costs” but do count as FTEs. Total Eligible for Forgiveness: $152k payroll $20k rent $4k utilities $176k BUT must be reduced due to continued reduction in FTEs.
(No penalty for reduction in wages as wages were 75% or more for each EE).
Reduction Math: Total Costs X 70 (current # of FTEs) So, $176,000 x 7/8 = $154,000 eligible for forgiveness Eligible for Forgiveness 80 (previous # of FTEs)
May
+
Joe is back to full employment, no COVID leaves, no layoffs, no reduced hours:Joe is back to full employment, no COVID leaves, no layoffs, no reduced hours: Total Eligible for Forgiveness: $256k payroll $20k rent $4k utilities $280k (no reductions because back to full employment)
Important Note:
Only 8 weeks of covered costs can be forgiven. The 8-week period begins on the loan origination date. May Total Eligible for Forgiveness: $154k June Total Eligible for Forgiveness: $280k $434k total forgiven Note: Joe would have maximized the amount of his loan forgiveness even more if he did rehires and increased hours/wages back to pre-COVID levels by May 1. Under that scenario, his total eligible for forgiveness would have been $259k (May) and $280k (June) for a total of $539k forgiven. This is the benefit of the program – to encourage employers to bring employees back to work, even before business is back to normal.
June
+
What Happens to the Rest?
So long as the proceeds were used for eligible expenses (payroll, rent/mortgage interest, utilities) during an eight-week period from loan origination, the remainder becomes a 2-year term loan, at no more than 1% interest, which can be pre-paid without penalty.
Max Loan Amount
Recall:
$640,000
=
Remaining Balance
$206,000
=
Amount Forgiven
(if loan taken by May 1st)
$434,000
=
Conclusion
The CARES Act PPP functions to get cash quickly into the hands of SMB and to incent them to maintain employees and wages during the period of business disruption caused by COVID-19.
Timeline Example
See what happens next
Paycheck Protection Program
Scenario
Loan program ends June 30, 2020. Funds can be used to pay any covered expenses, which include payroll, rent, mortgage interest, and utilities.
Eligible Use:
Loan Forgiveness:
Let's Look at an Example Timeline
June
Read More
Business is back and schools are out. No FF COVID leave
Joe brings back all EE’s at full hours/wages.
May
Business is picking up, but not fully. Joe:
Hires back 10 EE’s (10 still laid off) Brings back shifts to get up to 75% of hours/wages for 50 EEs (the 40 with reduced hours from April plus 10 he brought back from layoff) Maintains full hours for 10 EE’s Still has 10 EE’s on FF COVID FMLA
Read More
April
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Business is hit hard. Joe does the following:
Lays off 20 EE’s Reduces hours by 50% for 40 EE’s. Maintains full hours for 10 EE’s Has 10 EE’s take Families First COVID FMLA Leave due to school closures
What Happens to the Rest?
So long as the proceeds were used for eligible expenses (payroll, rent/mortgage interest, utilities) from February 15 – June 30, 2020, the remainder becomes a 10-year term loan, at no more than 4% interest, which can be pre-paid without penalty.
Max Loan Amount
Recall:
$640,000
=
Remaining Balance
$206,000
=
Amount Forgiven
(if loan taken by May 1st)
$434,000
=
Conclusion
The CARES Act PPP functions to get CASH quickly into the hands of SMB’s and to incent them to maintain employees and wages during the period of business disruption caused by COVID.
Max Loan Calculation
Joe's monthly payroll pre-covid
Joe's Pizzeria
Average monthly payroll costs using 12-month lookback from loan origination date
x
2.5
Max Loan Amount
=
80ee’s x $20/hr x 40hrs x 4 weeks
x
2.5
$256,000
$640,000
=
Can be used to pay any eligible expenses incurred from 2/15/20 – 6/30/20
Eligible Use:
How much can be forgiven? It depends!! On what? WHEN Joe’s Pizzeria takes the loan, and WHAT Joe’s Pizzeria numbers are for FTEs and salary/wages.
Loan Forgiveness:
Scenario
Paychex Protection Program
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May
May
JUNE
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