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SBA Paycheck Protection Program will help small business keep paying workers

Small businesses across Alabama can benefit from a U.S. Small Business Administration program that is designed to help these enterprises keep their workers on the payroll during the coronavirus crisis.

The Paycheck Protection Program provides a direct incentive for small businesses to maintain their workforces by getting cash into their hands quickly in the form of an ultra-low interest loan.

Significantly, the SBA will forgive the loan if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

“The Paycheck Protection Program is a completely unique solution to this unprecedented situation in which we all find ourselves,” said Thomas Todt, district director of the SBA’s Alabama District Office in Birmingham.

The Paycheck Protection Program — funded with $349 billion through the federal coronavirus relief package known as the CARES Act — will be available through June 30. The program is expected activated today.

Eddie F. Postell, manager of the Office of Small Business Advocacy at the Alabama Department of Commerce, said small businesses across the state need to act promptly to secure assistance through the program.

“You have to remember that these financial assistance programs are not just for affected Alabama businesses — they are for all U.S. businesses,” Postell said. “Therefore, it’s critically important that our affected small businesses begin to apply for assistance through these programs as soon as the SBA opens the application process.”

Loans under the Paycheck Protection Program are separate from other SBA loans, including assistance made under its Economic Injury Disaster Loan program for COVID-19.

“We are encouraging all of Alabama’s nearly 400,000 small businesses to take full advantage of the financial assistance and other programs being offered, as none of them have been unaffected by this massive combination of health care and economic crises,” Todt said.

“The purpose behind SBA Disaster Loans, including the Economic Injury Disaster Loans and Advances, is to preserve and restore the fabric of communities as quickly as possible. In this crisis, we have come to learn just how interlocking and interdependent we are,” he added.

For businesses that qualify, Todt said the SBA’s Express Bridge Loan (EBL) program can provide relatively quick access to needed funds.


The Paycheck Protection Program is open to any small business with fewer than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.

Businesses with more than 500 employees in certain industries may be eligible for the program if they meet the SBA’s size standards for those industries.

Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the individual location employs fewer than 500 workers. This means each store location could be eligible.


Businesses can apply to the Paycheck Protection Program through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.

Businesses should consult with their lender about whether it is participating in the program.


A loan under the Paycheck Protection Program will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities. (Because the participation rate in the program is likely to be high, at least 75 percent of the forgiven amount must go to cover payroll.)

Other important features:

  • Loan payments will also be deferred for six months.
  • No collateral or personal guarantees are required.
  • Neither the government nor lenders will charge small businesses any fees.
  • Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
  • This loan has a maturity of 2 years and an interest rate of 1 percent.
  • The Paycheck Protection Program will be available retroactive from Feb. 15, 2020.

Business owners can download a sample form to see the information that will be requested during the application process.


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