Prepared by the U.S. CHAMBER OF COMMERCE
Small Business Guide and Checklist
Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
The administration has released initial guidelines; they are available at www.treasury.gov. The U.S. Chamber of Commerce has issued this guide to help small businesses and self-
Small businesses and sole proprietors can begin applying on April 3. Independent contractors and self-
Here are the questions you may be asking—and what you need to know.
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.
While the program is open until June 30, 2020, the government is advising borrowers to apply as soon as possible given the loan cap on the program.
1 Am I ELIGIBLE?
You are eligible if you are:
• A small business with fewer than 500 employees
• A small business that otherwise meets the SBA’s size standard
• A 501(c)(3) with fewer than 500 employees
• An individual who operates as a sole proprietor
• An individual who operates as an independent contractor
• An individual who is self-
• A Tribal business concern that meets the SBA size standard
• A 501(c)(19) Veterans Organization that meets the SBA size standard
In addition, some special rules may make you eligible:
• If you are in the accommodation and food services sector (NAICS 72), the 500-
• If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply
REMEMBER: The 500-
Borrowers will need to complete the Paycheck Protection Loan Application (which is available HERE) and payroll documentation
Lenders will also ask you for a good faith certification that:
1. The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations
2. The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments
3. Borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for here
4. From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here (Note: There is an opportunity to fold emergency loans made between Jan. 31, 2020 and the date this loan program becomes available into a new loan)
If you are an independent contractor, sole proprietor, or self-
(final requirements will be announced by the government) such as payroll tax filings, Forms 1099-
What lenders will
• That the borrower sought and was unable to obtain credit elsewhere.
• A personal guarantee is not required for the loan.
• No collateral is required for the loan.
3 BHoOwRmRucOh cWan?I
Loans can be up to 2.5 x the borrower’s average monthly payroll costs, not to exceed $10 million.
How do I calculate my average monthly
INCLUDED Payroll Cost:
Maximum loan =
2.5 x Average total monthly payroll costs incurred during the year prior to the loan date
For businesses not operational in 2019:
2.5 x Average total monthly payroll costs incurred for
1. For Employers: The sum of payments of any compensation with respect to employees that is a:
• salary, wage, commission, or similar compensation;
• payment of cash tip or equivalent;
• payment for vacation, parental, family, medical, or sick leave
• allowance for dismissal or separation
• payment required for the provisions of group health care benefits, including insurance premiums
• payment of any retirement benefit
• payment of state or local tax assessed on the compensation of the employee
2. For Sole Proprietors, Independent Contractors, and Self-
$100,000 in one year, as pro-
EXCLUDED Payroll Cost:
1. Compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the period February 15, to June 30, 2020
2. Payroll taxes, railroad retirement taxes, and income taxes
3. Any compensation of an employee whose principal place of residence is outside of the United States
4. Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116– 5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act
January and February 2020
Maximum loan =
2.5 x Average total monthly payments for payroll costs for the 12-
June 30, 2019
• 0.50% fixed interest rate
• Loan is due in two years
Will this loan be FORGIVEN?
Borrowers are eligible to have their loans forgiven.
A borrower is eligible for loan forgiveness equal to the amount the borrower spent on the following items during the 8-
• Payroll costs (using the same definition of payroll costs used to determine loan eligibility)
• Interest on the mortgage obligation incurred in the ordinary course of business
• Rent on a leasing agreement
• Payments on utilities (electricity, gas, water, transportation, telephone, or internet)
• For borrowers with tipped employees, additional wages paid to those employees
NOTE: The government is now advising that because of high participation, it is anticipated that not more than 25% of the forgiven amount may be for non-
The amount of loan forgiveness calculated above is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Specifically:
Reduction based on reduction of number of employees
Look out for more information about eligible lenders and additional guidance from the
For more guidance and resources for small businesses, visit uschamber.com/co
Private lenders will ultimately issue PPP loans based on guidance from the SBA and Treasury Department. More
information, including from lenders, should be available once the guidance is issued.
