Paycheck Protection Program in CARES Act goes live April 3

Help is on the way for small businesses struggling to meet payroll and other expenses.

The Paycheck Protection Program piece of the CARES Act coronavirus relief bill signed into law March 27 goes live Friday, April 3, when the U.S. Small Business Administration begins taking applications for help from the $350 billion fund included in the act.

The program provides a loan up to $10 million for payroll and other expenses to qualified small businesses and a certain number of nonprofits.

According to information contained in the act, loans can be used on the following for an eight-week period after the loan is made:

  • Payroll costs, including benefits
  • Interest on mortgage obligations, incurred before Feb. 15, 2020
  • Rent, under lease agreements in force before Feb. 15, 2020
  • Utilities, for which service began before Feb. 15, 2020.

Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for six months.

“The government is trying to encourage businesses to stay open and keep paying employees,” said Steve Boggs, managing partner of Novi-based CPA firm Grant, Millman & Johnson. “They’re trying to minimize employees having to go on unemployment and encourage businesses to sustain employees.”

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The program is available to small businesses (generally defined as those having not more than 500 employees). Program eligibility includes sole-proprietors, independent contractors and other self-employed individuals.

Boggs said companies should jump right on what he says is a very straightforward application process.

“You have to be impacted by the lockdown and the coronavirus (to be eligible),” Boggs said. “There isn’t any really strong ‘you’ve got to prove things’ component. We strongly encourage businesses to take advantage.”

Under the program, many traditional SBA requirements are waived, including personal guarantees, collateral requirements, “credit elsewhere” and most fees commonly associated with SBA financing. The program includes the ability to have loans forgiven if the borrower meets certain requirements.

“Pretty much most businesses will qualify for some type of assistance,” Boggs said. “It will allow forgiveness of a portion of the loan for expenses incurred for payroll, rent, utilities and for interest.”

One downside, said Boggs, who conceded it isn’t much of a downside, is that these loans may affect other loans containing certain covenants. However, he added, the business’ banker will know those covenants and help businesses avoid problems.

“There really are not any pitfalls in the process,” Boggs said. “You’re putting in an application for a loan, you’re going to get a loan. There really appears to be no downside to doing this.”

Businesses can apply through any existing SBA lender, though the recommendation is to check with your current financial institution first.

The application for borrower is available at

A fact sheet about the program is available at–Fact-Sheet.pdf

For more details, go to