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Senate Passes SBA Paycheck Protection Loan Program

March 26, 2020

On Wednesday, March 25, 2020, the Senate passed the Coronavirus Aid, Relief, and Economic Security (“CARES” or “CARES Act”) Act, a stimulus bill that includes a loan program to keep small businesses, including certain private equity portfolio companies, afloat during mandated COVID-19-related closures. This new loan program, known as the Paycheck Protection Program (PPP), is based on the architecture of the SBA’s existing 7(a) loan program and will make forgivable loans of up to $10 million available to qualifying small businesses. The House of Representatives is expected to vote on the CARES Act on Friday, March 27, 2020. Additional detail will be provided as the SBA drafts implementing regulations, which the CARES Act requires to occur within 15 days. In the meantime, please see below for a brief summary of the main provisions of the CARES Act applicable to PPP loans. For information regarding SBA Economic Injury Disaster Loans, please see our client bulletin here.

Who is eligible for PPP loans?


A business, including a qualifying nonprofit organization, is eligible for PPP loans if it (a) meets the applicable North American Industry Classification System (NAICS) Code-based size standard or other applicable 7(a) loan size standard, both alone and together with its affiliates; or (b) has an employee headcount that is lower than the greater of (i) 500 employees or (ii) the employee size standard, if any, under the applicable NAICS Code. Businesses that fall within NAICS Code 72, which applies to accommodations and food services, are also eligible if they employ no more than 500 people per physical location. Sole proprietorships, independent contractors, and self-employed individuals are also eligible. It is unclear as of what date the size test will be applied, but historically, SBA size tests have been applied on the date of application for financing. More information on the NAICS-Code-based size standards can be found here.

How do affiliates, such as private equity sponsors, affect eligibility for PPP loans


Applicants for SBA loan programs, including PPP loans, typically must include their affiliates when applying size tests to determine eligibility. That means that employees of other businesses under common control would count toward the maximum number of permitted employees. A business that is controlled by a private equity sponsor would likely be deemed an affiliate of the other businesses controlled by that sponsor and could thus be ineligible for PPP loans. However, the CARES Act waives the affiliation requirement for the following applicants:

1. Businesses within NAICS Code 72 with no more than 500 employees
2. Franchises with codes assigned by the SBA, as reflected on the SBA franchise registry
3. Businesses that receive financial assistance from one or more small business investment companies (SBIC)

How are PPP loans made?

PPP loans will be made by lenders who are currently approved as 7(a) lenders or who are approved by the SBA and the Treasury Department to become PPP lenders. PPP lenders are delegated authority to make and approve PPP loans, with no additional SBA approval required. PPP lenders are only required to consider whether an applicant was in operation on February 15, 2020, and either had employees for whom it paid salaries and payroll taxes or paid independent contractors. Unlike other 7(a) loans, applicants are not required to show that credit is unavailable elsewhere or demonstrate repayment ability. PPP loans are backed by a 100% guaranty from SBA.

How much can be borrowed in PPP loans?

The CARES Act increases the maximum availability of 7(a) loans, including PPP loans, to $349 billion. The maximum PPP loan available to any business is $10 million or, if less, 2.5 times the average monthly payroll costs of the business over the year prior to the making of the loan (practically, this may become the year prior to the loan application), excluding the prorated portion of any annual compensation above $100,000 for any person. Note that under the CARES Act, “payroll costs” include vacation, parental, family, medical, and sick leave; allowances for dismissal or separation; payments for group health care benefits, including insurance premiums; and retirement benefits. Calculations vary slightly for seasonal businesses and businesses that were not in operation between February 15 and June 30, 2019.

How can PPP loan proceeds be used?

PPP loan proceeds are generally to be used for:

Payroll costs, excluding the prorated portion of any compensation above $100,000 per year for any person
Group healthcare benefit costs and insurance premiums
Mortgage interest (but not prepayments or principal payments) and rent payments
Interest on debt that existed as of February 15, 2020

What are the primary terms of PPP loans?

PPP loans bear interest at a maximum rate of 4% and mature no later than 10 years after determination of the amount, if any, to be forgiven, as described below. Payments under PPP loans and all other 7(a) loans will be deferred for 6–12 months, and the SBA is directed to issue guidance on the terms of this deferral. Unlike other 7(a) loans, PPP loans have no collateral or personal-guarantee requirements. There will be no recourse to owners of borrowers for nonpayment, except to the extent proceeds are used for an unauthorized purpose. For PPP loans, the SBA has waived prepayment penalties and has waived the guaranty fee and annual fee applicable to other 7(a) loans.

Can PPP loans be forgiven?