Average Number of Full-
Average number of FTEs per month from February 15, 2019 to June 30, 2019
Average number of FTEs per month from January 1, 2020 to February 29, 2020
For Seasonal Employers:
Average number of FTEs per month from February 15, 2019 to June 30, 2019
Reduction based on reduction in salaries
For any employee who did not earn during any pay period in 2019 wages at an annualized rate more than $100,000, the amount of any reduction in wages that is greater than 25% compared to their most recent full quarter.
Reductions in employment or wages that occur between February 15, 2020 and April 26, 2020 (as compared to February 15, 2020) shall not reduce the amount of loan forgiveness IF by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages.
The Small Business Owner’s Guide to the CARES Act
To keep up to date on when these programs become available, please follow us on social media: Facebook.com/AlabamaSBDC Do not contact the SBA District Office. There will be ample press releases when the program is activated.
Struggling to get started? The following questions might help point you in the right direction. Do you need:
Capital to cover the cost of retaining employees? Then the Paycheck Protection Program might be right for you.
A quick infusion of a smaller amount of cash to cover you right now? You might want to look into an Emergency Economic Injury Grant.
To ease your fears about keeping up with payments on your current or potential SBA loan? The Small Business Debt Relief Program could help.
Just some quality, free counseling to help you navigate this uncertain economic time? The resource partners might be your best bet.
Already know what resources you’re looking for? The table of contents can direct you to more information about the program or assistance product you need.
Paycheck Protection Program (PPP) Loans
The program would provide cash-
FREQUENTLY ASKED QUESTIONS
QUESTION: What types of businesses and entities are eligible for a PPP loan?
Answer: Businesses and entities must have been in operation on February 15, 2020.
Small business concerns, as well as any business concern, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or Tribal business concern described in section 31(b)(2)(C) that has fewer than 500 employees, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher.
Individuals who operate a sole proprietorship or as an independent contractor and eligible self-
Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a NAICS code beginning with 72, for which the affiliation rules are waived.
Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company.
QUESTION: What are affiliation rules?
Answer: Affiliation rules become important when SBA is deciding whether a business’s affiliations
preclude them from being considered “small.” Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Please see this resource for more on these rules and how they can impact your business’s eligibility.
QUESTION: What types of non-
Answer: In general, 501(c)(3) and 501(c)(19) non-
profit SBA size standards are based on revenue, not employee number. You can check here.
QUESTION: How is the loan size determined?
Answer: Depending on your business’s situation, the loan size will be calculated in different ways
(see below). The maximum loan size is always $10 million.
If you were in business February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date.
If you were not in business between February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum.
QUESTION: What costs are eligible for payroll?
Answer: Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
Payment for vacation, parental, family, medical, or sick leave
Allowance for dismissal or separation
Payment required for the provisions of group health care benefits, including insurance premiums
Payment of any retirement benefit
Payment of State or local tax assessed on the compensation of employees
QUESTION: What costs are not eligible for payroll?
Answer: Employee/owner compensation over $100,000
Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
Compensation of employees whose principal place of residence is outside of the U.S.
Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act
QUESTION: What are allowable uses of loan proceeds?
Answer: Payroll costs (as noted above)
Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
Employee salaries, commissions, or similar compensations (see exclusions above)
Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation)
Rent (including rent under a lease agreement)
Interest on any other debt obligations that were incurred before the covered period
QUESTION: What are the loan term, interest rate, and fees?
Answer: For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is
4 percent, zero loan fees, zero prepayment fee (SBA will establish application fees caps for lenders that charge).
QUESTION: How is the forgiveness amount calculated?
Answer: Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred
during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over
Payroll costs plus any payment of interest on any covered mortgage obligation (not including any prepayment or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation plus and any covered utility payment.
QUESTION: How do I get forgiveness on my PPP loan?
Answer: You must apply through your lender for forgiveness on your loan. In this application, you
Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings.
Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.
Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.
QUESTION: What happens after the forgiveness period?
Answer: Any loan amounts not forgiven are carried forward as an ongoing loan with max terms of 10
years, at a maximum interest rate of 4%. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again.
QUESTION: Can I get more than one PPP loan?
Answer: No, an entity is limited to one PPP loan. Each loan will be registered under a Taxpayer
Identification Number at SBA to prevent multiple loans to the same entity.
QUESTION: Where should I go to get a PPP loan from?
