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The CARES Act Loans – What Small Businesses Need to Know

What you should know about receiving relief during the pandemic.


On March 17, President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law that contained $376 billion in relief for American workers and small businesses. These funds were allocated to several new temporary programs to help businesses during the COVID-19 pandemic. To help you understand how and where you can get relief for your small business, consult this guide below.


Paycheck Protection Program (PPP)

This program is designed to allow small businesses to keep workers on payroll during the pandemic. The program is for any small business with fewer than 500 employees, including sole proprietors, independent contractors, the self-employed, and non-profit organizations.

Loans can be in the amount of up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount – up to a $10 million cap. The loan can be used for payroll costs, the continuation of group healthcare benefits or insurance premiums, mortgage interest, rent, and utilities.

The amount that you receive in PPP will be forgiven as long as:

  • You use the money only for the above-allowed expenses and use 75% of the loan amount for payroll costs
  • You maintain your full-time employee headcount until June 30
  • You do not decrease wages or salaries more than 25% for any employee that made less than $100,000 annualized in 2019

The PPP is live and can be accessed here.


Economic Injury Disaster Loan Emergency Advance (EIDL)

Typically, EIDLs are for businesses that need financial help because of a natural disaster. However, as of early March, eligibility for these loans has been extended to businesses that have been impacted by COVID-19.


The following may be eligible for the EIDL:

  • Businesses with fewer than 500 employees
  • Sole proprietorships, with or without employees
  • Independent contractors
  • Cooperatives with fewer than 500 employees
  • Nonprofit organizations

You can receive a $10,000 cash advance which does not need to be repaid under any circumstance. It may be used to keep employees on payroll, to pay for sick leave, business interruptions, utilities, increased costs due to supply chain disruptions, and other payment obligations that can’t be met due to revenue loss.


Keep in mind you are allowed to apply for both programs, although there are restrictions. 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, but you can use it for payroll in March or for different workers in April.


From the professionals at Abbate Insurance, we hope that you and your team members stay safe and are able to access support from the government. When looking to protect your business, be sure to talk to our team about how insurance policies can help during this time.

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