The CARES Act Review Part IV- The Paycheck Protection Program

Photo by Alex Kotliarskyi on Unsplash

Included in the CARES Act is $350 billion for a small business loan program called the Paycheck Protection Program.

This program intends to get money into the hands of small business owners quickly so that they can continue operations and pay their employees. The SBA is working with 1,800 approved lenders and plans to add more of them.

Not all the details about eligibility are available yet, but the SBA plans to publish specific regulations soon. Small businesses and nonprofits can apply first (as soon as April 3!), followed by independent contractors and self-employed.

These are essential details of the program:

  • Small businesses, nonprofits, tribal business concerns, and veterans organizations with fewer than 500 employees are eligible for loans under the program. If the business is in foodservice, the 500 employee cap is on a per-location basis.
  • Self-employed individuals, independent contractors, and sole proprietors are eligible.
  • Borrowers must certify that their business has been affected by the coronavirus slowdown.
  • Lenders will not require collateral or a personal guarantee. The loans are guaranteed by the Federal government.
  • The company must have been in business since February 15, 2020.
  • The loans can be up to $10 million to cover payroll and other expenses, or 2.5 times total payroll expenses for the loan period. The payroll expenses covered are broad including salaries, retirement, healthcare, parental leave parents and bonuses.
  • The loan applies to costs incurred from February 15 to June 30.


  • The Treasury Department set the loan rate at 1%, but the cap is 4%, so it could change.
  • The first payment will be due after six months, and the full loan will be due in two years. 
  • A business that has other SBA disaster loans such as a Disaster Relief Loan can still apply for the Paycheck Protection Loan but the loan must be used for different things.


  • The loan includes loan forgiveness covering costs for the first eight weeks for companies able to keep employees on payroll and continue paying bills through the crisis.
  • The loan forgiveness will include payroll costs for individuals below $100,000 in annual income, mortgage/rent, including interest and utilities. 
  • If a business reduces the workforce or wages, then the total amount of loan forgiveness will be mitigated unless employees are hired back.
  • Eligibility for loan forgiveness starts eight weeks after the loan origination date. 
  • It’s not clear yet whether salaries (up to $100,000) of sole proprietors, independent contractor, LLC’s or other businesses will count towards loan forgiveness; guidelines will be issued soon.


To read more details and to get updates, its best to go to the Treasury Department Website where you can also find the loan application.

And a more detailed summary from the Treasury Department here and from the SBA here.

There will be a huge demand for these loans, so if applying it’s best to find out what information you need to gather soon and find an approved lender to work with you to get your needed funds.

If you missed CARES Act Review Part 3 Unemployment Benefits go here.

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