Answer: All current SBA 7(a) lenders (see more about 7(a) here) are eligible lenders for PPP. The
Department of Treasury will also be in charge of authorizing new lenders, including non-
QUESTION: How does the PPP loan coordinate with SBA’s existing loans?
Answer: Borrowers may apply for PPP loans and other SBA financial assistance, including Economic
Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). However, you cannot use your PPP loan for the same purpose as your other SBA loan(s). For example, if you use your PPP to cover payroll for the 8-
QUESTION: How does the PPP loan work with the temporary Emergency Economic Injury Grants and the Small Business Debt Relief program?
Answer: Emergency Economic Injury Grant and Economic Injury Disaster Loan (EIDL) recipients
and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan as long as there is no duplication in the uses of funds. Refer to those sections for more information.
This program will provide immediate relief to small businesses with non-
FREQUENTLY ASKED QUESTIONS
QUESTION: Which SBA loans are eligible for debt relief under this program?
Answer: 7(a) loans not made under the Paycheck Protection Program (PPP), 504 loans, and microloans.
Disaster loans are not eligible (see p. 7 for more information on these).
QUESTION: How does debt relief under this program work with a PPP loan?
Answer: Borrowers may separately apply for and take out a PPP loan, but debt relief under this program will
not apply to a PPP loan.
QUESTION: How do I know if I’m eligible for a 7(a), 504, or microloan?
Answer: In general, businesses must meet size standards, be based in the U.S., be able to repay, and have a
sound business purpose. To check whether your business is considered small, you will need your business’s 6-
QUESTION: What is a 7(a) loan and how do I apply?
Answer: 7(a) loans are an affordable loan product of up to $5 million for borrowers who lack credit
elsewhere and need access to versatile financing, providing short-
QUESTION: What is a 504 loan and how do I apply?
Answer: The 504 Loan Program provides loans of up to $5.5 million to approved small businesses with long-
QUESTION: What is a microloan and how do I apply?
Answer: The Microloan Program provides loans up to $50,000 to help small businesses and certain not-
profit childcare centers to start up and expand. The average microloan is about $13,000. These loans are delivered through mission-
QUESTION: I am unfamiliar with SBA loans, can anyone help me apply?
Answer: Yes, SBA resource partners are available to help guide you through the loan application process. You
can find your nearest Small Business Development Center (SBDC) or Women’s Business Center here.
These grants provide an emergency advance of up to $10,000 to small businesses and private non-
FREQUENTLY ASKED QUESTIONS
QUESTION: Are businesses and private non-
Answer: Yes, those suffering substantial economic injury in all 50 states, DC, and the territories may
apply for an EIDL.
QUESTION: What is an EIDL and what is it used for?
Answer: EIDLs are lower interest loans of up to $2 million, with principal and interest deferment at
the Administrator’s discretion, that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.
QUESTION: Who is eligible for an EIDL?
Answer: Those eligible are the following with 500 or fewer employees:
Sole proprietorships, with or without employees
Cooperatives and employee owned businesses
Tribal small businesses
Small business concerns and small agricultural cooperatives that meet the applicable size standard for SBA are also eligible, as well as most private non-
QUESTION: My private non-
Answer: Yes, if you are a private non-
exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, or if you can provide satisfactory evidence from the State that the non-
However, a recipient that is principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting, or primarily engaged in political or lobbying activities is not eligible to receive an EIDL. If you are uncertain whether you qualify, please consult with legal counsel to determine whether your organization meets program criteria.
QUESTION: Who is eligible for an Emergency Economic Injury Grant?
Answer Those eligible for an EIDL and who have been in operation since January 31, 2020, when
the public health crisis was announced.
QUESTION: How long are Emergency Economic Injury Grants available?
Answer: January 31, 2020 – December 31, 2020. The grants are backdated to January 31, 2020 to
allow those who have already applied for EIDLs to be eligible to also receive a grant.
QUESTION: If I get an EIDL and/or an Emergency Economic Injury Grant, can I get a PPP loan?
Answer: Whether you’ve already received an EIDL unrelated to COVID-
19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.
QUESTION: How do I know if my business is a small business?
Answer: Please visit https://www.sba.gov/size-
small business size standards. You will need the 6-
QUESTION: How do I apply for an economic injury disaster loan?
