CARES Act Questions & Answers


Updated April 1, 2020


*NALP is providing the following information as general guidance based on information directly promulgated and provided by the Federal Government.  This is not intended to be legal, tax, or human resources advice concerning any specific circumstance or financial program. NALP strongly encourages you to consult with legal counsel or your human resources specialist on these matters. NALP is committed to continuing to be a conduit of information from the Federal Government to the Landscape industry and we will do our best to continuously monitor and update these resources with the most current information.*

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Q. What is the Employee Retention Credit?

A. Under the CARES Act, employers may be eligible for a refundable tax credit for the employer’s share of the 6.2% Social Security Tax based on qualified wages paid to employees from March 13 to December 31, 2020.  The tax credit is for 50% of the first $10,000 in qualified wages paid per employee for 2020 across the four quarters of 2020.

Q. Who is an eligible employer?
A. Eligibility is met when an employer meets one of the following conditions:

  • Business suspension - The employer must have had operations fully or partially suspended because of a shut-down order from a governmental authority related to COVID -19, or
  • Gross Receipts Condition - Had gross receipts decline by more than 50% in a calendar quarter when compared to the same quarter in 2019 and will remain eligible until the earlier of a) gross receipts exceeding 80% relative to the same quarter in the prior year, or b) December 31, 2020.

Q. Can I claim a credit for qualified wages paid in March 2020?
A. The credit can be claimed for wages paid beginning March 13, 2020.

Q. How do I claim this credit?
A. Eligible employers will report their total qualified wages and related credits for each quarter on their federal employment returns, usually Form 941.

Q. Can I receive both the tax credit for qualified leave wages under the FFCRA and the Employee Retention Credit under the Cares Act?
A. Yes, but not for the same wages.

Q. Can I receive both the Employee Retention Credit and a Small Business Interruption Loan under the Paycheck Protection program that is authorized under the CARES Act?
A. No, if you receive a paycheck protection loan you cannot claim this credit.

Q. Am I required to pay qualified wages to its employees under the CARES Act?
A. No, an employer is not required to pay qualified wages. And eligible employers may elect to not claim the credit for employee retention.

Q. When can I delay payment of the employer portion of Social Security taxes?
A. Payments of the employer portion of social security tax for the period from March 27 to December 31, 2020 can be delayed.

Q. When do these payments come due?
A. 50% would be due by December 31, 2021 and the remaining 50% by December 31, 2022.

Q. If I receive a loan through the Paycheck Protection program if all or any part was forgiven, can I still delay payment?
A. No. You would not be eligible for this benefit.

Paycheck Protection Program (PPP) Questions & Answers

Q. How Do I calculate the loan amount if I’m under 500 employees?
A. Average Monthly Payroll x 2.5=Loan Amount

Q. What about the standard SBA definition of under $ 8 million?
A. This standard does not apply if you are under 500 employees.

Q. How do I calculate my payroll since the landscape industry is seasonal?
A. For purposes of calculating “Average Monthly Payroll”, most Applicants will use the average monthly payroll for 2019, excluding costs over $100,000 on an annualized basis for each employee. For seasonal businesses, the applicant has the option to instead use average monthly payroll for any consecutive 12-week period between May 1,2019 and September 15, 2019 for determining it’s maximum loan amount.

Q. Can I use these funds to pay H-2B worker wages?
A. No, and they should not be counted in your average monthly payroll calculation.

Q. What documentation should I be ready to submit with my application?
A. When applying, just the loan application and any other documents requested by the lender. Documentation verifying the number of full-time equivalent employees on payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight-week period following this loan will need to be provided to the lender.

Q. If approved where do I get the loan from?
A. You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit for a list of SBA lenders.

Q. I was currently paying 1 employee cash when the covid-19 pandemic struck. Can I or how can I go about getting a loan while still claiming my employee? I had planned to put him on the books with unemployment ins. and pay his taxes etc.
but my season here in New England was only a couple of wks. in when this disaster struck. Any help is much appreciated.
A. Your average monthly payroll calculation, for the Paycheck Protection Program Loan, is based on past payroll so you would look back to your payroll for one of the periods below for purposes of the amount you would qualify for:

  • For purposes of calculating “Average Monthly Payroll,” most Applicants will use the average monthly payroll for 2019, excluding costs over $100,000 on an annualized basis for each employee.
  • For seasonal businesses, the Applicant may elect to instead use average monthly payroll for the time period between February 15, 2019 and June 30, 2019, excluding costs over $100,000 on an annualized basis for each employee.
  • For new businesses, average monthly payroll may be calculated using the time period from January 1, 2020 to February 29, 2020, excluding costs over $100,000 on an annualized basis for each employee.

