Recently, the president signed the Paycheck Protection Program Flexibility Act of 2020 (HR 7010), since this law does not integrate any kind of additional funding to the Small Business Administration (SBA) Paycheck Protection Program (PPP) loan program. The payment protection program offers small businesses with funds in order to pay up to eight weeks of payroll costs plus advantages. Funds may be utilized to pay interest on rent, mortgages, and utilities.

Moreover, providers as well as small business owners involving in the Paycheck Protection Program to have greater flexibility in order to utilize the funds on non-payroll expenditures. As part of the amendment, borrowers are permitted to utilize 40% of the loan on the non-payroll expenditures, formerly as per the regulation borrowers were allowed to utilize only 25% of the total loan amount.

In April 2020, the Medical Group Management Association (MGMA) conducted a survey that says 76 percent of medical practice leaders have applied for a loan under the Paycheck Protection Program. This survey highlights the importance of small business paycheck protection program.

Without wasting too much time, let us understand the various aspects of this program:


If the funds of the loan utilized for utilities, rent, interest on mortgages, and payroll costs, then the loan will be totally forgiven. Owing to the expected high subscription, a minimum of 75% of the forgiven amount have utilized to payroll.  Some of the advantages of forgiveness are the loan payments period to delay by six months. Furthermore, no need for personal guarantees as well as collateral. There is no fee charged for small businesses by lenders as well as the government.

Forgiveness depends on the employer keeping or rapidly hiring employees to fill vacant positions and managing salary levels. If there is decreasing in full-time employee forgiveness will be decreased. Moreover, forgiveness will be declined if there is a declination in wages and salary.

Small Businesses Eligibility for Paycheck Protection Program

The Coronavirus Aid, Relief, and Economic Security (CARES) Act to offer small businesses with loans to maintain their staff on payroll established the Paycheck Protection Program. As part of this program, small businesses with an employee strength of 500 or lesser containing sole proprietorships, nonprofits, tribal concerns, self-employed individuals, independent contractors, and veterans organizations are eligible. Businesses with 500 plus employees are eligible in particular industries.

Key Points of the Paycheck Protection Program

  • Small businesses are qualified for this program
  • Either no requirement to make loan payments until your application of forgiveness processed, or you can make payments after completion of your covered period
  • There is no need for guarantees as well as collateral
  • No monetary charges have been imposed by the government as well as lenders
  • The loan may be forgiven and fundamentally converted into a non-taxable grant
  • Previously, the loan term possess 2 years maturity rate with 1% of interest rate, now the extension has been given which is of 5 years
  • About 24 weeks of expenses have been covered as part of paycheck protection program initiating from the loan approval date

When Small Businesses can Apply for Paycheck Protection Program

From 3rd April 2020, small businesses and sole proprietorships can apply for this program. Furthermore, from 10th April 2020, self-employed individuals and independent contractors can apply. As there is no funding cap for this program, small businesses are requested to apply as instantly as they can.

The application process for this program

You can apply via any current SBA 7(a) lender as well as via federally insured credit union, federally insured depository institution, and Farm Credit System institution, which engage in this program. Other authorized lenders will be there to process these loans once you are enrolled and approved in Paycheck Protection Program. One should communicate with their local lenders, whether they are part of this program or not. The same terms have been incorporated in each loan regardless of the lender or borrower.

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