Answer: To apply for an EIDL online, please visit https://disasterloan.sba.gov/ela/. Your SBA District
Office is an important resource when applying for SBA assistance.
QUESTION: I am unfamiliar with the EIDL process, can anyone help me apply?
Answer: Yes, SBA resource partners are available to help guide you through the EIDL application
process. You can find the nearest Small Business Development Center (SBDC), Women’s Business Center, or SCORE mentorship chapter at https://www.sba.gov/local-
If you, like many small business owners, need a business counselor to help guide you through this uncertain time, you can turn to your local Small Business Development Center (SBDC), Women’s Business Center (WBC), or SCORE mentorship chapter. These resource partners, and the associations that represent them, will receive additional funds to expand their reach and better support small business owners with counseling and up-
In addition, the Minority Business Development Agency’s Business Centers (MBDCs), which cater to minority business enterprises of all sizes, will also receive funding to hire staff and provide programming to help their clients respond to COVID-
FREQUENTLY ASKED QUESTIONS
QUESTION: Do I have to pay for counseling and training through SBDCs, WBCs, and MBDCs?
Answer: Counseling is free and training is low-
Congress provided will help keep this possible. Mentorship through SCORE is always free.
QUESTION: What is a SBDC?
Answer: SBDCs are a national network of nearly 1,000 centers that are located at leading universities,
colleges, state economic development agencies and private partners. They provide counseling and training to new and existing businesses. Each state has a lead center that coordinates services specifically for that state, which you can find by clicking the link above. To find out more about SBDCs, visit https://americassbdc.org/about-
QUESTION: What is a WBC; is it only for women?
Answer: WBCs are a national network of more than 100 centers that offer one-
training, networking, workshops, technical assistance and mentoring to entrepreneurs on numerous business development topics. In addition to women, WBCs are mandated to serve the needs of underserved entrepreneurs, including low-
QUESTION: What is SCORE?
Answer SCORE provides free, confidential business advice through our volunteer network of 10,000+
business experts. You can meet with a mentor online. Find out more here.
QUESTION: Who do MBDCs serve?
Answer: MBDCs are a good option for minority-
Hispanic, Asian American/Pacific Islander, and American Indian business owners), especially those seeking to penetrate new markets — domestic & global — and grow in size and scale.
If you are a government contractor, there are a number of ways that Congress has provided relief and protection for your business. Agencies will be able to modify terms and conditions of a contract and to reimburse contractors at a billing rate of up to 40 hours per week of any paid leave, including sick leave. The contractors eligible are those whose employees or subcontractors cannot perform work on site and cannot telework due to federal facilities closing because of COVID-
If you need additional assistance, please reach out to your local Small Business Development Center, Women’s Business Center, SCORE chapter, or SBA District Office. You should also work with your agency’s contracting officer, as well as the agency’s Office of Small and Disadvantaged Business Utilization (OSDBU).
This provision would provide a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-
Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship are eligible for the credit. For employers with 100 or fewer full-
Delay of Payment of Employer Payroll Taxes
This provision would allow taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability.
Businesses Applying for Federal Aid Can Receive Certificates of Existence through SOS Office
FOR IMMEDIATE RELEASE
Monday, April 6, 2020 -
In order to be eligible for this federal aid, some corporations and businesses may be required to prove their existence as part of their application. Certificates of Existence can be obtained through visiting the Alabama Secretary of State’s website.
For immediate processing, business owners can apply online to receive their Certificate of Existence electronically. The non-
If you are completing the request for a Certificate of Existence by paper, you may access the application here. Once completed, the application, along with the $25 filing fee, should be mailed to the Secretary of State’s Business Services Division (P.O. Box 5616, Montgomery, Alabama 36103) in order to be processed.
Please note that those who apply online will not receive a mailed copy. Rather, a copy can be downloaded online and then printed out.
Certificates of Existence are only available for businesses who have previously filed for formation with the Secretary of State’s Office. If you have not yet filed, you are still able to do so through visiting our website.
Please be reminded that this documentation may also be required to process loan applications by lending institutions, banks, credit unions, farm credit, or public accountants.
For questions or concerns, please contact our Business Services Division at (334) 242-