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Paycheck Protection Forgivable Loan Program: SBA Issues Guidance and Loan Application

April 1, 2020

On Tuesday March 31st, the Small Business Administration (SBA) and the U.S. Department of Treasury issued additional guidance and information concerning the Paycheck Protection Program. The Paycheck Protection Program, a component of the CARES Act economic stimulus package that was signed into law on Friday March 27th, authorizes up to $349 billion in forgivable loans to small businesses to keep workers employed and sustain operations.

The additional guidance includes a borrower information sheet, the borrower application form, a lender information sheet and a program overview. (Please click on each of the above to access the appropriate information.)

Some highlights from the additional guidance:

  • Application Dates: Small businesses and sole proprietorship can apply beginning April 3rd, and independent contractors and self-employed individuals can apply beginning April 10th.
  • Application Urgency: While the application deadline is June 30th, the additional guidance encourages submitting applications “as quickly as you can because there is a funding cap and lenders need time to process your loan”.
  • How to Apply: Small businesses can apply through any SBA 7(a) lender, federally insured depository institution, federally insured credit union, and Farm Credit Service institution that is participating. A sample application can be found here.
  • Loan Forgiveness Eligibility: Requests for loan forgiveness should be submitted to the lender servicing the loan. The request will likely require that you: (1) verify the number of full-time equivalent employees and pay rates; (2) show that payment was made for eligible expenses; and (3) certify that the forgiveness amount was used to keep employees and pay eligible expenses. The lender will have sixty days to make a decision on forgiveness.
  • Loan Forgiveness (Payroll v. Non-Payroll Costs): The guidance indicates that, due to likely high subscription, it is anticipated that not more than 25% of the forgiven loan amount may be for non-payroll costs.
  • Loan Terms: The guidance confirms that loan terms will be the same for all borrowers, and will provide for the following:
    • Fixed interest rate of 0.5%;
    • Loan term of 2 years;
    • First payment deferred for 6 months (with interest accruing from Day 1);
    • No prepayment fees / penalties;
    • No collateral required;
    • No personal guaranty required; and
    • No borrower or lender fees owed to SBA.
  • $100,000 Annual Wage Cap Per Employee: The statute was unclear whether the business must exclude the excess of an employee’s payroll over $100,000 or whether you have to exclude the entire payroll for that employee. The new guidance clarifies that you only need to exclude the excess.
  • Condition For Loan Eligibility: The main condition for loan eligibility (besides meeting the small business definition) is that “the uncertainty of current economic conditions makes necessary the request for a CARES Loan to support the ongoing operations of the Applicant.” There is no further guidance on the meaning of this, or on how broad or narrow this may be interpreted.

The SBA and Department of Treasury will continue to issue additional guidance regarding the Paycheck Participation Program, and McGrath North will continue to track these developments as they arise.

If you have any questions about this alert, please contact the Financial Services and Incentives members of our COVID-19 Response Team indentified below.


Lauren Goodman
(402) 341-3070



Nick Niemann
(402) 633-1489



Matt Ottemann
(402) 633-9571


Contact information for the complete McGrath North’s COVID-19 Response Team can be found here.

For information regarding additional business-related concerns centered around COVID-19, please visit our COVID-19 Resource Guide here.