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: August 12, 2021
The Paycheck Protection Program (PPP) offered forgivable low-interest loans to small businesses facing uncertainty due to COVID-19, to help businesses retain workers, maintain payroll, and cover other existing overhead costs. Applications for new PPP loans are now closed. If you are ready to apply for forgiveness of your PPP loan, see below for important information and read our Loan Forgiveness Checkup. In late July 2021, the Small Business Administration (SBA) launched a portal to allow borrowers with PPP loans of $150,000 or less to apply for forgiveness directly through the SBA. . To apply for direct forgiveness, the PPP loan must have been obtained through a lender that has opted into the direct forgiveness program. A list of those lenders can be found here. The direct forgiveness portal can be found here.
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. In addition, the COVID-19 relief law signed in December 2020 provides that the amount of a borrower's PPP loan that is forgiven is excludable from gross income.
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 in the 8- to 24-week period immediately following disbursement of the loan (the 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.
The SBA began accepting forgiveness applications in August 2020 and remitting forgiveness payments to PPP lenders on October 2, 2020. Borrowers should check with their lenders directly to determine if they are prepared to accept forgiveness applications. In July 2021, the SBA launched a portal to allow borrowers with PPP loans of $150,000 or less to apply for forgiveness directly through the SBA. To apply for direct forgiveness, the PPP loan must have been obtained through a lender that has opted into the direct forgiveness program. A list of those lenders can be found here. The direct forgiveness portal can be found here.
Below is some additional information about loan forgiveness. 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, unless restored 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
Loan proceeds must be spent between 8 and 24 weeks immediately following disbursement of the loan (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.
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 the end of the applicable Safe Harbor period to be equal or higher to the FTEE levels as of February 15, 2020. The Safe Harbor period ends on December 31, 2020 for borrowers who received their PPP loan prior to August 8, 2020, and on the last day of the chosen covered period for borrowers who received their PPP loan or Second Draw PPP loan in or after December 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 the end of the applicable Safe Harbor period. 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). 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.
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.
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 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 a specified lookback period.
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 by the end of the applicable Safe Harbor period 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.
Forgiveness Reduction Waived for Smaller Loans:
On October 8, 2020, the Treasury Department and SBA released a simplified PPP forgiveness application (Form 3508S) and instructions for PPP loans of $50,000 or less.
The SBA adopted a de minimis exemption from reductions in loan forgiveness (i.e., penalties) for failure to maintain the number of FTEEs, as well as wage level maintenance requirements, for PPP loans of $50,000 or less.
Borrowers with affiliates that collectively received PPP loans of $2 million or more cannot use the new form or new exemptions.
The interim final rule issued by the SBA says that qualifying PPP borrowers won't need to document compliance with the targeted staffing and wage-level maintenance requirements. Loan forgiveness amounts won't be reduced, even if employee counts or wage levels decreased during or after the covered period, as long as the loan was $50,000 or less, and the borrower, when combined with any affiliates, collectively received less than $2 million.
Additionally, borrowers with loans of $150,000 or less may be eligible for a streamlined forgiveness process using Form 3508S. Borrowers with loans of over $50,000 but less than $150,000 can use FORM 3508S and manually calculate any forgiveness penalties due to wage or employment level reductions. Borrowers still need to retain – but not submit – documents substantiated their forgiveness applications for 4 years for employment records and 3 years for other records.
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.
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 and group insurance benefits, including insurance premiums.
- Employer-paid retirement benefits, including defined-benefit or defined-contribution retirement plans and employer 401(k) contributions.
In 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).
Borrowers must retain PPP documentation for six years after the date the loan is forgiven or repaid in full.
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.
COVID-19 Economic Injury Disaster Loans (EIDL)
Updated: September 21, 2021
The COVID-19 EIDL program is designed to provide economic relief to businesses that are experiencing a temporary loss of revenue due to the pandemic. The program is intended to help businesses meet financial obligations and operating expenses that could have been met had the pandemic not occurred. The loan may be used for working capital and normal operating expenses, such as continuation of healthcare benefits, rent, utilities, and fixed debt payments. Effective September 8, 2021, the funds may also be used for payment and pre-payment of business non-federal debt incurred at any time (past or future) and for payment of federal debt. The maximum loan amount is $2 million. Unlike a PPP loan, an EIDL isn't forgivable.
The loan limit for the program was set at $500,000, but effective September 8, 2021, the loan limit increased to $2 million (Note: the SBA will begin approving loans greater than $500,000 on October 8, 2021).
COVID-19 EIDL Terms:
The terms of a COVID-19 EIDL are:
- 3.75 percent interest rate for businesses (fixed)
- 30-year maturity (payments are deferred for two years, but interest still accrues)
Collateral is required for loans over $25,000.
