CARES Act: Small Business Loans

Education & Training with FoxBerry Accounting Services

There are 2 loan programs through the CARES Act that directly help small business owners.  There is the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Loan.  Both loans are designed to help employers maintain employees on their payroll and there are no fees involved in applying.  The EIDL loan can be applied for even if you are a sole proprietor with or without employees. There are distinct differences in the two, which are summarized below.


The EIDL loan can be applied for directly. The EIDL is funded through $10 billion of the CARES Act, with a covered period of February 15th through December 31, 2020.


Who’s eligible: 

  • Businesses with under 500 employees
  • Sole Proprietors
  • Independent Contractors
  • Cooperatives
  • ESOPs
  • Tribal small business
  • Non-Profit

For the EIDL loan you must hae been in business as of January 31st, 2020 and the emergency advance is only available through December 31st, 2020.


You can apply directly through the SBA  here .  When applying you can request an emergency advance of $10,000.  The SBA is asked to provide the advance within 3 days of receiving your application.


Funds can be used for:

  • Payroll
  • Employee sick leave due to COVID-19
  • Increased materials cost as a result of COVID-19
  • Comercial Rent/Mortgage
  • Repaying Obligations 

The advance does not have to be paid back even if the loan is not approved.  Best practice - keep track of your spending to ensure you can substantiate that the funds were used appropriately.

If you apply for the EILD loan, you can still apply for the Paycheck Protection Loan, however the EILD must be rolled into the Paycheck Protection Program as you cannot have both loans.

The Paycheck Protection Program was added to the US Treasury website this morning.  There is an information sheet Here  and an application link Here. The Paycheck Protection Program is being funded from $369 Billion from the CARES Act.


  •  In Business February 15th, 2020
  •  Had employees with payroll and taxes (or)
  •  Had independent contractors reported on 1099-Misc
  •  Fewer than 500 employees
  • 501(c)(3)
  • Sole Proprietor
  • Independent Contractors
  • Tribal Business
  • Veteran's organization

Special eligibility for hospitality and franchises

Loan maximum is the lessor of $10,000,000 or 2.5X average monthly “payroll costs”


Payroll Costs Include: 

  • Salaries, wages, commissions
  • Payment of cash tips
  • Vacation/sick leave
  • Group health insurance premiums
  • Retirement plan benefits (employer contribution)
  • State and local payroll taxes


There is loan forgiveness with the Paycheck Protection Program as long as the loan is used for allowable uses.  Interest rate is capped at 4% and the max term is 10 years (of unforgiven amounts).  Loan payments are deferred 6 months up to 1 year and there is no pre-payment penalty.


These are both very good options for busiesses during this crisis to help keep the American people employed.  There is talk that there may be more bills passes to ensure that very busienss that is in need will have the opportunity to get assistance through one of these programs.  I will be posting updates to the CARES Act on FoxBerry Accounting Services Facebook page.

Comments (1)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Jeanne Bourquin, EA very helpful report about Cares Act small business loans.

Apr 01, 2020 03:41 PM