The $349 billion federal Paycheck Protection Program opens Friday. Here’s what you need to know.

Small businesses like restaurants, caterers and shops across the United States are reeling from losses suffered during the coronavirus pandemic, with millions of workers laid off, but some relief is on the way.

Congress just passed a $2 trillion coronavirus aid package to help. President Donald Trump signed it into law last Friday.


Many of the provisions in the aid package are designed to help employers keep paying their workers — to keep employees on the job, whether they’re working or not, said Jennifer Berman, CEO of MZQ Consulting.

The $349 billion Paycheck Protection Program, which opens Friday, offers federally backed loans of up to $10 million to employers with fewer than 500 workers. Larger hotel and restaurant chains may still be eligible, as long as each location has fewer than 500 employees.


The United States has more than 30 million small businesses, according to the U.S. Small Business Administration. The loan program is open to nonprofits, veterans organizations, sole proprietorships, the self-employed and independent contractors.

An employer must certify that the current economic uncertainty makes the loan necessary to support the ongoing operations of the business, Berman said.

The program provides funding for up to eight weeks of payroll, mortgage and rent payments as well as utilities to businesses that keep workers on during the crisis. It also can apply to companies that rehire recently laid-off workers, Berman said. Companies can borrow up to 2.5 times their monthly payroll.

“It’s a good short-term liquidity solution, but it may not be sufficient for the duration of the shutdown we’re facing,” said Carolyn Z. Alford, a partner and head of the financial services industry at King & Spalding law firm in Atlanta. Still, “this is a really attractive program, the best that we’ve seen that’s targeted to small business. It’s straightforward on its terms and should be able to be executed quickly.”

Paperwork for the loans is available on the website for the Small Business Administration. Businesses can go to a participating SBA lender, bank or credit union, apply for a loan, and be approved as soon as the same day.

“If you have a relationship with a bank or an SBIC lender, that would be helpful,” Alford said. “If you can go to people who’ve already vetted you, it’s quicker.”

The loans will become available starting Friday and be offered through June 30. Corporations and sole proprietors can apply beginning Friday. Independent contractors can apply starting April 10.

“We’re expecting a tremendous volume of applications,” said Chris Earle, an administrative vice president and SBA sales manager for M&T Bank. He said the bank is moving resources from other departments to help.


Applications can’t be submitted until lenders receive final processing guidance from the SBA, which is expected by Friday, Earle said.

Businesses must submit the last four IRS quarterly payroll tax reports, the last 12 months of payroll reports and documentation of health insurance premiums and retirement plan funding paid by the company, Earle said.

And they must agree to continue to employ those people, Alford said.

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Even so, the application process has been streamlined compared with a typical SBA loan to make it easier to apply, with no collateral, personal guarantees or fees required of the borrower, said Scott Foley, chair of Baltimore-based Shapiro Sher’s banking and financial services group.

Lenders, too, are being offered special incentives to take on the business, he said. For instance, if approved loans need to be modified, lenders would not need to classify them as troubled debt.

All loan payments will be deferred for six months. But the SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used to pay wages, rent, mortgage interest or utilities. That’s a unique aspect of a program of its size, Alford said.


At least 75% of the forgiven amount must have been used for payroll.

“It’s going to keep the employees and employers connected, so when we get the pandemic under control, the economic impact will be lessened,” Foley said.

Minority and women-owned businesses may be eligible for special consideration, Berman said.

“It’s going to help the employers take care of their employees,” Berman said. But, she warned, “the funding could go quickly, so people should be prepared.”