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The CARES Act Paycheck Protection Program Amendments

In response to the spread of the 2019 Novel Coronavirus (COVID-19), President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law on March 27, 2020. The CARES Act is the third phase in Congress’ response to COVID-19 following the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 and the Families First Coronavirus Response Act (FFCRA). In addition to providing emergency relief aimed at individuals and hospitals, the roughly $2 trillion CARES Act provides emergency relief to small businesses. This Advisor focuses on the Paycheck Protection Program administered by the Small Business Administration (SBA) and the Department of the Treasury (Treasury), which will undoubtedly be instrumental in ensuring the survival of small businesses during the COVID-19 crisis.

On June 5, 2020, the Paycheck Protection Program was amended by the Paycheck Protection Program Flexibility Act of 2020.

Paycheck Protection Program

The Paycheck Protection Program (the PPP) was established under the CARES Act in order to provide small employers with an incentive to keep workers on their payroll during the COVID-19 crisis. Under the PPP, which is an extension of the SBA Section 7(a) loan program, qualifying small businesses are eligible to borrow up to $10 million, in order to maintain their workforce during the covered period for the loan. All or a portion of the loan may be forgiven if the borrower follows the SBA guidelines. The Treasury has issued FAQs and the application form on its website. Information on the program is also available on the SBA website.


In order to qualify for a loan, the business must have 500 or fewer employees (full-time, part-time, or other basis) or if higher, the maximum number specified for the type of business in the SBA’s table of small business size standards. Accommodation and food service businesses that have 500 or fewer employees for each business location are eligible for a loan. Eligibility extends to non-profits, veterans organizations, tribal concerns, sole proprietorships, self-employed individuals, and independent contractors. In order to qualify, the business must have been in operation on or before February 15, 2020, and must have paid salaries and payroll taxes or paid independent contractors as documented by the issuance of Forms 1099. The guidance indicates that an individual with self-employment income is eligible to apply.

  • Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans.
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans.
  • Application Deadline: Originally June 30, 2020, extended to December 31, 2020, under the PPPFA (however, the SBA subsequently announced that it will not accept applications after June 30, 2020. On July 4, 2020, the President signed a law extending the application deadline allowing businesses to apply for the loan until August 8, 2020).