SBA Coronavirus Loans (COVID-19)

Loan Uses

Loans can be used to “pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact.”

Eligible Businesses

Small businesses and private, nonprofit organizations in eligible all states and territories.

Loan Amount

Up to $2 million through SBA’s Economic Injury and Disaster Loans. Loans over $25,000 will require collateral.

What are SBA Coronavirus Loans?

To combat the novel coronavirus pandemic, the US government passed The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a historic $2 trillion stimulus bill to support individuals and small businesses.

The CARES Act created a new type of SBA loan, the Paycheck Protection Program, in addition to bolstering existing programs to support small businesses and private nonprofits through the economic downturn caused by the spread of the novel coronavirus.

Small businesses with fewer than 500 employees (with some exceptions for larger companies like hotels and restaurants) and private nonprofits can apply for SBA loans through 4 programs:

The Paycheck Protection Program (PPP)

PPP loans were established by the CARES Act to incentivize small businesses to maintain employees and lessen their economic burden through the COVID-19 outbreak. If used for approved purposes, a portion (or all) of the principal loan amount may be forgivable.

Congress has allocated $600 billion to fund PPP loans. Small businesses can qualify for loans up to $10 million, and many typical SBA loan requirements do not apply to PPP loans, making them more accessible to a larger number of businesses, including sole proprietors and independent contractors.

Who Is Eligible for a PPP Loan?

In order to qualify for a PPP loan, your business must certify that you have suffered economic losses due to the COVID-19 pandemic. The business or nonprofit must have been in operation as of February 15, 2020, and must have fewer than 500 employees.

PPP loans do not require collateral or guarantees, which makes them accessible to a larger number of small businesses. Because you don’t have to meet many of the other eligibility requirements for SBA loans (time in business, revenue, etc.), many newer businesses will qualify.

What Can You Use a PPP Loan for?

PPP loans can be used for “payroll support,” which includes items like:

  • Employee salaries
  • Paid sick or medical leave
  • Insurance premiums
  • Mortgage/rent and utility payments incurred during the covered period

How Much Can You Get with a PPP loan?

Loan amounts for PPP loans are 2.5 times your business’s average monthly payroll costs, up to $10 million. This includes the sum of payments like:

  • Salary, wage, commission, or similar compensation
  • Cash tips or equivalents
  • Vacation, parental, family, medical, or sick leave
  • Allowance for dismissal or separation
  • Group healthcare benefits, including insurance premiums
  • Retirement benefits
  • State or local taxes on the compensation

What Can Be Forgiven Under the Loan?

The total sum of payroll costs, mortgage interest payments, rent, and utilities incurred or paid by the borrower in the first 24 weeks of the loan term, beginning on the origination date. 60% of the loan must be used toward payroll for the loan to be eligible for forgiveness.

How Layoffs Affect Loan Forgiveness

Loan forgiveness is designed to incentivize businesses to keep on employees, hence why they’re called payroll protection plan loans. The amount forgiven will change if you have laid off employees or reduced individual pay beyond 25% for any employee between February 15, 2020, and June 30, 2020. Important to note: furloughed employees are included in this provision.

What If You’ve Already Laid Off Employees?

If you laid off employees due to coronavirus between February 15, 2020, and April 26, 2020, and you rehire them before June 30, 2020, those changes will not be counted.

Are You Taxed on the Forgiven Amount?

Any portion of the loan that is forgiven is excluded from taxable income.

Economic Injury and Disaster Loan (EIDL) and Loan Advance

EIDLs are the traditional disaster-relief SBA loans. They are similar to traditional SBA loans (like the SBA 7(a) loan) and follow a more traditional SBA loan process—that means higher requirements and a longer wait period before receiving funds.
Due to an overwhelming number of EIDL applications, the SBA has limited new applications to the agriculture industry.

What Are the Requirements for an EIDL?

Small businesses in agriculture may still apply for EIDLs. In addition to that limitation, borrowers must be able to demonstrate “substantial economic injury” caused by the COVID-19 pandemic. The SBA considers “substantial economic injury” to mean that a business is unable to meet its financial obligations or pay ordinary, essential operating expenses. Vitally, this economic hardship must be a direct result of the disaster—in this case, COVID-19. So if your business was struggling prior to coronavirus, you would be unlikely to qualify for an EIDL.

SBA Debt Relief

The SBA Debt Relief program provides financial support through the SBA 7(a) program.

How Does SBA Debt Relief Work?

The SBA will pay the principal and interest on new SBA 7(a) loans issued before September 25, 2020. For existing SBA 7(a) loans, the SBA will pay the principal and interest for a 6-month period. SBA Debt Relief is limited to the SBA 7(a) program and does not apply to PPP loans or EIDL.

Who Qualifies for SBA Debt Relief?

Borrowers who qualify for an SBA 7(a) loan or have an existing SBA 7(a) loan may qualify for SBA Debt Relief. This program maintains the existing loan requirements for SBA 7(a) loans, so it will be determined by time in business, revenue, credit score, and other factors, and may be highly competitive.

SBA Express Bridge Loans

The SBA is working hard to provide fast access to capital (not usually its strong suit) to ease the burden on small businesses. SBA Express Bridge Loans provide access to quicker SBA capital with less paperwork for eligible borrowers.

Who is Eligible for an SBA Express Bridge Loan?

Borrowers who have an existing relationship with an SBA Express Lender. Small businesses that have an urgent need for capital while waiting for a decision and funding on their EIDL may qualify for an SBA Express Disaster Bridge Loan.

How Much Can You Get with an SBA Express Bridge Loan?

Up to $25,000.

What if You Don’t Qualify or Can’t Wait for an SBA Coronavirus (COVID-19) Loan?

You can apply for other types of financing to give your business a financial safety net or take advantage of national, local, and corporate-sponsored relief resources.

Up to $25,000.


Lendio had an incredibly easy and straightforward application for the Paycheck Protection Program. It took less than 15 minutes. Devin walked me through it. It could not have been easier!

– Jonathan O.

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