What’s in the Coronavirus Relief Package for Small Businesses

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UPDATE (4/24/2020): Though the initial $350 billion in funds that were allocated to help small businesses as a part of the Paycheck Protection Program (PPP) in the CARES Act were exhausted, there is additional help on the way.

On Friday, April 24 a new $484 billion piece of legislation was signed into law to, in part, restock funds for the programs created to support small businesses during the coronavirus pandemic.

According to reports from the Associated Press, approximately $383 billion of that funding will go to aid small businesses. There will be $251 billion earmarked for replenishing the PPP, which helps businesses of 500 employees or less meet short-term payroll obligations. An additional $60 billion was set aside specifically for small community banks, credit unions and financial institutions in underbanked areas in urban and rural settings.

Yet another $60 billion will go towards replenishing funds for the Small Business Administration’s disaster relief loan program (EIDL loans), with $10 billion of that set aside for grants within the program.

If you have a small business that has not yet taken advantage of the PPP, money expert Clark Howard’s advice is to continue to apply. You can start the application process to get into the queue for approval through a local bank or credit union.

Something else to keep in mind with this round of funding is that are some alternative funding options aside from the big bank lenders. Fintech companies such as Kabbage, Intuit and PayPal are some of the lenders now approved to process PPP loan applications. Check with your local SBA office for a complete list of potential lenders.

For the latest information on additional funding for the PPP, please visit the Small Business Administration’s website for COVID-19 relief options.

If you are worried about the financial health of your small business or small businesses in your community, the good news is that some help is on the way.

The coronavirus pandemic has put an economic strain on large and small businesses alike in recent weeks. And many are rightfully concerned about the ability for the small businesses in their community to cover expenses and pay employees amid increased business restrictions and forced closures.

Some of those concerns may be quelled, at least temporarily, by the provisions for small businesses included in the recently enacted Coronavirus Aid, Relief and Economic Security (CARES) Act.


Approximately $350 billion of the more than $2.2 trillion allocated for the CARES Act will be available as potentially forgivable loans for small businesses that commit to keeping workers on the payroll during the COVID-19 outbreak.

Money expert Clark Howard says this unprecedented move may create an unusual work situation for small businesses, but is a good step for the economy:

“This is a weird one because there are going to be cases where there is no work for your workers to do, but you’ll be paying them not to work and the Feds will be rewarding you for that.”

What’s in the Coronavirus Relief Package for Small Businesses

First, it’s important to note that for the purposes of this package the federal government is defining “small business” as a business with 500 or fewer employees. To qualify for the programs listed below, your business is going to need to meet the standards set forth by the U.S. Small Business Administration.

Businesses that qualify will be eligible for the following, according to new guidance issued by the SBA:

Paycheck Protection Program

This program will allow for small businesses to keep paying their employees even if the operation is shuttered due to the coronavirus pandemic.

This is done by issuing SBA loans to eligible businesses that come with the federal government’s promise to both defer payments and then forgive the loan as long as conditions are met.

“This is designed to try to encourage small businesses to bring people back on payroll who you may have laid off, or to keep people on payroll who you were likely to lay off,” Clark explained.

We breakdown everything you need to know about these loans later in the article. You can start your application for these funds beginning April 3, 2020.

Disaster Loans and Loan Advances

Economic Injury Disaster Loans can provide working capital in short order for whatever a company’s needs may be.

The SBA is making these working capital loans of up to $2 million available to cover lost revenue due to the coronavirus emergency.

According to the SBA, businesses can apply for an Economic Injury Disaster Loan advance of up to $10,000. This money will be in the hands of businesses within three days of completing an application, and does not have to be repaid. You can start the application process for one of these loans here.


“It’s like a grant for your small business,” Clark said.

Clark recently filled one of these loans out online, and it took him nine minutes to get from beginning to end.

Existing Loan Relief

If small businesses already have SBA 7(a) loans in place, the government is taking measures to help ensure the coronavirus doesn’t let a company don’t go upside down on them.

Per the SBA, the “SBA Debt Relief” program will create a financial reprieve by covering the cost of the principal and interest on current 7(a) loans for six months.

Express Bridge Loans

If you already have a working relationship with the SBA, your business could receive access to loans of up to $25,000 while waiting to hear back on an application for the Economic Injury Disaster Loan.

This Express Bridge Loan Pilot Program was put in place to put money in the hands of businesses as quickly as possible. Once the Economic Injury Disaster Loan application is processed, the money borrowed on this bridge loan will be covered, at least in part, by the amount of money issued to the business in the disaster loan.