PPP loans can be forgiven to the extent that the loan proceeds have been used for the following costs incurred and payments made during the eight-week period after the loan is made:

Payroll costs, excluding the prorated portion of any compensation above $100,000 per year for any person
Group healthcare benefit costs and insurance premiums
Mortgage interest (but not prepayments or principal payments) and rent payments on mortgages and leases in existence before February 15, 2020
Certain utilities, including electricity, gas, water, transportation, and phone and Internet access for service that began before February 15, 2020
Additional wages paid to tipped employees

However, the amount forgiven is reduced based on failure to maintain the average number of full-time equivalent employees versus the period from either February 15, 2019, through June 30, 2019, or January 1, 2020, through February 29, 2020, as selected by the borrower. The amount forgiven is also reduced to the extent that compensation for any individual making less than $100,000 per year is reduced by more than 25% measured against the most recent full quarter. Reductions in the number of employees or compensation occurring between February 15, 2020, and 30 days after enactment of the CARES Act will generally be ignored to the extent reversed by June 30, 2020. Forgiven amounts will not constitute cancellation of indebtedness income for federal tax purposes.

Does having a PPP loan subject a business to terms regarding stock buybacks, dividends, employee retention, or other employment terms?

No. The CARES Act imposes restrictions on relief provided by the Treasury Department, but these types of restrictions do not apply to PPP loans.

Can I get a PPP loan if I got an Economic Injury Disaster Loan?

Yes, to the extent that the disaster loan was used for a purpose other than those permitted for PPP Loans. Disaster loans may be refinanced with proceeds of PPP loans, in which case the maximum available PPP loan amount is increased by the amount of disaster loans being refinanced.

If I’m interested in a PPP loan, whom should I call?

We recommend contacting existing 7(a) lenders as soon as possible to learn what you will need to provide for underwriting and approving a PPP loan.

View all of our COVID-19 perspectives here. Contact a member of our COVID-19 Legal Task Force HERE.


Small Business Programs Offered by SBA Resource Partners to Assist During COVID19

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Keeping you up to date on the latest Coronavirus #SmallBiz news & resources.


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VetBizCentral is an SBA funded Veteran Business Outreach Center serving Michigan, Ohio, and Indiana. The organization provides assistance to Veterans, Active Duty, Guard and Reserve Members in the formation and expansion of their businesses through education, training, counseling and procurement. To connect go to:


Essential FAR Performance Clauses for Federal Construction Contractors

May 14, 2020
1:00—2:30 pm EST


Identify “constructive” or implied changes
Understand and comply with notice requirements
Distinguish between types of differing site conditions
Understand the difference between design and performance specifications
Differentiate between delay, disruption, and inefficiency, acceleration and suspension


How Do We Drive Down Overhead?

May 7, 2020
1:00—2:30 pm EST

Known as the Oprah of Government Contracting, Jenny will take you through "The Financial Side of GovCon" giving you the roadmap you need that will save you tons of time and money. Price is always a component of any federal contract because agencies are dealing with more restrictive budgets. When your company starts out, you’ll bid anything and everything to get the revenue in, and some of those contracts may even be money-losers. But getting the wins creates momentum and brings relationships with customers who want to keep their successful contractors on their projects

Jenny Clark


Doing Business with the VA

May 20, 2020
10:00 AM - 12:00 PM EDT

Mr. Pak Sa Dewhurst will educate small businesses how the VA’s Veterans Health Administration (VHA) and Network Contracting Office (NCO) does business which comes from a philosophy “ order for you to do business with us, you must know how WE do business first!”


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SCORE is a funded resource partner of the SBA. SCORE provides volunteer mentors to assist small business with free mentoring, training, and networking opportunities. To connect with SCORE go to


SCORE hosts free, LIVE webinars every week on small business tips and strategies. See our upcoming offerings. READ MORE

Next live SCORE webinar coming up:
3 Step Approach to Intentional Social Media Marketing
SCORE Live Webinar
April 2, 1:00 p.m.

Did you miss a SCORE live webinar? They are available to watch on-demand at your convenience.

Related to Managing a Business During COVID 19

11 Options if Your Small Business Can't Pay Its Bills Due to Corona Virus

How Can Entrepreneurs Take Care of Their Mental Health During the Corona Virus

The Coronavirus Economic Impact: Will Business Interruption Insurance Help (& What are My Other Options)?

Crisis Communication Planning Checklist

Online Templates and Tools for Existing Businesses Go: HERE


During the COVID19 crisis SCORE mentors are available via elecronic means.


