CARES Act Passes: Paycheck Protection Program Provides Financial Relief To Small Businesses

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted. CARES is an economic relief package promulgated in response to the COVID-19 pandemic. The CARES Act provides Federal economic stimulus to small businesses through the Paycheck Protection Program (the “PPP”), a loan program designed to help small businesses keep their current employees and to bring back furloughed employees.

The PPP allocates $349 billion dollars to forgivable, small business loans to small businesses, defined as having 500, or fewer, employees. If the loaned funds are used for payroll costs, interest on mortgages, rent,  and utilities, the loans will be fully forgiven as long as 75% of the forgiven amount is used for payroll expenses.

All small businesses are generally eligible for the PPP program, including nonprofits, veterans’ organizations, tribal concerns, self employed individuals, sole proprietors and independent contractors. Starting on April 3, 2020, small businesses and sole proprietorships can apply for loans under the PPP. Starting April 10, 2020, independent contractors and self-employed individuals can apply for loans under the PPP.  I recommend that you apply quickly due to the $349 billion dollar funding cap.

The PPP covers the period beginning on February 15, 2020 and ending on June 30, 2020. The loan proceeds can be used for payroll and benefits, mortgage interest, rents and utilities regarding agreements for such work or services being in place before February 15, 2020.  Covered wages/salaries are capped at $100,000.00 for each employee.

The maximum loan amount under the PPP program is $10 million dollars. PPP program loans can be up to two months of your average monthly payroll costs from the last year, plus an additional 25%, of this amount. These loans may be forgiven when used for the qualified expenses noted above. Borrowers must maintain their staffing and payroll levels to be eligible for loan forgiveness. Borrowers will be required to submit verification of employment staffing levels when requesting loan forgiveness. Below is a link to the Information Sheet for Borrowers published by the U.S. Treasury Department:–Fact-Sheet.pdf

The above link provides greater details about the PPP program and valuable links to SBA lenders, who would be able to facilitate these loans.

David G. Hellmuth, Esq. is the chairperson of the Banking Law practice group at Hellmuth & Johnson, PLLC. For inquiries and questions regarding the PPP program, Mr. Hellmuth can be contacted through the firm’s website,