CARES Act Paycheck Protection Program1

Updated April 7, 2020



Traditional SBA lenders plus other approved FDIC-insured lenders and credit unions.  Loans under the program do not need separate SBA approval.


Loans must be originated by June 30, 2020.

Use Of Proceeds

Maximum Loan Size

The lesser of:

Loan Deferral

Lenders required to provide complete payment deferment relief, including payment of principal, interest, and fees, for 6 months.

Loan Forgiveness


Maturity of 2 years (to the extent any balance remains after forgiveness).

Interest Rate



No penalty for prepayment.


No collateral required.


No personal guarantee required.


No SBA fees (agent and lender fees to be paid by SBA).

Other Credit

Borrower is not required to demonstrate that it is unable to obtain credit elsewhere.

Employee Retention Credit

Borrowers who receive a PPP loan are not eligible for the Employee Retention Credit under the CARES Act.

Payroll Tax Deferral

Borrowers who receive loan forgiveness for a PPP loan are not eligible to take advantage of payroll tax deferral provisions of the CARES Act.


  1. The Paycheck Protection Program was added by Section 1102 of the CARES Act as Subsection (36) of Section 7(a) of the Small Business Act. Interim Final Rules were released by the SBA on April 3, 2020. We expect the SBA to provide additional guidance on a number of issues, which could modify the information provided herein. The information provided herein is intended to be a summary only and reference should be made to the language of the actual statutes, regulations, and SBA guidance.
  2. The “small business concern” test is based on industry-specific maximum annual revenue and/or employees. The test applies both to the individual company and its affiliates (using a very broad affiliate test). 
  3. The traditional “small business concern” test requires the borrower to satisfy either the applicable size standard based on the borrower’s NAICS industry code or the “alternative size standard” (maximum tangible net worth of no more than $15m and average net after-tax income of not more than $5m over the past 2 years).
  4. A complete list of industries classified under NAICS code 72 can be found here:
  5. “Payroll costs” include: (a) employee compensation, including (i) salary, wage, (ii) tips, (iii) vacation, parental, family medical or sick leave, (iv) allowance for dismissal or separation, (v) payments for the maintenance of health care benefits (including insurance premiums), (vi) payment of retirement benefits, and (vii) payroll taxes, and (b) if the borrower is a sole proprietor or independent contractor, income in an amount not more than $100,000 per year (as prorated for the covered period); but specifically exclude (x) payments to an individual employee exceeding $100,000 (as prorated for the covered period) and any payments to independent contractors, (y) compensation to employees whose principal residence is outside of the US and (z) qualified sick and family leave for which a credit is allowed under the Families First Coronavirus Response Act. April 6, 2020 guidance from the SBA clarified that payroll tax withholding for Federal income tax and FICA paid by the employer or employee should not reduce payroll costs.
  6. For “seasonal employers,” average monthly payroll costs are based on period commencing Feb. 15, 2019 and ending June 30, 2019.
  7. “Seasonal employers” must use the period between Feb. 15, 2019 and June 30, 2019.
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