Banks Scramble as Small Businesses Seek Paycheck Protection Loans

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​Small businesses started applying for payroll-protection loans on April 3, but many banks were still sorting out the details and setting up their portals.

Under the Coronavirus Aid, Relief and Economic Security (CARES) Act, the U.S. Small Business Administration (SBA) will manage payroll-protection loans for qualifying organizations with fewer than 500 employees.

Lenders were authorized to start processing loan applications for small businesses and sole proprietors on April 3 and independent contractors and self-employed workers on April 10. But many banks said they weren't ready on April 3, according to Yahoo! Finance.

U.S. Treasury Secretary Steven Mnuchin had announced late on April 2 that an interim rule is available, which provides guidance for the program.

We've rounded up articles and resources from SHRM Online on the program.

SHRM Resource Spotlight
Coronavirus and COVID-19

What Is the Paycheck Protection Program?

Payroll-protection loans can be applied to expenses incurred in an eight-week period between Feb. 15 and June 30 and may be used for payroll costs, health care, rent, utilities and other business debts. Businesses are generally eligible if they employ fewer than 500 employees. However, businesses that employ 500 or more workers may participate if they meet the SBA's size standards for their industry. Independent contractors and self-employed people are also eligible, as well as independently owned franchises that are SBA approved and employ less than 500 workers. Additionally, each store location could be eligible.

Loan applicants may apply until June 30, but they should get started as soon as possible because there is a funding cap. The total amount authorized is $349 billion. Small businesses can apply through established SBA 7(a) lenders or other participating financial institutions, and additional regulated lenders will soon be approved to participate in the program. "You should consult with your local lender as to whether it is participating in the program," the SBA recommended. 

(SHRM Online)

Banks Face Hurdles

Banks had only a few days to set up a system allowing covered businesses to apply for loans and be approved on the same day. Many banks emailed their customers on April 2 to say they would not be ready by the deadline. "We feel it would be inappropriate to launch without the necessary information that our customers need to provide in addition to what the bank needs to process these specific loan applications," Fifth Third Bank said. On April 6, Fifth Third said it was ready to start the process for current customers. “We expect to begin servicing noncustomers later in April,” the bank said on its website. Bank of America was the first large bank to open its online portal but it initially limited applications to customers with a "pre-existing business lending and business deposit relationship with Bank of America, as of February 15, 2020." Bank of America, however, later opened its application process to all small business customers.


Loans for Mid-Size Businesses

Businesses with 500 to 10,000 employees are not eligible for payroll-protection loans, but they can apply for relief under the CARES Act's Emergency Relief and Taxpayer Protections provisions. To qualify, the business must make a "good-faith certification" that it will comply with certain requirements in the CARES Act.

(Fisher Phillips)

Gig Workers, Self-Employed Eligible for Unemployment Benefits

An important component of the CARES Act significantly expands unemployment insurance benefits for U.S. workers impacted by the coronavirus outbreak. The legislation increases the amount of weekly unemployment assistance workers receive; extends how long they can receive it; and expands eligibility to nontraditional workers such as independent contractors, gig workers and the self-employed.

(SHRM Online)

[Looking for state-specific information? See State & Local Updates]

CARES Act Changes Health, Retirement and Student Loan Benefits

In addition to providing loans and grants to businesses to deter layoffs, the CARES Act provides one-time payments to individuals; strengthens unemployment insurance; and provides additional health care funding. But this sweeping measure also alters the rules for employee benefits, affecting health coverage, retirement savings and student loan assistance. Here's an explanation of the most significant changes.

(SHRM Online)

Paid-Leave Mandate

Lawmakers also rolled out the Families First Coronavirus Response Act (FFCRA), H.R. 6201, which provides paid emergency family leave in limited circumstances, as well as paid sick leave for people affected by COVID-19, the respiratory disease caused by the coronavirus. In general, the emergency paid-leave provisions in the legislation apply to businesses with fewer than 500 employees, but there may be some exceptions available for small businesses and companies that employ health care workers.

(SHRM Online)


Provide input as the DOL develops further guidance on the FFCRA. Participate online at through April 10—an extended deadline.


Visit SHRM's resource page on coronavirus and COVID-19.



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