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Small Business Development Centers

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Navigating the Cash Flow Crunch - REGISTER HERE
Human Resource Management During COVID19 - REGISTER HERE
Managing Your Freelance Business During COVID19 - REGISTER HERE


Can't make it to our weekly live webinars? Sign up for our on-demand webinar library and you will receive a link to access a set of webinars curated specifically for busy entrepreneurs looking to start or grow their business.
Register: HERE

Upcoming webinars and trainings on various business topics go to: Workshops

To reach out to the SBDC for counseling go to: Request Counseling

Great Lakes Women’s Business Council

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Minding Your Business - Managing in a Financial Crisis

April 1, 2020
12:00 – 1:00 PM

Guest Speaker
Benita Tyler
Founder of Woman CFO


SBA resource partners stand ready to assist during difficult times. Below is a list of virtual offerings and links to resources that can assist including workshops, counseling, mentors, templates, and other online tools.

Notice About Changes and Updates to the SBA Website

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Keeping you up to date on the latest Coronavirus #SmallBiz news & resources.

SBA Economic Injury Disaster Loan (EIDL) Online App

The SBA is working diligently to meet customer demand for the SBA Economic Injury Disaster Loan (EIDL) program and make the process as user-friendly and easy as possible.

As we make changes, we will have update periods where things will be in flux.

While this is happening now, we still want to make sure you have a way to fill out and submit your application


If you are having issues accessing the website, try clearing your browsing data/cache.

As things are improved, we will update you accordingly with the new information.

Thank you for your patience

Small Business Guidence & Loan Resources

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Additional Resources to Support Small Businesses Impacted by Coronavirus (COVID-19)

The SBA also provides additional financing, exporting and advising resources to support small businesses impacted by COVID-19.

For example, new information is available about the SBA Express Bridge Loan Pilot Program along with other guidance and resources. Check regularly for more updates.


Get Updates from the SBA About COVID-19 Support

Visit for guidance and resources
Check for updates specific to SBA Economic Injury Disaster Loans
Follow us on Twitter at @SBAgov or
Subscribe to email updates UPDATES
Contact your local SBA office


SBA Office Locator

Find your local SBA office

Disaster Loan Assistance

Apply Online

Eligible Disaster Areas

Apply Online

Check Application Status

1. Business Loan Application
(Form 5) PDF
(en Español)

2. Home or Sole Proprietor Loan Application
(SBA Form 5C)n
(en Español)

3. Economic Injury Disaster Loan Supporting Informationn
(Form P-019)

Guidance for Businesses and Employers

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Additional Resources to Support Small Businesses Impacted by Coronavirus (COVID-19)

The SBA also provides additional financing, exporting and advising resources to support small businesses impacted by COVID-19.

For example, new information is available about the SBA Express Bridge Loan Pilot Program along with other guidance and resources. Check regularly for more updates.


Get Updates from the SBA About COVID-19 Support

Visit for guidance and resources
Check for updates specific to SBA Economic Injury Disaster Loans
Follow us on Twitter at @SBAgov or
Subscribe to email updates UPDATES
Contact your local SBA office

Coronavirus (COVID-19): Small Business Guidance & Loan Resources

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Health and government officials are working together to maintain the safety, security, and health of the American people. Small businesses are encouraged to do their part to keep their employees, customers, and themselves healthy.


Economic Injury Disaster Loan Program
SBA Express Bridge Loans
Guidance for Businesses and Employers
SBA Products and Resources
Government Contracting
Local Assistance

Economic Injury Disaster Loan Program

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Small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan due to Coronavirus (COVID-19). Click here to apply.

Find more information on the SBA’s Economic Injury Disaster Loans at:

The SBA will work directly with state Governors to provide targeted, low-interest loans to small businesses and non-profits that have been severely impacted by the Coronavirus (COVID-19). The SBA’s Economic Injury Disaster Loan 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.

SBA Express Bridge Loans

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Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.


Up to $25,000
Fast Turnaround
Will be repaid in full or in part by proceeds from the EIDL loan

Find an Express Bridge Loan Lender via SBA’s Lender Match Tool or by connecting with your local SBA District Office.

Guidance for Businesses and Employers

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The President's Coronavirus Guidelines for America - 15 Days to Slow the Spread

The Centers for Disease Control and Prevention (CDC) offers the most up-to-date information on COVID-19. This interim guidance is based on what is currently known about the coronavirus disease 2019 (COVID-19). For updates from CDC, please see the following:

Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19)
Preventing Stigma Related to COVID-19
Share Facts about COVID-19
CDC Coronavirus Disease 2019 (COVID-19) Web page
Information on Coronavirus Disease 2019 (COVID-19) Prevention, Symptoms and FAQ

The following interim guidance may help prevent workplace exposures to acute respiratory illnesses, including COVID-19, in non-healthcare settings. The guidance also provides planning considerations if there are more widespread, community outbreaks of COVID-19.

