As part of the CARE ACT (The Coronavirus Aid, Relief, and Economic Security), Congress is providing $350 billion for a loan program to assist businesses and self-employed persons during the COVID-19 crisis.


Under the Keeping American Workers Paid and Employed Act, the Payroll Protection Program will use the SBA to program to provide loans that waive collateral and personal guarantee requirements. These loans are 100% federally guaranteed and may be eligible for forgiveness if borrowers either maintain their payrolls during the crisis or restore their payrolls afterward. These loans are for a maximum of 10 years at a rate not to exceed 4%.


To stress again, the program WAIVES collateral and personal guarantee requirements.


Who is Eligible?

You are eligible if you are:


  • Are a small business with < 500 employees
  • Are a small business which meets the SBA’s size standard
  • Are a 501(c)(3) with <500 employees
  • Are an individual who operates as a sole proprietor
  • Are an individual who operates as an independent contractor
  • Are a self-employed individual who regularly carries on any trade or business
  • Paid employees and related payroll taxes
  • Make a good-faith certification that the loan is necessary due to conditions caused by the COVID-19 virus and will use the funds to retain workers and pay payroll, rent, mortgages and utilities.

How Much Can I Borrow?

  • Loans can be made of up to 2.5x the borrowers monthly payroll costs, salaries, health care benefits and retirement plan contributions.
  • Payroll costs above $100,000 in compensation are not eligible.
  • Maximum loan amount is $10MM.


Loan Forgiveness:

Borrowers may have loans forgiven up to the amount the borrower spent on the below items within 8-weeks of the loan origination date.

  • Payroll costs
  • Group health insurance premiums and other healthcare costs
  • Salaries and/or commissions
  • Rent
  • Mortgage interest (excluding amounts pre-paid)
  • Utilities
  • Other business interest incurred prior to February 15, 2020

Forgiveness may be reduced proportionately by any reduction in employees and any reduction in pay greater than 25%.  To encourage employers to rehire people previously laid off due to the pandemic, borrowers that rehire will not be penalized.

Loan forgiveness will be tax free.

For more information and updates visit Schrum Private Wealth Management via, or call us at 888-963-0363