Why These Measures Are Important

These measures are an effort to keep workers on the payroll for impacted small businesses and out of the unemployment system, which saw an astonishing 3.28 million claims in the first reporting period after the pandemic hit the United State workforce.

By infusing this money into small businesses, the government hopes to keep them financially stable until the virus’ infection rate has peaked and the U.S. economy can return to more stable condition.

This impacts the economy in a couple of ways.

First and foremost, allowing small businesses to have payroll expenses forgiven through this process helps keep workers employed and off the unemployment radar.

But as Clark also explains, allowing small businesses to use these funds to pay for things like rent and mortgages helps other sectors of the economy in the process:


“A provision was put in [to allow paying for] mortgages and rent because a lot of commercial lenders are worried that they’re going to be demolished by businesses not paying on their mortgages. Same for commercial real estate. Landlords are worried that when their business tenants don’t pay rent, they’re going to go bust. That money was enlightened capitalist self-interest to try to save other parts of the capitalist system by funneling money through small businesses.”

How to Take Advantage of the Small Business Relief Programs

Economic Injury Disaster Loans

Since the Economic Injury Disaster Loan Program is offered through the U.S. Small Business Administration (SBA), you’ll be applying for a SBA loan. This can be accomplished through the SBA or through an approved lender.

“If you have a bank or credit union you are using as a business, you’ll want to contact them and see if they are an active participant,” Clark advises.

If using your local lender is not an option, you can apply directly for the Economic Injury Disaster Loans with the SBA on its website.

Paycheck Protection Program

The Paycheck Protection Program, which will be available for application beginning April 3, 2020, is supposed to have a more streamlined application process that could extend beyond typical SBA lenders.

Here’s what the SBA says about applying for it:

“You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.”

Many banks and credit unions have closed their lobbies due to virus concerns, so if you go that route you may need to call ahead to set up a time for an appointment or a virtual consultation.

Clark cautions that while the government has designed this to be a quick-funding process for small businesses, there likely will be some hiccups in the rushed process:

“At first it is going to be frustrating. It’s going to be like the worst traffic jam you’ve gotten into, but then banks and credit unions will get into a flow and they’ll learn how to do it. They’ll train employees how to do, they’ll process these applications and then they’ll fund. How quickly? Nobody knows.”

What Small Businesses Need to Know About the Paycheck Protection Program

Eligibility Requirements

According to a guide for this legislation published by the U.S. Chamber of Commerce, the following are general guidelines for businesses eligible for access to the $350 billion dollars allocated to these federally guaranteed loans:

  • Business or non-profit with fewer than 500 employees (this includes full-time, part-time and otherwise classified employees)
  • Individuals who operate as a sole proprietorship, independent contractor or self-employed who regularly carry a trade or business

If you’re unsure if you qualify, there is an online size standards tool to help you find out.

How Much Can I Borrow?

These loans can be for up to $10 million, but the amount that can be forgiven is measured by the eight weeks of prior average payroll plus an additional 25% of that amount, per the SBA.


Payments are deferred for six months on these loans, and small businesses could have up to 100% of the loan amount forgiven by the government if the money goes toward certain expenses.

What Expenses Are Forgiven With This Loan?

If you use the money to maintain a workforce, the SBA will forgive the amount of the loan that is utilized in covering the first eight weeks of payroll.

Rent or mortgage payments on commercial property, mortgage interest and utilities also are 100% forgivable for this period.

If you use the money for something other than these things, you’ll have to pay for the loan. But it’s at an extremely low interest rate (0.5%) and payments are delayed for six months. The loan must be paid back in full within two years.

Clark cautions that small business owners will want to take extreme care in documenting all of the expenses paid with this loan to ensure you get the maximum amount forgiven.

After all, this is a new program for the government. It likely will be overrun with requests.

“I can predict the future already. There’s going to be bureaucratic snafus with that to the max. So having thorough records and full documentation will be key,” Clark warns.

What if I Was Laid Off by a Small Business?

If you are an employee laid off by a small business, you may want to contact that employer to inquire about their plans to utilize these provisions before moving forward with an unemployment claim.

The government is incenting these companies to keep workers on payroll, so you may very well have a chance to get your job back.

If that doesn’t work out, there are special unemployment provisions in the CARES Act that allow for $600 per week in unemployment on top of what you may qualify for with your state. Read the details on that here.

In the meantime, you may also want to consult Team Clark’s guide to preparing your finances for a layoff.


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