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CARES Act stimulus for small business

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136 (H.R. 748)) was signed into law in the US in response to the 2019 novel coronavirus disease (COVID-19) pandemic. 

The CARES Act provides economic relief to individuals and businesses facing economic hardship due to the COVID-19 outbreak. Temporary changes were made to two significant types of loans provided by the Small Business Administration (SBA) during the COVID-19 pandemic:

  • Paycheck Protection Program (PPP)
    The Paycheck Protection Program is designed to encourage small businesses to retain employees through the COVID-19 crisis. It extends the SBA's 7(a) loan program to provide up to $659 billion in partial or fully forgivable loans to eligible small businesses to cover payroll and certain other operational costs from February 15, 2020 to June 30, 2020. Loans up to 2.5x the borrower's average monthly payroll will be forgiven if at least 75% of the loan is used to pay payroll costs, and not more than 25% of the loan is used to pay mortgage interest, rent, or utilities during the eight weeks after the loan is made.
  • The Economic Injury Disaster Loan (EIDL)
    The EIDL provides working capital loans to small businesses suffering substantial economic injury from the COVID-19 crisis. It will provide low interest loans to small businesses to pay payroll and certain operating costs and liabilities from January 31, 2020 through December 31, 2020. Loans are available up to $2 million, based on the borrower's actual economic injury and financial need, and are not forgivable. The EIDL Program also provides up to $20 billion for $10,000 emergency EIDL advances which will not have to be repaid.

On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act (PPPHCE Act) (Pub. L. No. 116-139 (H.R. 266)) was enacted to increase funding under the CARES Act. This added $310 billion for paycheck protection program (PPP) loans, $50 billion for economic injury disaster loans (EIDL), and $10 billion for emergency economic injury grants (EEIG).

Last Updated: 5/7/2020

Thomson Reuters Labs

SBA loan analysis tool

This valuable tool was designed to help navigate the COVID-19 pandemic and to understand which loans a small business qualifies for under the CARES Act.

Although the SBA stopped accepting applications for EIDL program on April 30th, the Payroll Protection Program is still available.