Apr 24, 2020 - 9:15am

Guide to Small Business COVID-19 Emergency Loans

< Combating the Coronavirus

UPDATE: The PPP application deadline has passed, but we are continuing to advocate for additional targeted relief for small businesses and industries hit hardest by the pandemic.


Click here to discover more resources and financial support programs

For help finding a PPP lender, please click here to visit SBA’s Lender Match tool. If you have received a PPP loan and are seeking guidance on forgiveness, please click here.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $660 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (PPP), the initiative provides 100% federally guaranteed loans to small businesses. 

Importantly, these PPP loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.

The administration’s PPP program guidelines can be found at www.treasury.gov, and the U.S. Small Business Administration's search tool to find a bank that offers PPP loans can be found at https://www.sba.gov/paycheckprotection/find.

The U.S. Chamber of Commerce has issued this step-by-step guide to help small businesses and self-employed individuals check eligibility and prepare to apply for a loan.

Stay informed!

Sign up to receive new and updated COVID-19 resources and guides as they are released.



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.

1. Am I eligible?

You are eligible to apply for a PPP loan if you are:

  • A small business with 500 or fewer employees
  • Defined as “small” by SBA Size Standard that allows for higher employee threshold or is revenue based; or
  • A small business with maximum tangible net worth up to $15 million and the average net income for full 2 fiscal years prior to application does not exceed $5 million
  • A 501(c)(3) with 500 or fewer employees
  • A  sole proprietor, independent contractor, or self-employed
  • 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-employee rule is applied on a per physical location basis
  • 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
  • Small businesses that have minority shareholders (private equity or venture capital) can still qualify if those stakeholders relinquish rights


2. What will lenders be looking for?

Borrowers will need to complete the Treasury Department's PPP Loan Application (PDF) 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 February 15, 2020 to December 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 SBA Disaster Loans into a PPP loan)

If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents (final requirements will be announced by the government) such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.

What lenders will NOT look for
  • 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. How much can I borrow?

Loans can be up to 2.5 x the borrower’s average monthly payroll costs, not to exceed $10 million.

  • Payments deferred for six months
  • 1.00% fixed interest rate
  • Loan is due in two years if issued before June 5th.
  • Loan is due in five years if issued after June 5th.
How do I calculate my average monthly payroll costs?

INCLUDED Payroll Costs
  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 for group health care and retirement benefits
    • payment of state or local tax assessed on the compensation of the employee
  2. For Sole Proprietors, Independent Contractors, and Self-Employed Individuals: The net income not more than $100,000 in one year.
EXCLUDED Payroll Costs
  • Compensation of an individual employee in excess of an annual salary of $100,000 (Note: employer contributions to healthcare and retirement benefits are not part of amount deemed in excess of $100,000 annual salary)
  • Employer portion of payroll taxes
  • Any compensation of an employee whose principal place of residence is outside of the United States
  • 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

Maximum loan = 2.5 x Average total monthly payroll costs incurred during 2019 or one year prior to the loan date

For businesses not operational in 2019:
2.5 x Average total monthly payroll costs incurred for January and February 2020

Maximum loan = 2.5 x Average monthly payroll for an 8-week period between February 15 or March 1, 2019 and June 30, 2019

  • Payments deferred for six months
  • 1.00% fixed interest rate
  • Loan is due in two years if issued prior to June 5th
  • Loan is due in five years if issued after June 5th. 

Borrowers can refinance a SBA Economic Injury Disaster Loan (EIDL) into a PPP loan

The EIDL amount is added to the payroll calculation but may not exceed the $10 million PPP loan.


4. Will this loan be forgiven?

Borrowers are eligible to have their loans forgiven.

How Much?

A borrower is eligible for loan forgiveness equal to the amount the borrower spent on the following items during the 8-week period (or 24-week period for loans issued after June 5th) beginning on the date of the origination of the loan:

  • 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 and utility payments
  • Interest on other debt obligations incurred before February 15, 2020

NOTE: Not more than 40% of the forgiven amount may be for non-payroll costs.

Free Forgiveness Calculator 

The Association of International Certified Professional Accountants (AICPA) developed a PPP forgiveness calculator that can be found here.

How could the forgiveness be reduced?

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

Reduction based on reduction in salaries


What if I bring back employees or restore wages?

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 December 31, 2020 the borrower eliminates the reduction in employees or reduction in wages.

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.

What's next?

For more guidance and resources for small businesses, visit www.uschamber.com/co

Download this Guide


Special thanks to Facebook, our partner on these guides and resources. Visit the Facebook Business Resources Hub for more resources and information.