UPDATED: April 3, 2020 9:00AM PST

In response to the COVID-19 pandemic, the federal government has recently issued and passed various assistance programs for businesses and individuals.  The U.S. Small Business Administration (SBA) is responsible for administering some of these programs.  Below is a summary of programs that could assist you in these times.  Please note, the formal guidance has yet to be finalized by the SBA and lenders are expected to receive the necessary information over the next week.  Note the information and guidance may change at any foreseeable moment.


Economic Injury Disaster Loan

Small business owners with less than 500 employees are eligible to apply for an Economic Injury Disaster Loan advance of up to $2 million.  These funds are basically working capital loans that may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred.  These are non-forgivable loans with interest rates at 3.75% and with terms up to 30 years.  The first payment due can be deferred 12 months after the funds are issued.


Paycheck Protection Program

Small businesses with less than 500 employees are eligible to apply for a loan at 2.5 times their average monthly payroll up to a maximum of $10 million for employment retention and certain other expenses.  The loan amounts will be forgiven if employee and compensation levels are maintained, and the loan proceeds are used to cover certain costs over the 8-week period after the loan is made.  These qualified costs include:


  • Payroll costs, including benefits.  This includes 1) salary, wages, and commissions, 2) employee benefits such as vacation, parental, family, medical, or sick leave; group health insurance care benefits including insurance premiums; and payment of any retirement benefit, 3) state and local taxes assessed on compensation, and, 4) for a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment;
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.


Please note your loan may not be forgiven if you use the funds for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan.  It is anticipated that a minimum of 75% of the loan proceeds must be used for payroll costs to be forgiven.  You may also owe money if you do not maintain your staff and payroll, such as:


  • Number of staff – forgiveness will be reduced if full time staff employee headcount is decreased.
  • Level of payroll – forgiveness will be reduced if salaries and wages are decreased by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring – Employer has until June 30, 2020 to restore full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.


Employers can only take one loan under the Paycheck Protection Program.  Loans carry interest of 1.0% and mature within 2 years with the ability of the first payment to be deferred up to 6 months.  In addition, no collateral or personal guarantees are required under this loan program.

Applications can be submitted starting April 3, 2020 for small businesses and sole proprietorships.  Independent contractors and self-employed individuals can submit their applications starting April 10, 2020.  For an application, open the following link at PPP Application.

If you wish to gather further information, browse the SBA website at

Again, we want to emphasize formal guidance has yet to be finalized by the SBA to lenders and responses from your lender may be delayed until the SBA submits the proper guidance and instruction to participating lenders.

Please note that the Paycheck Protection Program is not the only employer-related relief provision available under the CARES Act. By accepting a Paycheck Protection Program loan under the terms as currently promulgated, you may limit your company’s ability to take advantage of other available employer-related relief provisions. As such, it is important that you consider your decision carefully, based on your specific facts and circumstances.