As the number of cases for COVID-19 continue to increase, several things are being implemented in an attempt to lessen the burden on the devastation that has taken a hit on both our economy and our small businesses and their workers. In response to this pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.

Last week the CARES Act was signed into law. Small businesses will be able to secure a loan of up to $10 million to help get them through this pandemic. Some of the requirements to be able to secure this loan are as follows:

  1. Businesses and entities must have been in operation on or before February 15, 2020.
  2. Small business concerns, as well as any business concern, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or Tribal business concern described in section 31(b)(2)(C) that has fewer than 500 employees, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher.
  3. Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals.
  4. Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a NAICS code beginning with 72, for which the affiliation rules are waived.
  5. Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company.

Loan size is determined based on your businesses situation and vary from one business to the next. If you were in business February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date. If you were not in business between February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020. If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum.

The loan covers compensation (salaries, commission, tips or equivalent), payment for leave (vacation, family, medical, or sick), allowance for dismissal or separation, health insurance benefits, including premiums, retirement benefits and state and/or local tax assessed on the compensation of employees. What is does not cover is employee/owner compensation over $100,000, employees who reside overseas, taxes imposed or withheld under chapters 21, 22 or 24 of the IRS code, or qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.

Allowable uses for the loan also include payments of interest on any mortgage obligation, rent, utilities, and interest on any other obligation that was in place prior to the covered period.

To find a local lender, start your search here.


For more information on the CARES Act and for FAQ please visit Small Business Finance’s website or check out Coronavirus Small Business Guide for resources on where to find information on applying for the SBA Disaster Loan.


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