What type of small businesses qualify for a SBA Loan?


  • A small business is with fewer than 500 employees
  • A small business that otherwise meets the SBA’s size standard
  • A 501(c)(3) with fewer than 500 employees
  • An individual who operates as a sole proprietor
  • An individual who operates as an independent contractor
  • An individual who is self-employed who regularly carries on any trade or business
  • A Tribal business concern that meets the SBA size standard
  • A 501(c)(19) Veterans Organization that meets the SBA size standard




Are there any special rules that could potentially make me eligible for a SBA Loan? Is the "500 employee" rule on a per location basis or total among multiple locations?


  1. If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis.
  2. 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.

*The 500-employee threshold includes all employees: full-time, part-time, and any other working status.




What does the borrow need to demonstrate to the prospective lender?


In evaluating eligibility, lenders are directed to consider whether the borrower was in operation before February 15, 2020 and had employees for whom they paid salaries and payroll taxes or retained paid independent contractors.

The list is as follows:

  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 Feb. 15, 2020 to Dec. 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 emergency loans made between Jan. 31, 2020 and the date this loan program becomes available into a new loan)




What if I am a sole proprietor, independent contractor or self-employed?


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 if I was unable to attain credit elsewhere in the past?


The lender will not look nor will they know that you were unable to obtain credit in the past. And given this loan is backed 100% by the federal governement the criteria for this loan differ from a standard loan.




Is a personal guarantee needed?


No, it is not required by the lender.




Which type of SBA loan is best for me?


The first question you must be asking yourself is "What is the maximum amount I can borrow based on my business profile"? Which loan best fits my business needs and provides the most immediate assistance?

Below are the types of loans the SBA is offering and the the programs' loan amount parameters;

  • 7(a) Program: offers loan amounts up to $5,000,000 and is an all-inclusive loan program deployed by lending partners for eligible small businesses within the U.S. States and its territories. The uses of proceeds include: working capital; expansion/renovation; new construction; purchase of land or buildings; purchase of equipment, fixtures; lease-hold improvements; refinancing debt for compelling reasons; seasonal line of credit; inventory; or starting a business.
  • Express Loan Program: provides loans up to $350,000 for no more than 7 years with an option to revolve. There is a turnaround time of 36 hours for approval or denial of a completed application. The uses of proceeds are the same as the standard 7(a) loan.
  • Community Advantage Loan Pilot Program; allows mission-based lenders to assist small businesses in underserved markets with a maximum loan size of $250,000. The uses of proceeds are the same as the standard 7(a) loan.
  • 504 Loan Program; is designed to foster economic development and job creation and/or retention. The eligible use of proceeds is limited to the acquisition or eligible refinance of fixed assets.
  • Micro Loan Program; involves making loans through nonprofit lending organizations to underserved markets. Authorized use of loan proceeds includes working capital, supplies, machinery & equipment, and fixtures (does not include real estate). The maximum loan amount is $50,000 with the average loan size of $14,000.




What is the maximum amount one can receive? How is the loan amount calculated?


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




How do I calculate my payroll costs?


Sum of included payroll costs subtracted (-) from your excluded payroll costs, equaling payroll costs.




What is defined as included payroll costs? Is it different for Sole Proprietors, Independent Contractors and Self-Employed Individuals?


Included Payroll Costs are defined by the following:

  • 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 required for the provisions of group health care benefits, including insurance premiums
  • Payment of any retirement benefit
  • Payment of state or local tax assessed on the compensation of the employee




What is defined as included payroll costs for sole proprietors, independent contractors and self employed Individuals?


The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period.




What is defined as excluded payroll costs?


  • Compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the period February 15, to June 30, 2020
  • Payroll taxes, railroad retirement taxes, and income 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




What if I am a Seasonal or Non-seasonal employer?


A seasonal employer can receive the max loan of: 2.5 x Average total monthly payments for payroll costs for the 12-week period beginning February 15, 2019 or March 1, 2019 (decided by the loan recipient) and ending June 30, 2019. A nonseasonal employer can receive the max loan of: 2.5 x Average total monthly payroll costs incurred during the 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 of 2020




What criteria must be met by a borrower in order for the borrower to be eligible for loan forgiveness? How much does the borrower need to spend during the 8 week period 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 on a leasing agreement
  • Payments on utilities (electricity, gas, water, transportation, telephone, or internet)
  • For borrowers with tipped employees, additional wages paid to those employees
** The loan forgiveness cannot exceed the principal loan amount.




How can my loan 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 or more than 25% of the wages paid to employee(s).





Frequently Asked questions

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