This guide provides information on how the US government is providing support to businesses, self-employed individuals, and independent contractors affected by the COVID-19 pandemic, and how that aid can be accessed. Please contact the Small Business Administration (SBA) or your bank directly with any questions.
In March, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion package to support individuals, families, and businesses during the COVID-19 pandemic. This includes financial programs, such as the Paycheck Protection Program and Economic Injury Disaster Loans, to give small businesses and independent contractors an infusion of cash.
This guide highlights the options available to help businesses and individuals access capital.
Programs at a glance
Additionally, details are developing for the Small Business Debt Relief Program. We’ll update this guide as more information becomes available for all programs.
Note: On April 23, Congress authorized an additional $310 billion of PPP funding for small businesses, which will be disbursed on a first come, first served basis.
100% federally guaranteed loans to cover payroll and necessary business expenses
Eligible: Small businesses, non-profits, sole-proprietors, self-employed individuals, independent contractors (including gig economy workers) [See more details at sba.gov]
The Paycheck Protection Program (PPP) provides a blanket loan term of 2 years, with a maximum 1% interest rate. It requires no personal guarantee or collateral, and offers forgiveness for the loan amount used toward payroll and necessary business expenses. Further, it incentivizes small businesses to retain their employees—loan forgiveness is reduced for small businesses that do not retain their full-time staff, or reduce compensation by more than 25% for employees making less than $100,000.
Any loan amounts not forgiven continue with max terms of two years and at a 1% fixed interest rate. Read more about how to apply for loan forgiveness.
You may be eligible to borrow up to two months of your average monthly payroll costs from the past year, plus an additional 25% of that amount. The total loan amount should cover eight weeks of payroll expenses, and payments made toward debt obligations such as rent, utilities, and interest on mortgages and other debts established before February 15, 2020. This eight-week period applies to any time frame between February 15, 2020 and June 30, 2020.
PPP loans are deferred for six months. In addition, the SBA is waiving the usual requirement that you try to obtain some or all of the loan funds from other sources.
Your business or self-employment must:
Have been in operation on February 15, 2020
For small businesses: Employ fewer than 500 employees (or fewer than 1,500 employees for select types of businesses)
Be affected by COVID-19
In some cases, small businesses invested in or owned by venture capital or private equity firms would not be eligible for a PPP loan due to the SBA’s affiliation rule. Under this rule, businesses in some cases are “affiliated” with all of the other portfolio companies of the private equity firm or venture capital firm. For example, if you have 20 employees but are wholly owned by a private equity firm whose companies employ 1,000 people, you probably wouldn’t qualify.
The Treasury Department has issued interim rules and other guidance on affiliations and PPP loan eligibility. We will update this guide as new information is released.
All eligible individuals and small businesses can now apply for and receive loans through existing SBA lenders.
As part of your loan application, you must certify among other things that:
Current economic uncertainty makes the loan necessary to support your ongoing operations
The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments
You have not and will not receive another loan under this program
You can read a full list of requirements on this fact sheet provided by the US Department of Treasury.
The following lenders are currently accepting applications for PPP, and may have their own set of eligibility requirements in addition to the SBA’s.
Banks accepting PPP applications from non-customers:
The following lenders are accepting PPP applications from Stripe users who don’t currently have a banking relationship with them.
Banks accepting PPP applications from existing customers:
Credit unions and non-bank lenders accepting PPP applications from existing customers:
If you receive the loan and want to apply for loan forgiveness, you need to submit the following documents to your lender:
Payroll tax filings reported to the IRS and state income, payroll, and unemployment insurance filings to verify the number of full-time equivalent employees on payroll
Canceled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered mortgage obligations, lease obligations, and utility payments
Certification from a representative of the eligible recipient authorized to confirm that the documentation is presented true and correct and the amount for which forgiveness is requested was used to retain employees or make interest payments on mortgage, rent, or utility payments
The lender will make a decision regarding loan forgiveness within 60 days.
