A Life Preserver for Small Businesses – The Paycheck Protection Program

On March 27, 2020 Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion emergency fiscal stimulus package with the aim of mitigating the economic damage created by the Coronavirus pandemic by introducing a wide range of provisions for individuals, businesses, healthcare entities, and state and local governments to meet short-term cashflow demands.

What is The Paycheck Protection Program?

One of the most compelling provisions of the Act is the Paycheck Protection Program, which authorizes up to $349 billion in forgivable loans, allowing small businesses to pay their employees during the crisis.

Who Qualifies?

Employers with less than 500 employees and who certify current economic uncertainty makes the loan necessary to support your ongoing operations. All businesses – including nonprofits, veterans’ organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply.

Forgivable Loan Uses:

  • Payroll costs, including benefits, which include:
  • Wages and other compensation capped at $100K per employee; and
  • Vacation, parental, family, medical, and sick leave benefits.
  • State/local tax on compensation.
  • Interest on mortgage obligations, incurred 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 Description:

Loans will have a maturity period of 2 years and a fixed interest rate of 1.0%. The loan maximum is $10,000,000. Notably, any amounts spent on certain items during the first 8 weeks after the loan is made may be eligible for forgiveness.  As an added benefit, amounts that are forgiven will even be excluded from taxable income for the year.

When and How to apply?

For small businesses and sole proprietorship, applications will be accepted beginning on April 3, 2020, and for independent contractors and self-employed individuals, applications will be accepted beginning on April 10, 2020. E-Signatures are acceptable.This is a first-come, first serve program. Applying as early as possible is important.

The Paycheck Protection Program loan application is a straightforward 4-page document that is available on-line. Click here to view now.  

Where to Apply?

Either your current existing bank if SBA qualified or a qualified SBA lender. Due to the high volume of applications expected, your current bank, if qualified, will probably be the best option.

More information is available here.

View the fact sheet here.


Kurtz Fargo LLP, Hughes & Company, LLC, Michael Kitces, ABG-Rocky Mountain Consultants

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