Small Business Administration (SBA) Loans Under the CARES Act

SBA 7(a) Loans under the CARES Act-Paycheck Protection Program (PPP)

The purpose is to incentivize small businesses to maintain their workforce and rehire workers who were laid-off due to COVID-19 interruptions.

View the Paycheck Protection Program details on the Small Business Administration website.

  • Underwritten by SBA, modeled after the existing SBA 7(a) loan program
  • Expanded the network beyond SBA so more banks and lenders can issue these loans
  • Allows lenders to make decisions based on creditworthiness without normal SBA channels
  • A portion of the loan can be forgiven (thus turned into a grant)
  • Loan balances will have a maturity of not more than ten years
  • Allows for payment deferral for at least six months
  • Maximum loan is $10 million with a rate no higher than 4% and no prepayment fees
  • Loans do not require a personal guarantee

Who is eligible:
1. Defined small business (less than 500 employees and gross receipts limits in certain industries)
2. In a disaster area (IL Qualifies)
3. Business materially impacted by COVID-19

How are the funds used?
1. Employee wages
2. The costs to maintain employee benefits (i.e., group health care)
3. Business rent (under a lease)/mortgage payment
4. Utilities
5. Existing term debt obligations

Mechanics of the Paycheck Protection Program

  • The maximum loan amount is a formula tied to payroll costs.
    • In general, the maximum loan amount is 2.5x the average total monthly payments by the applicant for payroll costs. There are many items included in payroll costs, including wages, commissions, cash tips, vacation, medical or sick leave, group health, and retirement benefits, to name a few.
  • The portion of the loan used to ensure Continuity of Payroll will be forgiven.
    • This amount of loan forgiveness will be reduced by the percentage change in the average number of full-term equivalent employees per month for the measurement period in 2019 compared to the average full-time equivalent employees during the covered period. Employers may receive additional wage forgiveness for tipped workers. Further reduction in loan forgiveness may be made if compensation decreases by more than 25 percent in the most recent quarter for any employee earning less than $100,000 annually.

Applicants may also need to provide the following:

  • 2019 Payroll tax filings as a report to the Internal Revenue Service
  • State income, payroll, and unemployment insurance filings
  • Financial statements to verify payment on debt obligations incurred before the covered period
  • Current organizational documents-bylaws, articles & operating agreements
  • General Liability Insurance information
  • Current building lease

As the week progresses more guidance will be released regarding this SBA 7(a) loan and the mechanics therein.

See All the Resources for Businesses on our COVID-19 Business Resource Page


SBA 7(b) Loans – changes under the CARES Act


Economic Injury Disaster Loan Program
These are the SBA 7B loans that were originally introduced with the Families First Coronavirus Act. Businesses can apply for low-interest loans for businesses that have been severely impacted by the Coronavirus of up to $2 million. A borrower is limited from receiving PPP assistance and an EIDL through the SBA for the same purpose. The application is directly through the SBA. Credit checks and documentation are required. Apply on the SBA website:

SBA Express Bridge Loans
Businesses that already have a relationship with an SBA lender can access up to $25,000 with less paperwork. These loans can be used while waiting for the Economic Injury Disaster Loan process and will ultimately be paid back by the EIDL proceeds.

The Electronic Loan Application process requires the submission of certain documents.

  • A complete copy, including all schedules, of the most recent Federal Income Tax returns for the applicant business; provide an explanation if not available.
  • Request for Transcript of Tax Return (IRS Form 4506T), completed and signed for the applicant business, each principal owning 20 percent or more of the applicant business, each general partner or managing member; and for any owner who has more than a 50 percent ownership in an affiliate business. Link to IRS Form 4506-T
  • A current schedule of liabilities listing all fixed debts (SBA Form 2202 may be used). Link to SBA Forms 2202
  • A Personal Financial Statement (SBA Form 413) signed and dated by the applicant (if a sole proprietorship), each principal owning 20 percent or more of the applicant business, and each general partner or managing member. Link to SBA Forms 413

Additional information may be necessary to process your application. You should be prepared, if requested, to provide these documents within seven (7) days of the information request:

  • A complete copy of the most recent Federal Income Tax return for each principal owning 20 percent or more, each general partner or managing member, and each affiliate when any owner has more than a 50 percent ownership in the affiliate business
  • If the most recent Federal Income Tax return is not yet filed, a financial statement for the year
  • A profit-and-loss statement for the current year to date
  • Additional Filing Requirements (SBA Form 1368) providing monthly sales figures. Link to SBA Forms 1368
  • Fee Disclosure Form and Compensation Agreement (SBA Form 159D). Link to SBA Forms 159D

Loan Programs – State of Illinois Highlights

Illinois Hospitality Emergency Grant Program-MUST APPLY BY APRIL 1

  • Bars and restaurants with 2019 revenue of $500,000-$1,000,000 are eligible for a $25,000 grant
  • Bars and restaurants with 2019 revenue less than $500,000 are eligible for a grant up to $10,000
  • Hotels that generated less than $8 million in annual revenue will be eligible for a grant up to $50,000
  • Only $14M in available funds for this program – MUST APPLY BY APRIL 1.
  • Businesses can submit an application at

Illinois Small Business Emergency Loan