Note: As of April 16, the SBA has closed new Economic Injury Disaster Loan applications for the current round of funding. Applicants who have already submitted their applications will continue to be processed on a first come, first served basis.
A quick infusion of cash through loans and emergency grants
Eligible: Small businesses, non-profits, sole-proprietors, self-employed individuals, independent contractors (including gig economy workers)
You can apply for an Economic Injury Disaster Loan of up to $2 million with interest rates of 3.75% for small businesses and 2.75% for non-profits. These loans can be used to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid due to COVID-19.
The first month’s payments are deferred for a full year from the date the loan is issued. In addition, the SBA offers long-term repayment options to keep payments affordable, up to a maximum of 30 years.
The CARES Act also extended new provisions to Economic Injury Disaster Loans, allowing for more flexibility. For example, the SBA can evaluate such loan applications solely based on your credit score without requiring a tax return. Loans smaller than $200,000 can be approved without a personal guarantee. The SBA accepts a general security interest in business property and does not require real estate as collateral.
You can also apply for an Economic Injury Disaster Loan advance of up to $10,000. Funds will be available within three days of a successful application. The loan amount may be forgiven if you spend it on providing paid leave for your employees, maintaining payroll, increased costs due to disruptions in your supply chain, mortgage or lease payments, or prepaying some debt obligations.
Your business must:
Have been in operation by January 31, 2020
Employ fewer than 500 employees
Be directly affected by COVID-19
Have a credit history acceptable to the SBA
Demonstrate the ability to repay the SBA loan
Sole proprietors, independent contractors, tribunal businesses, cooperatives, and all non-profits including 501(c)(6)s are also eligible to apply.
There is no cost to apply and you can submit your application online. Review and approval timelines depend on volume, but the average is two to three weeks. Disbursement can take up to five days once approved
For additional information, you can contact the SBA disaster assistance customer service center by calling 1-800-659-2955 or emailing firstname.lastname@example.org.
Support for existing loan payments
Eligibility details forthcoming
The CARES Act will also provide immediate support to small businesses with non-disaster SBA loans. Under the new program, SBA will cover all payments on these loans, including 7(a), 504, and microloans, for six months. This will also apply to new borrowers who take out loans before September 27, 2020.
Details on how to apply for the Small Business Debt Relief Program have not yet been released. We will update this section as new information is released.
Loans with flexible terms and low interest rates
Eligible: Small businesses, as defined by the SBA
7(a) loans are small business loans of up to $5 million that are partially guaranteed by the SBA. However, it’s important that you are aware that you, the borrower, will remain 100% liable for the loan. The guarantee is to the lender, not you.
Interest rates can be as low as the market prime rate plus 2.25% and loan terms can go up to 25 years.
This loan program is a popular type of financing because you can use the capital for a wide range of business purposes, including short-term or long-term working capital, refinancing current business debt, or purchasing inventory or supplies. However, the process for a 7(a) loan can take weeks, or even months, so you should assess the urgency of your capital needs accordingly.
Your business must:
Be officially registered as for-profit
Meet the SBA’s definition of a small business
Be located and operate in the US
Additional requirements vary from lender to lender, but you should also have a good personal credit score, be able to submit a business plan with financial projections, and demonstrate profitability (the SBA will make exceptions for new businesses with strong credit).
Contact your bank, credit union or other lender to learn if they offer 7(a) loans and apply for one. Use this checklist to compile necessary documents for your application, including:
Business certificate or license
Loan application history
Income tax returns
Business overview and history
Once your loan package is complete, your lender will submit it to the SBA.
There are a number of resources to help your business adapt to the challenges of COVID-19, including:
Small business guidance and loan resources from the SBA
Coronavirus small business guide from the U.S. Chamber of Commerce
Government response to Coronavirus from USA.gov
COVID-19 small business resources from America’s Small Business Development Centers
We’ve seen optimistic results from businesses that have quickly added e-commerce capabilities. Learn how to accept your first online payment with Stripe and how to send one-time or recurring invoices.
You can also visit Stripe’s COVID-19 resources page for products, programs, and resources to help your business adapt.