April 4, 2020 Last updated April 15th, 2020 736 Reads share

The CARES Act Loan Forgiveness Requires Keeping Your Employees, But How?

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In a time of terrible uncertainty, some businesses are fully open, some are limited, and many more are completely closed. The vast majority are looking for ways to remain a viable business after the economy ramps back up. However, it is unclear and uncertain how long this will take and what it really takes to get there.

As owners scramble to stop the bleeding from precipitous drops in revenue, bloated expenses, rent payments, and payroll, they will discover a variety of lending and funding sources that could serve as lifelines for their business entities. Cities and counties have stimulus money to distribute. State programs are in the works. The nonprofit CDC Small Business Finance Corporate Development Council is developing its own loan packages for small businesses reeling from stalled revenue. And the big one, the federal CARES Act (with 800 pages of legislation and myriad programs that apply to small business), just revised its online application after the online application site crashed under the onslaught of applications. A new streamlined application process is now available. 

The primary loan assistance plan under the CARES Act for businesses impacted by the 2020 coronavirus pandemic is the Paycheck Protection Program (PPP). It specifically provides an incentive for small businesses to keep their workers on the payroll. While federally funded, it is administered by the Small Business Administration (SBA) through local banks who will forgive the loans if all employees are kept on the payroll for approximately three months and if the money is used for payroll, rent, mortgage interest, or utilities. In general, the amount provided is 2.5 times your regular monthly payroll amount to provide financial relief for 90 days. If you keep only some of your employees for the required time, then your forgiveness amount will be reduced accordingly. It is not yet clear how the forgiveness works, how the banks will administer the program, and what exactly is required to qualify.

How Do You Keep Employees?

In the case of PPP loan, keeping your employees engaged and ready to return to work is very important. Their value to you will be partly measured by the loan forgiveness you can receive. Your employees, working or not, are particularly precious under a PPP loan, and you will want to retain as many of them as possible both to reduce business costs on the loan now and to ramp up your business quickly later (although there is a provision excluding highly compensated employees, so retention strategies may adjust accordingly).

When business is chugging along normally, we train, staff, schedule and develop our employees to bring greater success to them and to our businesses. If we can maintain this type of development and collaboration, their high levels of productivity and skills can favorably impact our ability to recover from this 2020 economic downturn. Now should be no different than before the coronavirus in this regard. Even though unprecedented numbers of employees are involuntarily suspended from work-as-usual, they can still contribute and develop themselves and your organization. As paid employees under a PPP loan, your business can utilize them in numerous ways and help ensure your business’s long-term success.

Stay a Community

“Social distancing” is the wrong term, really. We must stay in touch (figuratively) as we remain physically separated. Reach out, create group messages, keep them informed with honesty and candor. And let them know you want them back asap. Schedule daily or weekly meetings suitable to your needs. Share experiences–especially now when the end of confinement is not in sight.  How is everyone planning on spending the next month? Who needs help?

Ask for Ideas

Employees have wonderful, valuable ideas of ways to improve or expand your business—many of which they have not shared. But if it means staying employed, more will be willing to share their business concepts or suggest improvement. A workplace that promotes open sharing of ideas makes employees feel better valued, too. As a bonus, you could discover your next, great leader. This is the time to develop new projects, products, and services—while there is time to do so. Open your ears and be open to change.


Just recently, county and city executives gave approval for “non-essential services” personnel to be used in more critical areas. Park and recreation employees, for example, are delivering supplies and food to hospital workers. What can your company do that is similar but different? Like manufacturers now making medical equipment, what could you provide or do that is needed at this time? Even on a small scale, it might make a difference that expands or shifts your business permanently while utilizing personnel now. 

Special Projects

How many times have you wished that things could just stop long enough to catch up, develop a new market, or design a new type of service? Well, it’s here. It may have been unexpected, but your organization will be better off in the long run if you rework what you offer and how.  This is the silver lining with a work stoppage–it is a good time to think innovatively. What will be different when business returns, and how does the business and its workforce best plan for this?


If there is a way to modify what your employees do to continue revenue income, do it. Employees will want to return to work quickly, too, so keep them sharp by investing in their skill development. If those special projects also require new skill sets, then employees will be motivated to learn and stay employed. Think software, design work, HR or accounting functions. Online software training is often free, too. What an opportune time to cross-train and expand knowledge.

Many details are still unknown, but the PPP requirement to retain employees is definite. Even on a hiatus from business-as-usual, there are numerous options for maintaining some level of productivity and forward movement while paying employees. Use the time to develop new systems, products, skills and resiliency. With a bit of dedication, you will recover more quickly, recover more robustly, achieve higher levels of employee development, and limit or eliminate PPP loan amounts.  That’s how a challenge can be turned into an opportunity while keeping your employees on the payroll.

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Jon Forknell

Jon Forknell

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