COVID-19 Small Business Resource Center

Small Business Loans for COVID-19

This area of our Resource Center was created to help connect you with loan and other assistance programs created by federal, state, and local governments for small businesses impacted by the COVID-19. For specifics on these programs, visit the links below and contact the program directly. Since the situation is evolving rapidly, please check back for new developments. We will be updating this page regularly.

SBA Paycheck Protection Program

Updated: July 28, 2020

The Paycheck Protection Program (PPP) is a loan program for small businesses. The program is administered by the Small Business Administration (SBA), which will fully guarantee loans provided by approved lenders to eligible entities. Forgiveness of these loans is also available under certain circumstances. Here is some additional information about the PPP:

Eligible Businesses:

Businesses and nonprofit organizations with no more than 500 employees are eligible for the PPP through June 30, 2020, or until funds are exhausted. Note that Congress is currently considering a bill that would extend availability of PPP loans through August 8, 2020. Businesses must have been in operation, with employees, on February 15, 2020. There are special rules for determining the 500-employee limit (for example, for employers in the Hospitality and Food Service industries (NAICS code 72), the 500-employee limit may be determined based on the number of employees per physical location). Certain franchises may also qualify as separate businesses.

Maximum Loan Amount:

PPP loans will be provided in amounts approximately equivalent to ten weeks of payroll costs. Loan amounts are determined based on 250% of average monthly payroll costs, taking into consideration average wages paid during the applicable period (which will either be the one-year period prior to the loan or calendar year 2019, at your option), up to a limit of $10 million. There are alternate periods for seasonal employers and those not in business in the prior year.

Loan Uses:

Payroll costs (as described below);

Interest on mortgage obligations, in force before February 15, 2020;

Rent, under lease agreements in force before February 15, 2020; and

Utilities, for which service began before February 15, 2020.

Loan Terms:

PPP loans have an interest rate of 1 percent. Loans issued on or after June 5, 2020, have a maturity date of 5 years. Interest accrues from the origination date. Loan recipients can defer principal and interest payments on their PPP loans until the date that the SBA compensates the lender for forgiven amounts, as long as the borrower applies for forgiveness within 10 months of the expiration of the applicable covered period.

Loan Forgiveness:


FAQs


Checklist


Scenarios

Up to 100 percent of the PPP loan is forgivable (to the extent that employers maintain specified staffing and wage levels). The loan will be fully forgiven if the loan proceeds are spent, or the qualifying costs incurred, within the applicable Covered Period*; the funds are used for payroll costs and the other Loan Uses described above, provided that at least 60 percent of the forgiven amount must have been used for payroll costs; and certain other conditions are met. Employers can apply for loan forgiveness through the lender that is servicing the loan. Lenders have 60 days to make a decision on loan forgiveness.

* Loan proceeds must be spent during the 24-week period immediately following disbursement of the loan or by December 31, 2020, whichever is earlier (the Covered Period). If you received your loan prior to June 5, 2020, you may choose the 8-week period following disbursement of your loan as your Covered Period. Also, if you pay your employees on a biweekly or more frequent schedule, you may choose to begin the covered period on the first day of the first pay period following disbursement of the loan ("Alternative Payroll Covered Period") for qualifying payroll costs only.

Forgiveness Applications:

On July 23, 2020, the SBA advised lenders that it won't begin accepting forgiveness applications until at least August 10, 2020. This date is subject to extension if any new legislative amendments to the forgiveness process necessitate changes to the system. Additionally, final Treasury Department guidance concerning PPP forgiveness applications has been delayed. Banks, accountants, and others are being advised not to process PPP forgiveness applications until Treasury and SBA guidance is finalized.

Below is some additional information about loan forgiveness. Please note that in June the government passed the Paycheck Protection Program Flexibility Act (PPPFA), which makes important changes to the PPP loan forgiveness process. For more information about the changes made by the PPPFA, please see ADP's Eye on Washington article describing the law, available here. Guidance on loan forgiveness is evolving and rules may change, so check back for updates.

Conditions for Loan Forgiveness:

The amount of the loan can be fully forgiven as long as certain conditions are met. The specific amount will generally depend in part on what portion of the loan is used on payroll costs and whether the employer has maintained staffing and pay levels during the Covered Period or Alternative Payroll Covered Period.