To prevent stigma and discrimination in the workplace, use the guidance described below and on the CDC’s Guidance for Businesses and Employers web page.

Below are recommended strategies for employers to use now. In-depth guidance is available on the CDC’s Guidance for Businesses and Employers web page:

Actively encourage sick employees to stay home
Separate sick employees
Emphasize staying home when sick, respiratory etiquette and hand hygiene by all employees
Perform routine environmental cleaning
Advise employees before traveling to take certain steps
.♦. Check the CDC’s Traveler’s Health Notices for the latest guidance and recommendations for each country to which you will travel. Specific travel information for travelers going to and returning from designated countries with risk of community spread of Coronavirus, and information for aircrew, can be found on the CDC website.
Additional Measures in Response to Currently Occurring Sporadic Importations of the COVID-19:
.♦. Employees who are well but who have a sick family member at home with COVID-19 should notify their supervisor and refer to CDC guidance for how to conduct a risk assessment of their potential exposure.
.♦. If an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure to COVID-19 in the workplace but maintain confidentiality as required by the Americans with Disabilities Act (ADA). Employees exposed to a co-worker with confirmed COVID-19 should refer to CDC guidance for how to conduct a risk assessment of their potential exposure.

Common Issues Small Businesses May Encounter:

Capital Access – Incidents can strain a small business's financial capacity to make payroll, maintain inventory and respond to market fluctuations (both sudden drops and surges in demand). Businesses should prepare by exploring and testing their capital access options so they have what they need when they need it. See SBA’s capital access resources.
Workforce Capacity – Incidents have just as much impact on your workers as they do your clientele. It’s critical to ensure they have the ability to fulfill their duties while protected.
Inventory and Supply Chain Shortfalls – While the possibility could be remote, it is a prudent preparedness measure to ensure you have either adequate supplies of inventory for a sustained period and/or diversify your distributor sources in the event one supplier cannot meet an order request.
Facility Remediation/Clean-up Costs – Depending on the incident, there may be a need to enhance the protection of customers and staff by increasing the frequency and intensity by which your business conducts cleaning of surfaces frequently touched by occupants and visitors. Check your maintenance contracts and supplies of cleaning materials to ensure they can meet increases in demand.
Insurance Coverage Issues – Many businesses have business interruption insurance; Now is the time to contact your insurance agent to review your policy to understand precisely what you are and are not covered for in the event of an extended incident.
Changing Market Demand – Depending on the incident, there may be access controls or movement restrictions established which can impede your customers from reaching your business. Additionally, there may be public concerns about public exposure to an incident and they may decide not to go to your business out of concern of exposing themselves to greater risk. SBA’s Resources Partners and District Offices have trained experts who can help you craft a plan specific to your situation to help navigate any rapid changes in demand.
Marketing – It’s critical to communicate openly with your customers about the status of your operations, what protective measures you’ve implemented, and how they (as customers) will be protected when they visit your business. Promotions may also help incentivize customers who may be reluctant to patronize your business.
Plan – As a business, bring your staff together and prepare a plan for what you will do if the incident worsens or improves. It’s also helpful to conduct a tabletop exercise to simulate potential scenarios and how your business management and staff might respond to the hypothetical scenario in the exercise. For examples of tabletop exercises, visit FEMA’s website at:

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The U.S. Small Business Administration requires all clients to complete the Request for Counseling (Form 641). This form will act as our Confidentiality and Code of Conduct Agreements. All client information is held in strictest of confidence.

To start the process, please click on the above e-CENTER button to access our electronic Request for Counseling form. After submission, a counselor will contact you shortly.



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Managing Your Business Through A Crisis

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25 August 2020
10:00 AM – 12:00 PM ET




Virtual Resources to Explore Global Markets

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27 May 2020
11:00 AM – 12:00 PM ET






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Verification Process Training Opportunities

Preparing For Re-Evaluation


1st Tuesday of Each Month

Preparing for Re-Verification Webinar & Town Hall

Designed for firms whose verification will be expiring

Verification Training


3rd Tuesday of Each Month

Pre-Application Webinar & Town Hall

Designed for firms interested in submitting their first CVE Verification application

Staying Verified


4th Tuesday of Each Month

How to stay Verified Webinar & Town Hall

Designed for firms who have been verified in six months

Center For Verification

Apply here for VOSB or SDVOSB status with the VA


CVE Business Locator


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A Nonprofit assisting veterans since 2005, serving Michigan, Ohio and Indiana