Q. If you are seasonal business and you have not brought in your staff yet would you apply for the PPP and start paying your employees based on the previous season or leave them on unemployment?
A. You can use the seasonal business calculation to for the PPP loan, which is based on past payroll, and use the proceeds to pay your employees this season.  Please note that for loan forgiveness they must be brought on by June 30, 2020.

Q. If you are an s-corporation can you use the PPP money to cover the salaries of the owners?
A. Businesses that are structured as C corporations or S corporations must use payroll to pay their owners, because the corporation is taxed separately from the individual. If you own a corporation and have not been paying yourself a salary through payroll, you will not have a salary covered through the PPP.

Q. Am I able to apply for a PPP loan now, guessing that we will be bringing people back to work by the time I get the loan?
A. The idea of the PPP was to put employees back on your payroll.  The calculation, for the loan is based on past payroll, so when you bring them back you can pay their wages.  You must bring them back by June 30, 2020 to qualify for loan forgiveness.

Q. The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value?
A. No. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:
  • employer contributions to defined-benefit or defined-contribution retirement plans;
  • payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
  • payment of state and local taxes assessed on compensation of employees
Q. Do PPP loans cover paid sick leave?
A. Yes. PPP loans covers payroll costs, including costs for employee vacation, parental, family, medical, and sick leave. However, the CARES Act excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116–127). Learn more about the Paid Sick Leave Refundable Credit here.
Q. My small business is a seasonal business whose activity increases from April to June. Considering activity from that period would be a more accurate reflection of my business’s operations. However, my small business was not fully ramped up on February 15, 2020. Am I still eligible?
A. In evaluating a borrower’s eligibility, a lender may consider whether a seasonal borrower was in operation on February 15, 2020 or for an 8-week period between February 15, 2019 and June 30, 2019.

Q. What if an eligible borrower contracts with a third-party payer such as a payroll provider or a Professional Employer Organization (PEO) to process payroll and report payroll taxes?
A. SBA recognizes that eligible borrowers that use PEOs or similar payroll providers are required under some state registration laws to report wage and other data on the Employer Identification Number (EIN) of the PEO or other payroll provider. In these cases, payroll documentation provided by the payroll provider that indicates the amount of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s employees will be considered acceptable PPP loan payroll documentation. Relevant information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly Federal Tax Return, should be used if it is available; otherwise, the eligible borrower should obtain a statement from the payroll provider documenting the amount of wagesand payroll taxes. In addition, employees of the eligible borrower will not be considered employees of the eligible borrower’s payroll provider or PEO.

Q. What time period should borrowers use to determine their number of employees and payroll costs to calculate their maximum loan amounts?
A. In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019. For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.

Borrowers may use their average employment over the same time periods to determine their number of employees, for the purposes of applying an employee-based size standard. Alternatively, borrowers may elect to use SBA’s usual calculation: the average number of employees per pay period in the 12 completed calendar months prior to the date of the loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for 12 months).

Q. Should payments that an eligible borrower made to an independent contractor or sole proprietor be included in calculations of the eligible borrower’s payroll costs?
A. No. Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll costs. However, an independent contractor or sole proprietor will itself be eligible for a loan under the PPP, if it satisfies the applicable requirements.

Q. How should a borrower account for federal taxes when determining its payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of a loan that may be forgiven?
A. Under the Act, payroll costs are calculated on a gross basis without regard to (i.e., not including subtractions or additions based on) federal taxes imposed or withheld, such as the employee’s and employer’s share of Federal Insurance Contributions Act (FICA) and income taxes required to be withheld from employees. As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer, but payroll costs do not include the employer’s share of payroll tax. For example, an employee who earned $4,000 per month in gross wages, from which $500 in federal taxes was withheld, would count as $4,000 in payroll costs. The employee would receive $3,500, and $500 would be paid to the federal government. However, the employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from payroll costs under the statute.2.