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Paycheck Protection Program (the CARES act SBA loan)

Updated: May 19

The CARES Act amends the Small Business Act to create a new Business Loan Program category. For the period from February 15, 2020 to June 30, 2020, the law allows the Small Business Administration to provide 100% federally-backed loans up to a maximum amount to eligible businesses to help pay operational costs like payroll, rent, health benefits, insurance premiums, utilities. The US Treasury has issued an official PPP Fact Sheet.


  • Small businesses as defined by SBA size standards (< 500 employees, but up to 1,500 employees depending on the sector and certain sectors are based on revenue).

  • Businesses in the Accommodation and Food Services Sector (NAICS Code 72) are eligible with up to 500 employees at each location.

  • Non-profits with fewer than 500 employees who are 501(c)3s and do not receive Medicaid funding.

  • Sole proprietors, the self-employed, and independent contractors.

Maximum Loan:

Generally, monthly payroll costs for 2.5 months, not to exceed $10 million. Payroll costs exclude compensation paid to individuals, including the self-employed, in excess of $100,000 a year.

Loan Forgiveness:

The borrower may have a portion of their loan forgiven in the amount equal to their payroll costs, interest payments on mortgages, rent payments, and utility payments. The forgiven costs must be from the 8 weeks immediately after assuming the loan. Loan forgiveness will be reduced if the borrower reduces employment by a ratio similar to their reduction in employment or if borrower reduces salaries and wages by more than 25%.


Payroll Protection Program (PPP) loans are live with most banks, but processing time appears to be long. As opposed to PPP, which are applied for in your bank, Economic Injury Disaster Loans (EIDL) are available immediately by applying directly on the SBA website: here One option would be to apply for an EIDL loan immediately to cover the expenses a business has now. Later, when the PPP loans are accessible, current consensus is that business owners would be able to refinance and convert their EIDL loan into a PPP loan.

We encourage business owners to educate themselves about their options. EIDL loans are available on the SBA website, and the PPP loan are going live during April. We are expecting the lenders to be overwhelmed with applications and processing time may be longer than usual.

  • Click here for an application, overview of the program and list of participating SBA lenders.

  • Click here for a program overview by the U.S. Chamber of Commerce.

The Small Business Association (SBA) has created a comprehensive Coronavirus page with all of its resources in one place.

This letter is issued for informational purposes only. It is not intended to be and should not be relied upon as legal or financial advice, and it should not be considered exhaustive or comprehensive. Faropoint is not making any representation or warranty, express or implied, as to the accuracy or completeness of this information, and Faropoint will not have any liability, neither legally nor financially, for any loss (direct or indirect) caused by the understanding or by the use of this page or its content. Any reference to any relief program or a loan or otherwise does not constitute an endorsement or a recommendation or a favoring by Faropoint.


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