A loan may be fully forgiven if all the following three conditions are met:

  • 100% of the loan proceeds are spent, or qualifying costs are incurred, within the Covered Period or Alternative Payroll Covered Period (for qualifying payroll costs only).
  • At least 60 percent of the funds are used for payroll costs, and no more than 40 percent are used for the other Loan Uses described above.

    Example: If a small business received a loan for $50,000, to receive 100% forgiveness at least $30,000 must be used on payroll costs during the Covered Period or Alternative Payroll Covered Period. This would leave no more than $20,000 for the other Loan Uses described above.

  • Staffing and wage levels must be maintained through the end of the Covered Period or Alternative Payroll Covered Period or until the borrower applies for forgiveness, whichever occurs first, unless restored by December 31, 2020 in certain circumstances (see below).

Note: Use our Loan Forgiveness Estimator Tool to help estimate the amount of the PPP loan that may be forgiven.

Covered Period & Alternative Payroll Covered Period

Covered Period:

Loan proceeds must be spent during the 24-week period immediately following disbursement of the loan or by December 31, 2020, whichever is earlier (the Covered Period). For example, if you received PPP loan proceeds on April 20, 2020, the first day of the Covered Period is April 20, 2020, and the last day of the covered period is October 4, 2020. If you received your loan prior to June 5, 2020, you may choose the 8-week period following disbursement of your loan as your Covered Period.

Alternative Payroll Covered Period:

The SBA indicates that borrowers with a biweekly or more frequent payroll schedule may elect to calculate eligible payroll costs (see below) beginning on the first day of their first pay period following their PPP loan disbursement date.

For example, if you received PPP loan proceeds on April 20, 2020 and the first day of your first pay period following loan disbursement is April 26, 2020, then the first day of the Alternative Payroll Covered Period is April 26, 2020. The Alternative Payroll Covered Period can be used when calculating eligible payroll costs and for the purposes of determining whether staffing levels and pay levels have been maintained after receipt of the loan.

Maintaining Staffing Levels:

To determine whether adequate staffing levels have been maintained, the average number of full-time equivalent employees (FTEEs) during the Covered Period or Alternative Payroll Covered Period will be compared to one of two time periods*. Borrowers may either use the period from February 15 through June 30, 2019 or January through February 28, 2020.

For instance, if the employer had 20 FTEEs from February 15 through June 30, 2019 and 18 FTE employees from January through February 2020, the borrower would most likely choose the latter time period since it may be more advantageous. If the number of FTEEs during the Covered Period or Alternative Payroll Covered Period is lower than the time period chosen, the amount of loan forgiveness may be reduced proportionately.

However, your forgiveness amount will not be reduced by a failure to maintain staffing levels during the Covered Period or Alternative Payroll Covered Period if (a) your average FTEEs between February 15 and April 26, 2020 is lower than your FTEEs as of February 15, 2020, and (b) you restored the level of FTEEs on or before December 31, 2020 to be equal or higher to the FTEE levels as of February 15, 2020.

* Seasonal employers may also choose to compare the average FTEEs employed during the Covered Period or Alternative Payroll Covered Period to either period listed above or to any consecutive 12-week period between May 1 through September 15, 2019.

Loan forgiveness will not be reduced based on an inability to rehire employees if the employer can document (1) written offers to rehire individuals who were employees of the organization on February 15, 2020; or (2) an inability to hire similarly qualified employees for unfilled positions by December 31, 2020. Additionally, forgiveness will not be reduced for failure to maintain employment levels if the organization is able to document an inability to return to the same level of business activity as existed prior to February 15, 2020, due to compliance with COVID-19-related guidance for sanitation, social distancing, or worker or customer safety requirements from the Health and Human Services (HHS), the Centers for Disease Control and Prevention (CDC), or the Occupational Safety and Health Administration (OSHA) between March 1 and December 31, 2020. Employees who are terminated for cause, voluntarily resign, or voluntarily request and receive a reduction of hours may also be excluded from the FTEE reduction calculations.

Calculating FTEEs:

To determine the average number of FTEEs during the applicable period, generally the following method must be used for each employee:

  • Determine the average number of hours paid per week during the applicable period;
  • Divide by 40; and
  • Round the total to the nearest tenth.

The maximum for each employee is capped at 1.0.

Note: A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer than 40 hours may be used at the election of the borrower. Whichever option the borrower chooses, the borrower must apply that method consistently to all of their part-time employees for the Covered Period or the Alternative Payroll Covered Period and the selected reference period.

