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Small businesses that employ 500 employees or fewer are eligible for a 100 percent federally guaranteed loan through the Small Business Administration’s (SBA) Paycheck Protection Program. Businesses can borrow up to 250 percent of their average monthly payroll expenses, up to a total of $10 million. If they keep all of their employees, the entirety of the loan will be forgiven, effectively making the loans into grants.

How to Apply

Apply for the Paycheck Protection Program at any bank, credit union, or lender that participates in SBA’s lending programs. Use SBA’s online Lender Match tool, or call your bank, to find a local lender that is SBA approved.

Am I Eligible?

In addition to small businesses with fewer than 500 employees, other businesses eligible for the program include tribal businesses, 501(c)(3) veteran organizations, 501(c)(3) religious organizations, certain nonprofits, independently-owned franchises with under 500 employees, and certain classified restaurants, hotels, or businesses with locations that have 500 employees or fewer. Sole proprietors, independent contractors, gig economy workers, and self-employed individuals are also eligible for the program.

How Can I Use the Money?

The goal of the program is to help businesses keep employees on payroll. If you use the loan for payroll expenses (salaries, paid sick leave, group health insurance premiums), existing interest payments on mortgages, rent payments, leases, or utility bills, the loan will be forgiven in full.

“If you would like to use the Paycheck Protection Program for other business-related expenses, like inventory, you can, but that portion of the loan will not be forgiven,” reads the SBA guidelines.

How and When Is the Loan Forgiven?

Expenses eligible to be covered by the loan fall between the time period of Feb. 15, 2020, to June 30, 2020. Borrowers can choose an eight-week period between those dates they want the loan to cover. The loan is then forgiven at the end of the eight-week period.

“If you keep all of your employees, the entirety of the loan will be forgiven. If you still lay off employees, the forgiveness will be reduced by the percent decrease in the number of employees,” reads the SBA guidelines. “If your total payroll expenses on workers making less than $100,000 annually decreases by more than 25 percent, loan forgiveness will be reduced by the same amount. If you have already laid off some employees, you can still be forgiven for the full amount of your payroll cost if you rehire your employees by June 30, 2020.”

The deadline to apply for the Paycheck Protection Program is June 30, 2020. Find out more about the SBA’s program here, or apply for an SBA economic disaster loan here.