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The CARES Act: What It Does For You and Your Company

Rich Collins & Adrian Canzoneri

                 The economic impact of COVID-19 has undoubtedly been felt throughout the country, and the world.  We are living in an unprecedented time of uncertainty, anxiety, and fear, both for ourselves and our families, but also for our livelihoods.  Small businesses are being decimated as a result of the mitigation measures being taken by federal and local governments.  In response, and in an effort to alleviate some of the economic turmoil, our government recently passed the CARES Act, which includes the Paycheck Protection Program, which we aim to break down in simple terms below to provide clear insight on how it affects you and your business.


                               In short, the Paycheck Protection Program authorizes up to nearly $350 billion in forgivable loans to small businesses to cover payroll costs, including benefits, during this COVID-19 pandemic.  These loans may also be used to pay interest on mortgages, rent and utilities.

Importantly, these loans will be fully forgiven so long as they are used for the above-referenced costs. In fact, at least 75% of the forgiven amounts must be used for payroll.  Also of importance, forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

In addition, loan payments will be deferred for 6 months, and no collateral or personal guarantees will be required.  Nor will lenders (or the government) charge qualifying small businesses any fees in connection with these loans.

These loans can be for up to two months of your average monthly payroll costs from the last year, plus an additional 25% of that amount – all subject to a $10 million cap.  Seasonal and new businesses will use different applicable time periods to calculate their loan amounts.

Eligibility and Application

Small businesses with 500 or fewer employees are eligible for the Paycheck Protection Program.  This includes nonprofits, veteran’s organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors.  In addition, business in certain industries can have more than 500 employees if they meet certain SBA employee-based size standards for those specific industries.

Starting April 3, 2020, small businesses and sole proprietorships can apply for these loans.  Independent contractors and self-employed individuals can apply for and receive these loans starting April 10, 2020.

Applications will be submitted through any existing SBA 7(a) lender or any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.  Other regulated lenders will be available once approved and enrolled in the program. Critically, all loans will have the same terms regardless of lender or borrower.  Participating lenders can be found at

We at Callahan & Blaine understand the difficult times that our clients and businesses in our community are facing.  We stand ready and prepared to assist you and your business navigate the difficult business and employment issues that you will undoubtedly face in the coming weeks, months and years.  Do not hesitate to contact us with any questions.  Callahan & Blaine is here to assist!