Paycheck Protection Program (CARES Act)

On Friday, March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act (HR 748) into law. The new law authorizes a $2 trillion stimulus package aimed at helping individuals and small businesses impacted by the devastating economic effects of the current coronavirus pandemic.

The Paycheck Protection Program sets aside $350 billion in 100% federally-backed loans for small businesses that may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward. Businesses will be able to apply for such loans through certain local lending institutions.


  • Small businesses, tribal businesses, nonprofits, and veteran organizations with fewer than 500 employees (or otherwise meet Small Business Administration (SBA) size standards) are eligible.
  • For businesses in the accommodation and food services industries, the 500-employee rule is applied per physical location.

To Qualify

  • The business must have been in operation before February 15, 2020.
  • The business must certify that:
    1. Due to the uncertainty of current economic conditions, the loan request is necessary to support the ongoing operations of the eligible recipient.
    2. The funds will be used to retain workers, maintain payroll and make mortgage, lease, and utility payments.
    3. The business does not have an application pending for a loan for the same purpose and amount.
    4. From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here, subject to certain exceptions.

Loan Limits

  • Loans may be up to 2.5 times the business’s average monthly payroll costs (less certain exclusions), up to $10 million.

Loan Forgiveness

Businesses are eligible for loan forgiveness to help pay operational costs incurred during the 8-week period beginning on the date of the origination of the loan in an amount not to exceed the loan principal, for the following expenses:

  • Payroll costs (including group health benefits and insurance premiums)
  • Rent or mortgage interest payments
  • Utilities

Loan forgiveness may be reduced if there is:

  • A reduction in the number of employees, or
  • A reduction of greater than 25% in wages paid to employees.

Reductions in employment or wages that occur from February 15, 2020 to April 26, 2020 shall not reduce the amount of the loan forgiveness if, by June 30, 2020, the number of employees and/or wages lost are restored (in other words, the reductions are reversed).

Additional Information

  • No collateral or personal guarantee is required.
  • No prepayment penalty.
  • Interest rate maximum of 4%.
  • Loan amounts that are not forgiven will have a maximum maturity date of 10 years.
  • Certain prior SBA loans may be refinanced and rolled into the new loan.
  • Small businesses may also be eligible for emergency grants and payroll tax credits authorized by the CARES Act.


Other Relief Available

In response to the coronavirus pandemic, small business owners are also eligible to apply for an Economic Injury Disaster Loan (EIDL) through the SBA. The EIDL program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Visit the SBA Coronavirus (COVID-19): Small Business Guidance & Loan Resources Website for access to more resources available to assist small businesses during the current COVID-19 crisis.

As additional guidance is issued, we will keep you informed.

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