Small Business Loans & Emergency Money Explained


Updated: May 4, 2020

Since its rollout last month, reviews for the CARES Act have been lackluster. Many small business owners find the application process unfair, confusing, and with too many strings attached. Banks have also had a hard time figuring out who they can give money to, and how much, and they continue to play catch up as best they can.

The program was initially capped at $350M and scheduled to run through June 30, 2020. However, due to incredibly high demand, on April 7, 2020, Treasury Secretary Steve Mnuchin asked congress for an additional $250B for the PPP. Still, businesses are being encouraged to apply as soon as possible, for the best chance of getting their share of the $350-$600M aid.


On Friday, March 27, 2020, the federal government passed the $2.3 trillion CARES Act (Coronavirus Aid, Relief, and Economic Security Act), which contains $349 billion in relief for small businesses.

There are two types of loans available that are regulated by the Small Business Administration (SBA): Economic Injury Disaster Loans (EIDL) and Paycheck Protection Loans (PPP).

The CARES Act Explained

Paycheck Protection Loans provide loan forgiveness for keeping employees. Any portion of that loan used to maintain payroll, keep workers on the books, or pay for rent, mortgage, and existing debt could be forgiven, if workers stay employed through the end of June.


Economic Injury Disaster Loans (EIDL) provide grants of up to $10,000 (stipulations include $1,000 per employee, up to 10 employees) to provide emergency funds for small businesses to cover immediate operating costs.

Dealing With Delays

There are issues that have caused major delays in the distribution of these loans. For example, banks are looking for more clarity about the loan regulations and fraud protection and why many institutions are taking loan applications only from their members. In addition, the SBA must review all loan applications, and they’re obviously dealing with an unpresented surge in volume.

Due to delays in issuing these loans, as of April 9th, most businesses had not received any funds.

According to eMarketer, 75% of small business owners polled on March 31, 2020, believed their businesses could withstand the economic conditions caused by COVID19 for only one month.

Can Small Businesses Expect More Emergency Money?

On Tuesday April 7th, the Trump administration asked Congress for an additional $250 billion in emergency economic aid for small U.S. businesses, which is currently being reviewed. As stated by Senate Small Business Committee Chairman, Marco Rubio, “There is a critical need to supplement the (loan) fund to ensure America’s more than 30 million small businesses will be able to access this critical lifeline”.

It’s important to check with your individual bank for their requirements, as each financial lender has set up their own process for loan applications. Many banks have set up online portals to receive applications and require applicants to submit multiple documents, including tax returns, proof of payroll, and more. For more information and guidance, visit the U.S. Small Business Administration’s site or contact your bank via phone or email.