COVID-19: Small Business & Nonprofit Information

SBA Loan Information

Loans will soon become available for small businesses and nonprofit organizations with 500 employees or less under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The CARES Act allocated $350 billion in funding through the Paycheck Protection Program (PPP) to help keep workers employed during this uncertain time of the Covid-19 pandemic. 

The loans can be used for operational costs including:

  • payroll expenses
  • health benefits, paid, sick, medical/family leave and insurance premiums
  • mortgage interest
  • rent payments
  • interest on debt incurred before the covered period

In general, the amount of the loan businesses can apply for is 2.5 times the average total monthly payroll costs incurred in the one year period before the loan is made, or $10 million – whichever is smaller.

Organizations may qualify to have a portion of their loan forgiven if they meet certain requirements which include maintaining an average monthly number of full-time equivalent employees that is not less than the average number during the one-year period before the loan was made. The loan forgiveness provision is the reason that many small businesses will choose to apply for the PPP loan over the SBA’s EIDL loan which assists with disaster relief. Keep in mind that even if you meet the loan forgiveness requirements, only the amount of the loan used for the allowed operational costs during the 8 weeks following the date the loan was made will be forgiven. The remainder will be treated as a loan.

Once the PPP loan applications become available, they will be processed on a first come first served basis, so you will need to move quickly. 

Here is what you can do now to get ready:

1.    Start to assemble information you will need to have ready to apply for the loan.

  • This will include monthly salary, wage, etc.; paid leave; severance payments; payment for group health benefits, including insurance premiums; retirement benefits; state and local payroll taxes; and compensation to sole proprietors or independent contractors (including commission-based compensation). We suggest compiling this information as far back as January, 2019.
  • Exclusions are individual employee compensation above $100,000 per year, prorated for the covered period; certain federal taxes; and compensation to employees whose principal place of residence is outside of the US. 

2.    Talk with your professional advisors (accountant/auditor; lawyer) to make sure this loan is right for your organization.

3.    Check with your bank to see if they will be handling the PPP loans. Banks will typically serve their existing clients before serving new ones. 

4.    Review your governance process (Articles and Bylaws) with respect to loans. 

The following are links to some of the resources you may find particularly helpful:
FAQs About Paycheck Protection Program SBA 7(a)Loans for Nonprofits
Sample Loan and Forgiveness Calculations
List of SBA Approved Lenders  (The list begins on page 36)


The Small Business Administration has posted a sample application and instructions on the SBA Paycheck Protection Program. According to the directions provided, applications cannot be submitted to banks until Friday, April 3.

You can find the sample application and loan directions here.

Other Major Points

  • The interest rate on these loans is .5% (previously had been stated as up to 4%).
  • The deferral period on these loans is 6 months and interest accrues during the deferral period (previously stated as not less than 6 months and up to 12 months).
  • The term of the loan (maturity date) is two years from the date of loan origination (previously stated as up to 10 years. 
  • The calculation of payroll costs is still 250% (2.5 times) your average monthly payroll costs.

    We believe that the SBA will be issuing further guidance. 

PPP Loan Preparation Materials

Given that funds are limited and expected to go fast, there is no guarantee that all businesses that apply will receive funding.  However, in an effort to expedite the application process (when full guidance becomes available) and processing, it is recommended to start preparing the following to the extent this is something you’re interested in applying for:      

  • SBA Form 1919 or corresponding SBA Form 912, if applicable
  • Articles of Incorporation/Organization of each borrowing entity
  • By Laws/Operating Agreement of each borrowing entity
  • All owners Driver’s Licenses
  • Payroll Expense verification documents to include:
    • IRS Form 941 and 944 (see attached)
    • Payroll Summary Report with corresponding bank statement
    • If a Payroll Summary Report is not available, Employee Pay Stubs as of February 15, 2020 (or corresponding period) with corresponding bank statement, and,
    • Breakdown of payroll benefits (vacation, allowance for dismissal, group healthcare benefits, retirement benefits, etc.)
  • 1099s (if Independent Contractor)
  • Certification that all employees live within the United States. If any do not, provide a detailed list with corresponding salaries of all employees outside the United States
  • Trailing twelve-month profit and loss statement (as of the date of application) for all applicants
  • Most recent Mortgage Statement or Rent Statement (Lease)
  • Most recent Utility Bills (Electric, Gas, Telephone, Internet, Water, etc.)