Scenario:

Benny's Metalworks received a PPP loan of $44,000 on April 12, 2020. The company has 24 weeks from receipt of the loan to meet the criteria for loan forgiveness. The timeline starts as soon as the company receives the loan.

Benny spends all of the funds during the Covered Period on covered costs, and more than 60 percent of the loan was used on payroll costs. However, due to a loss of several major accounts, Benny had to reduce staffing at the end of Week 1, but he kept pay levels the same for remaining employees. As a result, Benny's average number of FTEEs per month is 3 during the Covered Period, down from 5 (the number Benny had from January through February 2020).

Since the company was not able to maintain staffing levels, the amount of loan forgiveness is reduced proportionately:

  • 3 FTEEs divided by 5 FTEEs = 0.60 (FTEE reduction quotient)
  • Amount of Loan Eligible for Forgiveness: $26,400 ($44,000 x 0.60)
  • Amount to Be Repaid by Benny's Metalworks: $17,600 (plus interest)

Alternatively, if Benny had 5 FTEEs as of February 15, 2020, and the reductions occurred between then and April 26, 2020, and Benny restored the business to 5 FTEEs on or before December 31, 2020, he would be eligible for full forgiveness of the loan.

Note: Seasonal employers may compare the average FTEEs during the Covered Period or Alternative Payroll Covered Period to February 15 through June 30, 2019; January 1 through February 29, 2020; or any consecutive twelve-week period between May 1 through September 15, 2019.

Maintaining Pay Levels:

Repayment of part of the loan may be required if any employee's average annual salary (for salaried employees) or average hourly wages (for hourly employees) are reduced by more than 25% during the Covered Period or Alternative Payroll Covered Period compared to January 1 through March 31, 2020.

However, if (a) a given employee's wage levels (annual salary level for salaried employees and hourly wages for hourly employees) between February 15 and April 26, 2020, are lower than as of February 15 and (b) you restore the wage levels on or before December 31, 2020 to be the same or higher than as of February 15, 2020, there will be no reduction in forgiveness based on that employee's wage levels.

When comparing wage levels to determine if your loan forgiveness amount will be reduced, employees who earned wages or a salary at an annualized rate of more than $100,000 in any single pay period of 2019 aren't considered.

Note: The government has issued guidance to make clear that borrowers should not be doubly penalized by reductions in wages and FTEEs. Accordingly, reductions in average annual salary or average hourly wage should only be considered to the extent that they aren't also attributable to FTEE reductions.

Using at Least 60 Percent of Loan on Payroll Costs:

At least 60% of the covered loan amount must be used for payroll costs, but a borrower may obtain partial loan forgiveness, as long as 60 percent of the loan forgiveness amount covers payroll costs.

For example, if a small business received a loan for $50,000, it must spend at least $30,000 on payroll costs during the applicable Covered Period to be eligible for 100% forgiveness of the loan amount.


Payroll Costs:

Under the PPP, payroll costs generally include:

  • Employee gross pay including salary, wages, commissions, bonuses, and tips (capped at $100,000 on an annualized basis for each employee).
  • All employer state and local taxes paid on employee gross pay, such as state unemployment insurance and employer-paid state disability insurance (in applicable states).
  • Employer-paid healthcare benefits, including insurance premiums.
  • Employer-paid retirement benefits, including defined-benefit or defined-contribution retirement plans and employer 401(k) contributions.

In recent guidance, the SBA said bonuses and hazard pay are covered payroll costs and eligible for forgiveness, provided the employee's total compensation doesn’t exceed $100,000 on an annualized basis.

Note: The definition of payroll costs excludes employer federal taxes, workers compensation premiums, payments to independent contractors, and payments to employees for leave covered under the Families First Coronavirus Response Act.

Payroll costs are considered paid on the day that: (1) paychecks are distributed; or (2) the borrower originates an ACH credit transaction.

Payroll costs are considered incurred on the day that the employee's pay is earned.

Payroll costs incurred but not paid during the borrower's last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period (or Alternative Payroll Covered Period).

Recordkeeping:

Borrowers must retain PPP documentation for six years after the date the loan is forgiven or repaid in full.

Applying for PPP Loans:

Employers can apply through any existing SBA 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. Employers should consult with your local lender as to whether it is participating in the program.

