CARES Act: Payroll Protection Program

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Payroll Protection Program (PPP)

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses and nonprofits keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to eligible organizations. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward. The administration soon will release more details including the list of lenders offering loans under the program.

What is it?
Signed into law on March 6, The Coronavirus Preparedness and Response Supplemental Appropriations Act provides $8.3 billion in emergency funding for federal agencies to respond to the coronavirus outbreak, enabling the U.S. Small Business Administration to offer $7 billion in disaster assistance loans to small businesses impacted by COVID-19.

  • Eligible recipients may qualify for a loan up to $10 million determined by eight weeks of prior average payroll plus an additional 25% of that amount.

  • Loan payments will be deferred for six months.L

  • SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

  • Business owners can apply through any existing SBA 7(a) 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.

  • Independent consultants may apply after April 10. 

  • The Paycheck Protection Program will be available through June 30.

What does it mean for small business?
The SBA is offering designated states and territories low-interest federal disaster loans to small businesses suffering substantial economic harm as a result of the coronavirus.
These loans may be used by small businesses to pay fixed debts, payroll, accounts payable and additional bills that can’t be paid because of COVID-19’s impact. The interest rate is 3.75% for small businesses without other available means of credit. The interest rate for non-profits is 2.75%. Businesses with credit available elsewhere are not eligible.


The SBA loans come with long-term repayments, up to a maximum of 30 years, in an effort to keep payments affordable. Loan terms are determined on a case-by-case basis, according to individual borrower’s ability to repay.


The SBA has amended its disaster loan criteria to help borrowers still paying back SBA loans from previous disasters. By making this change, deferments through December 31, 2020, will be automatic. Hence, borrowers of home and business disaster loans do not have to contact SBA to request deferment.


Read our full story on SBA Disaster Assistance Loans.

Where can I learn more?

The-Small-Business-Owner’s-Guide-to-the-CARES-Act

Download the application

US Chamber of Commerce Coronavirus Emergency Loans Guide & Checklist

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The Small Business Development Center at the Starved Rock Country Alliance

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