Borrowers can apply for both the PPP and EIDL, although funds from both cannot be used for the same purpose.
Targeted EIDL Advance:
The Targeted EIDL Advance program provides businesses located in low-income communities with additional funds to ensure small business continuity, adaptation, and resiliency. The Targeted EIDL Advance is considered a grant and therefore doesn't need to be repaid.
To be eligible, businesses must
- Have 300 or fewer employees;
- Be located in federally identified low-income communities; and
- Demonstrate a reduction in revenue of more than 30 percent during an 8-week period beginning on March 2, 2020 or later.
During the initial round of the program, businesses that received a previous EIDL Advance in an amount less than $10,000 have first priority to apply for the Targeted EIDL Advance. The second priority group are businesses that applied for EIDL assistance before December 27, 2020 but did not receive an EIDL Advance because available funding was exhausted in mid-July 2020.
Signed on March 11, 2021, the American Rescue Plan Act (ARPA) included $10 billion in funding for another round of Targeted EIDL Advances to eligible businesses that previously applied for an EIDL Advance but didn't receive the full amount to which they were entitled because funding had been exhausted.
The ARPA also included $5 billion in funding for $5,000 grants to entities that:
- Have suffered an economic loss of greater than 50 percent; and
- Employ no more than 10 employees.
For this grant, the business doesn't need to be located in a low-income community.
Restaurant Revitalization Fund
Posted: March 16, 2021
Signed on March 11, 2021, the American Rescue Plan Act included $28.6 billion in funding for grants to restaurants, bars, breweries, food trucks, and similar entities that suffered revenue declines in 2020. The grant program will be administered by the Small Business Association.
To be eligible for a grant under the program, the business must:
- Be a restaurant, food stand, food truck, caterer, bar, brewpub, or a similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink; and
- Have suffered a decline in gross receipts in 2020.
Businesses are excluded from eligibility if they:
- As of March 13, 2020, own or operate (together with any affiliated business) more than 20 locations, regardless of whether those locations do business under the same or multiple names;
- Have a pending application for or have received a grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (title III of division N of Public Law 116–260); or
- Are a publicly traded company.
Applying for a Grant:
An eligible business applying for a grant under the program must make a good-faith certification that:
- The uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations; and
- They haven't applied for or received a grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (title III of division N of Public Law 116–260).
Distribution and Prioritization of Grants:
Of the $28.6 billion available:
- $5 billion is set aside for eligible entities with gross receipts during 2019 of no more than $500,000; and
- $23.6 billion will be distributed in an equitable manner to eligible entities of different sizes based on annual gross receipts.
During the initial 21-day period of the program, the SBA will prioritize awarding grants to eligible entities that are small businesses owned and controlled by women or veterans, or socially and economically disadvantaged small businesses.
In general, the amount of a grant will be equal to the pandemic-related revenue loss of the eligible business in 2020, subject to a cap of $10 million (or $5 million per physical location).
During the covered period, an eligible entity that receives a grant may use the funds for the following expenses incurred as a direct result of, or during, the COVID–19 pandemic:
- Payroll costs.
- Payments of principal or interest on any mortgage obligation (excluding any prepayment of principal on a mortgage obligation).
- Rent payments, including rent under a lease agreement (excluding any prepayment of rent).
- Maintenance expenses, including:
- Construction to accommodate outdoor seating; and
- Walls, floors, deck surfaces, furniture, fixtures, and equipment.
- Supplies, including protective equipment and cleaning materials.
- Food and beverage expenses that are within the scope of the normal business practice of the eligible entity before the covered period.
- Covered supplier costs.
- Operational expenses.
- Paid sick leave.
- Any other expenses that the SBA determines to be essential to maintaining the eligible entity.
The covered period is defined as:
- Beginning on February 15, 2020; and
- Ending on December 31, 2021, or a date to be determined by the SBA that is no later than two years after March 11, 2021.
Main Street Lending Program
Updated: December 21, 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 has 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. On May 27, 2020, June 8, 2020, and October 30, 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. Unless extended, the program will cease purchasing loan participations on December 31,2020.
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.
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 is deferred for two years and interest is deferred for one year;
- Minimum loan size of $100,000 (recently lowered from $250,000);
- Maximum loan size of the lesser of: (1) $35 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 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
Minimum Loan Size
Maximum Loan Size
Lesser of $35M or 4x 2019 adjusted EBITDA
Lesser of $50M or 6x 2019 adjusted EBITDA
Lesser of $300M or 6x 2019 adjusted EBITDA
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%
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.
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
Posted: April 1, 2020
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
Posted: April 1, 2020
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.