Summary of the Small Business Loans included in the CARES Act

Summary of the Small Business Loans included in the CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act signed on March 27 provided about $2 trillion in federal dollars in response to the COVID-19 pandemic. About $350 billion of these funds are directed to provide loans to small businesses, with opportunity for loan recipients to receive forgiveness and not have to repay the amount borrowed.

This article provides a summary of the small business loan provisions included in the CARES Act and potential next steps for aging services providers.

The Paycheck Protection Program

The Paycheck Protection Program is the primary small business loan program in the CARES Act. Among eligible entities are 501(c)(3) organizations with fewer than 500 employees. In other word, not for profit aging services providers are able to receive these funds, provided they have 500 or fewer employees. This threshold includes all full- and part-time employees and those with other statuses (e.g., per diem/TAR). Not-for-profit entities seeking loans through this program are subject to SBA’s affiliation standards, which prospective borrowers should review in detail.

Small entities are allowed to borrow up to 250% of their average monthly payroll costs (averaging payroll costs for each month in the year preceding the loan date). If an adult day services provider, for example, had an average monthly payroll of $100,000, it could access up to $250,000 in loans through this program.  MORE