Key Highlights

-Proposed not yet final SBA to get cash to small/medium size businesses to cover immediate losses from COVID-19 mandated closures

  • Program likely to be administered by current lenders called SBA Partners (all banks, credit unions, etc.)

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On March 24, the SBA “Payment Protection Program” was introduced in the US Senate. The purpose of this proposed program is to provide emergency loan relief to small/medium-sized businesses (no more than 500 employees in one location) to cover the immediate losses sustained by mandated closures due to the COVID-19 outbreak and spread. Note that what is summarized here may be amended as this proposal makes its way toward approval.

As currently proposed, the SBA “Payment Protection Plan” is envisioned to offset costs due to closures and staffing depletions caused by restrictions relating to the coronavirus. Loans could be utilized to pay for…

  • Payroll costs
  • Salaries, commissions or similar compensation
  • Rents and/or mortgages for office space
  • Costs related to maintenance of group health care benefits
  • Utilities costs
  • Bills to trade vendors
  • Sick leave costs
  • Insurance premium costs and other debt obligations

Proposed qualifications for loan eligibility include…

  • Small/medium businesses with no more than 500 employees and/or independent contractors as reported on IRS form 1099 as of 2/15/20 in one location, non-profits and veterans organizations
  • Sole proprietors and self-employed individuals operating within a formal legal entity are expressly included as long as they submit payroll tax forms to the IRS
  • Hospitality and food services are expressly included
  • Non-profit organizations eligible for Medicaid are expressly excluded because such organizations are already covered under other SBA emergency loan programs
  • Borrowers MUST sign a good faith certification

Proposed administrative procedures include…

  • Current proposed loan period is 2/15/20 – 6/30/20
  • Borrower must have been operational with employees/independent contractors as of 2/15/20
  • Interest on loans is to be determined by the US Treasury Department
  • Administration of loan program to be handled by all banks, credit unions, etc. who are current SBA Partners
  • Loan repayment MAY BE forgiven IF the borrower retains/rehires employees/independent contractors and MUST retain a certain percentage of full-time employees IF full-time employees retained 2/15/20
  • Loans granted are NOT dependent upon repayment ability
  • Collateral/personal guarantee requirements for this loan may be waived BUT the borrower MUST sign a good-faith certification.
  • Maturity of loan is 10 years with no prepayment penalties
  • If the borrower defaults on the loan, SBA will cover the outstanding finances back to the SBA Partner granting the loan
  • All fees and interest MAY BE waived.


Remember, the SBA “Paycheck Protection Program” as summarized is merely proposed – – – it has NOT been finally approved. However, this proposal is WELL WORTH YOUR ATTENTION OVER TIME as it makes its way towards final approval as MANY OF YOU AND YOUR BUSINESSES May Be Eligible For This Emergency Program.


Thanks to authors Elizabeth H. Evans and John ReVeal for K&L Gates, a fully integrated global law firm located across 5 continents for source data and material.

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