If you wish to begin preparing your application, you should contact a participating lender, or you can download a sample form to see the information that will be requested by a lender. Download a sample form.

Borrowers won't be required to make a personal guarantee for the loan or to provide collateral, and don't need to be unable to obtain credit elsewhere. Borrowers must make certain good-faith certifications, including, but not limited to, that the uncertainty of current economic conditions makes the loan request necessary to support the ongoing operations. Borrowers must also acknowledge that funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments, and the government has indicated an intent to focus on necessity of loans in excess of $2 million.

Restrictions:

  • Loan proceeds may not be used to pay:

Wages exceeding $100,000 per employee (annualized for the length of the covered period)

Employees who live outside the U.S.

Payments to independent contractors

FFCRA paid sick or family leave wages for which credit is allowed

  • The PPPFA also allows employers that receive PPP loan forgiveness to continue deferring payment of the employer share of the Social Security tax under CARES Act (Section 2302) through December 31, 2020. The original PPP prohibited employers from deferring employer Social Security taxes after any portion of the PPP loan was forgiven. Deferred employer Social Security tax amounts will be due in two equal payments in December 2021 and 2022.
  • Employers that receive the Employee Retention Credit for Closures Due to COVID-19 are not eligible for the PPP. Note that employers who returned their PPP loans by May 18, 2020, will be deemed to not have obtained a PPP loan and can participate in the Employee Retention Credit.

Small businesses should work with an experienced financial advisor to carefully assess all of the available assistance programs to determine the interplay and best option for their specific circumstances. More information on the PPP can be found here. In addition, the U.S. Department of the Treasury has provided an information sheet here.

Main Street Lending Program

Updated: July 7, 2020

The Federal Reserve has established the Main Street Lending Program (MSLP) to help facilitate loans to certain businesses that were in good standing prior to the COVID-19 crisis. The MSLP recently launched and is now accepting applications. The MSLP has three components: one for new loans (Main Street New Loan Facility, or MSNLF), another to increase the size of existing loans (Main Street Expanded Loan Facility, or MSELF), and a "priority" option for new loans (Main Street Priority Loan Facility, or MSPLF). The combined size of these programs is up to $600 billion. Unlike loans under the Paycheck Protection Program (PPP), loans under the MSLP are not forgivable. Prior to launching, on May 27, 2020 and June 8, 2020, the Federal Reserve announced further changes and expansions to these programs that increased the number and type of companies affected by COVID-19 that may be eligible.

ELIGIBLE BUSINESSES:

Eligible businesses are those with either up to (1) 15,000 employees (previously increased from 10,000, and now with affiliation rules applying when determining eligibility) or (2) $5 billion in 2019 annual revenues (previously increased from $2.5 billion). They must have been created or organized in the United States or under the laws of the United States prior to March 13, 2020. Additionally, the business must have significant operations in, and a majority of their employees based in, the United States.

Businesses may only participate in one of the MSLP loan programs and may not also participate in the Primary Market Corporate Credit Facility. A borrower may, however, obtain more than one loan under a single program, provided that the sum of the loans does not exceed the maximum loan amount for the program.

LOAN TERMS:

A loan under the MSNLF will have the following features:

  • Maximum maturity of five years (recently increased from four years);
  • The interest rate is LIBOR + 3%;
  • Principal and interest payments deferred for two years (recently increased from one year);
  • Minimum loan size of $250,000 (recently lowered from $500,000);
  • Maximum loan size of the lesser of: (1) $35 million (recently increased from $25 million) or (2) an amount that, when added to the borrower's existing outstanding and committed but undrawn debt, doesn't exceed four times the borrower's 2019 earnings before interest, taxes, depreciation, and amortization (EBITDA);
  • Early payment is permitted without penalty.

A loan under the MSPLF will have many of the same features as the MSNLF, except the maximum loan size is the lesser of: (1) $50 million (recently increased from $25 million) or (2) an amount that, when added to the borrower's existing outstanding and committed but undrawn debt, doesn't exceed six times the borrower's 2019 EBITDA.

A loan under the MSELF will have many of the same features as the MSNLF, except the minimum and maximum loan amounts are different.

Unique features of each loan program are provided in each program's term sheet, published by the Federal Reserve.

