SBA Loan Programs

The CARES Act was passed in March to provide economic relief to workers and businesses nationwide, including critical funding for  Small Business Administration (SBA) programs and enhanced unemployment benefits. 

The SBA programs and the funding to state unemployment benefits programs are the two primary ways that the government is offering support to small businesses, their employees, and to self-employed people.


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This article is a part of the Financial Survival Handbook [link forthcoming], which is one section of the COVID-19 HANDBOOKS FOR THE CREATIVE SECTOR.  All this month, we will post new daily articles on Financial Survival and other refreshed articles from the Handbook.

What Is the Small Business Administration (SBA)?

The Small Business Administration (SBA) is an autonomous U.S. government agency established in 1953 to bolster and promote the economy in general by providing assistance to small businesses. One of the largest functions of the SBA is the provision of counseling to aid individuals trying to start and grow businesses.


On the agency’s website, there is a wealth of tools to assist small businesses including a small business planner and additional training programs. Localized SBA offices throughout the United States and associated territories offer in-person, one-on-one counseling services that include business plan writing instruction, and assistance with small business loans.

The Small Business Administration offers substantial educational information with a specific focus on assisting small business start-up and growth. In addition to educational events offered on the SBA’s website, local offices also provide more personalized special events for small business owners.


According to its website, the SBA provides the following services to small businesses:

  • Access to capital: The agency offers a variety of financial resources for small businesses including microlending, or small loans that are issued to those who wouldn’t otherwise qualify for financing.
  • Entrepreneurial development: This is driven by counseling services and low-cost training provided by the SBA. This is available to both new and existing business owners.
  • Contracting: The SBA reserves 23% in government contracting dollars for small businesses with the help of other federal departments and agencies.
  • Advocacy: The agency acts as an advocate by reviewing legislation and protecting the interests of small business owners across the country.

The agency has helped small businesses across the country get access to loans, loan guarantees, contracts, and other services.

Payroll Protection Program (PPP)

The Paycheck Protection Program (PPP) is a loan designed to provide a direct incentive for small businesses and non-profit organizations to keep their workers on the payroll. The trick of the PPP is that is turns into a grant in whole or in part if certain criteria are met, and does not need to be repaid.

NOTE: This program is currently suspended (as of August 8, 2020). The Heroes Act or other stimulus legislation is likely to reopen the program but the timeline is unknown.


The SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.  Eligible expenses include payroll costs, interest on mortgages, rent, and utilities (at least 75% of the forgiven amount must have been used for payroll). 

  • PPP loans have an interest rate of 1%.

  • Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years.

  • Loan payments will be deferred for borrowers who apply for loan forgiveness until SBA remits the borrower’s loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness (either 8 weeks or 24 weeks).

  • No collateral or personal guarantees are required.

  • Neither the government nor lenders will charge small businesses any fees.

Economic Injury Disaster Loans (EIDL)

Originally created for businesses in disaster zones, like hurricanes in the Southeast or fires out West, Economic Injury Disaster Loans (EIDL) are SBA emergency relief funds of immediate cash assistance to meet financial obligations and operating expenses that could have been met had the disaster not occurred. 

The EIDL program is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to coronavirus (COVID-19).

The program offers 30-year repayment loans at 3.75% interest for businesses and 2.75% for nonprofits. Repayment is deferred 1 year (interest still accrues.) There are no penalties or fees for early repayment.

You can receive these loans and still apply for and receive the PPP loans, but the EIDL will be taken into consideration in the amount forgiven of the PPP.

Express Bridge Loan

Seeing as EIDL (and other SBA loan) processing times can be a hardship on an already stressed business, the SBA Express Bridge Loan Pilot Program was made available in 2017 especially for any small business who is experiencing immediate hardship from a disaster. It allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly. 

These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan

If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.

Debt Relief

If you had SBA-related microloans previous to COVID-19, the SBA may provide you with debt relief, in the form of payments and/or deferment. 

The SBA will pay up to 6 months of principal, interest, and any associated fees that borrowers owe. This relief is not available for Paycheck Protection Program loans or Economic Injury Disaster loans. 

Borrowers do not need to apply for this assistance and the SBA has notified the lenders that it will pay these borrower loan payments.

Also, for current SBA Serviced Disaster (Home and Business) Loans: If your disaster loan was in “regular servicing” status on March 1, 2020, the SBA is providing automatic deferments through December 31, 2020.

It’s unlikely that any of these apply to your business, but if you want to learn more, refer to the information on the SBA site, or from your lender.

Other SBA and CARES Act Resources

Photo by Mike Petrucci on Unsplash

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