Question: What is the maximum loan amount available to my small business (<500 employees) under the government rescue package? Answer: The CARES Act provides loans to small businesses up to $10 million. To determine how much your business is eligible for, you must average your monthly payments for the year preceding the loan date for the following expenses: Payroll, including related benefits such as:
- Parental, family, medical, or sick leave
- Allowance for separation or dismissal
- Payments required for the provisions of group health care benefits including insurance premiums and
- Payment of any retirement benefit
EXAMPLE: So, let’s say for the year ended March 31, 2020 your payments averaged the amounts shown below: Monthly Average
- $25,000 Payroll (salaries for employees earning less than $100,000/year)
- $3,100 Payments to former employees
- $5,900 Healthcare insurance, PTO, etc.
- $1,000 Retirement Benefits
$35,000 Total monthly average
$87,500 Maximum loan amount
There are provisions for deferring loan repayments up to one year as well as the potential for forgiveness on the loan under certain conditions.