Basic details, including terms, minimum and maximum loan sizes, risk retention, payment and risk are summarized in a chart issued by the Federal Reserve, reproduced below.

Main Street Lending Program Loan Options

New Loans

Priority Loans

Expanded Loans

Term

5 years

5 years

5 years

Minimum Loan Size

$250,000

$250,000

$10,000,000

Maximum Loan Size

Lesser of $23M or 4x 2019 adjusted EBITDA

Lesser of $50M or 6x 2019 adjusted EBITDA

Lesser of $300M or 6x 2019 adjusted EBITDA

Risk Retention

5%

5%

5%

Payment (year one deferred for all)

Principal deferred for two years; Years 3-5: 15%, 15%, 70%

Principal deferred for two years; Years 3-5: 15%, 15%, 70%

Principal deferred for two years; Years 3-5: 15%, 15%, 70%

Rate

LIBOR + 3%

LIBOR + 3%

LIBOR + 3%

APPLYING FOR A LOAN:

Businesses may apply for the MSNLF, MSELF and MSPLF loans through eligible lenders. Borrowers seeking an MSNLF or MSPLF will be required to attest that they:

  • Have a reasonable basis to believe, as of the date of origination of the eligible loan, or the upsized tranche, and after giving effect to such loan, that they have the ability to meet their financial obligations for at least the next 90 days and do not expect to file for bankruptcy during that time period.
  • Meet the EBITDA leverage condition stated in the loan terms above.
  • Won't seek to cancel or reduce any of its outstanding lines of credit with the lender or any other lender.
  • Commit to refrain from using the proceeds of the loan to repay other loan balances and refrain from repaying other debt of equal or lower priority, with the exception of mandatory principal payments, unless the borrower has first repaid the loan in full.
  • Will follow compensation, stock repurchase, and capital distribution restrictions that apply to direct loan programs under the CARES Act.
  • Are eligible to participate.

Borrowers no longer need to attest that they require financing due to circumstances presented by COVID-19 or that they will make reasonable efforts to maintain payroll and retain their employees during the term of the loan. However, borrowers still are required to make commercially reasonable efforts to maintain their payroll and retain employees during the time their eligible loans are outstanding. Borrowers are not precluded from participation in the MSLP if they have already laid-off or furloughed employees as a result of disruptions from COVID-19.

A MSELF loan will also require certain attestations.

INTERPLAY WITH PPP:

Businesses that have a PPP loan may also take out a MSLP loan.

Businesses should work with an experienced financial advisor to carefully assess all of the available assistance programs to determine the interplay and best option for their specific circumstances.

SBA Express Loans

Businesses and nonprofit organizations with fewer than 500 employees, sole proprietorships and independent contractors that have suffered economic injury due to COVID-19 may be eligible for a loan under the existing SBA "Express" Loans program. The SBA Express Loans program helps small businesses obtain loans in a faster and easier way (usually within 36 hours). These loans provide businesses with revolving lines of credit for working capital purposes.

The CARES Act expands the allowable uses for loans under this program to permit payroll support, including paid sick leave, supply chain disruptions, employee salaries, mortgage payments and other debt obligations, to provide immediate access to funds for affected small businesses. The CARES Act increases the maximum loan amount for SBA Express loans from $350,000 to $1,000,000, until December 31, 2020. The CARES Act also reduces the cost of participation in the program by providing fee waivers, an automatic deferment of payments for up to one year, and no prepayment penalties.

Debt Relief for Other SBA Loans

For small businesses with current non-disaster SBA loans, under the CARES Act, the SBA will cover all loan payments on these loans, including principal, interest and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of March 27, 2020. PPP Loans and EIDLs are not eligible for this debt-relief program.

The loans eligible for this relief include those guaranteed by the SBA, such as the SBA Business Loan Program (including the Community Advantage Pilot Program, but excluding PPP Loans) or Title V of the Small Business Investment Act. Loans made by an intermediary to a small business using loans or grants received under the SBA’s Microloan Program are also eligible.

State and Local Loan Programs

Updated: June 1, 2020

Currently, the following jurisdictions have set up grant and/or loan programs for small businesses impacted by COVID-19. Each program establishes its own eligibility rules, caps, and deadlines. For details and information on how to apply, click on the links below. Due to rapidly changing developments, this information may not be the most current information available.

Note: There are also various non-profits and other private entities offering loans and/or grants to impacted small businesses.