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Paycheck Protection Program Loans

Wednesday, April 1, 2020

The CARES Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn.

Included in the CARES Act was the Paycheck Protection Program, which provides 100% federally guaranteed loans to small businesses, through Jun. 30, 2020. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis. Though information on the program continues to be rolled out, the following is an overview of information available now:


You are eligible for a loan under this program if you are:

  • A small business that was in operation on Feb. 15, 2020, with fewer than 500 employees (The 500-employee threshold includes all employees: full-time, part-time and any other status.)
  • A small business that otherwise meets the SBA’s size standard
  • A 501(c)(3) with fewer than 500 employees
  • An individual who operates as a sole proprietor
  • An individual who operates as an independent contractor
  • An individual who is self-employed and who regularly carries on any trade or business
  • A tribal business concern that meets the SBA size standard
  • A 501(c)(19) Veterans Organization that meets the SBA size standard

Terms of the Loan

The terms of a Paycheck Protection Program loan are as follows:

  • The amount of a Paycheck Protection Program loan available to each borrower is 2.5 times the borrower’s average monthly payroll costs, not to exceed $10 million.
  • Paycheck Protection Program loans require no collateral, have a maximum 10-year term, and an interest rate of no more than 4%.
  • The loans are available to eligible companies to be used for the following costs incurred from Feb. 15, 2020 through Jun. 30, 2020: payroll (including salary, wage, parental, family, medical or sick leave, and more); health care benefits and related insurance premiums; employee compensation; mortgage interest obligations; and rent and utilities.
  • A borrower of a Paycheck Protection Program loan is eligible for loan forgiveness equal to the amount spent during the eight-week period after the date of the original loan for rent on a leasing agreement, payroll costs (including wages for USA employees capped at $100,000 per employee), mortgage interest and utilities. The amount forgiven may be reduced if the borrower reduces the number of employees, or salaries and wages of employees. Borrowers must apply through their lender for forgiveness on the loan.

How to Apply for a Paycheck Protection Program Loan

The application has been posted on the Treasury Department’s CARES Act resource page. The SBA has a network of 1,800 approved lenders that process small business loans. If you are interested in a Paycheck Protection Program loan, you should first contact your bank to see if it is an SBA-approved lender. If your bank is not an SBA-approved lender, you can contact the SBA to find one.

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.

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