March 26, 2020

Stimulus Bill: SBA Loans/COVID-19/Phase 3 Legislation

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The Senate passed Phase 3 of the COVID-19 legislation, which is designed to get money in the hands of small business, American workers, and their families. While the legislation still must pass the House, and be signed by the President, we wanted to highlight one that could be valuable to your business (SBA loan provision).


Allows SBA to provide federally-backed loans from February 15, 2020 to June 30, 2020 to eligible businesses to cover operational costs, including payroll, rent, health benefits (and insurance premiums), etc.

No collateral, personal guarantees, or subsidy recoupment fees required (interest rate set at 2/15/20 level)

Eligible Businesses = 500 or fewer employees

2 Eligibility Criteria = Good-faith certification of need for the loan + agree to not fire workers

The maximum loan amount is a multiplier (2.5x) of average monthly payroll costs up to $10M cap

Businesses can use loans for almost all operating costs (with limits on individual comp above $100K, comp for non-U.S. workers, and “double dipping” for Families First paid leave wages already receiving credit)

Debt forgiveness up to the principal loan amount for certain costs incurred during the covered period

Forgivable Amounts = Payroll costs; interest payments on loan obligations rent; and utilities

Forgiveness amounts reduced for firing employees or cutting wages

Leeway for businesses with multiple “small” locations that provide accommodation and food services

Sole proprietors, independent contractors, and self-employed individuals are eligible

Some relief from SBA affiliation rules for certain businesses

Source: The Council of Insurance Agents & Brokers

For more important links, check our COVID-19 Resource Center.