Neal & Harwell attorneys Arrin Richards and Stephen M. Montgomery provide an overview of the CARES Act Small Business Relief Options.

If you or someone you know would like to discuss more about which program is right for your business or other ways to protect your interests, you may you may reach out to Arrin or Stephen directly or call our main office line at 615.244.1713 to leave a message that will be returned promptly.

CARES Act Small Business Relief Options

In response to the economic fallout from the Coronavirus pandemic, the Federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act authorizes up to $349 billion in loans to small businesses and non-profits through the Paycheck Protection Program, an expansion of the Small Business Administration’s (SBA) existing 7(a) loan program, and expands the SBA’s existing Emergency Injury Disaster Loan program. The SBA has also initiated Express Bridge Loan and Debt Relief programs to assist small businesses. Here is an overview of how these relief options can help your small business.


The PPP offers 2-year term, 1% interest loans of up to $10 Million to small businesses (including tax-exempt organizations, sole proprietors and independent contractors) to cover 8 weeks of payroll costs. Covered payroll costs include annual compensation of up to $100,000 for each employee, mortgage interest, rent, utilities, benefits, leave, employment taxes, and debt interest. Loan proceeds used for these covered payroll costs may be forgiven, and not more than 25% of the loan may be attributable to non-payroll costs. Repayment of the loan will be deferred for 6 months, and there are no collateral or personal guarantee requirements.  The program begins April 3, 2020 for small businesses and sole proprietorships and April 10th for Independent contractors/self-employed individuals.

Economic Injury Disaster Loans (EIDL)

The CARES Act expanded the SBA’s existing EIDL program to provide small businesses and non-profits low interest (<4%) loans of up to $2 Million to cover fixed debts (rent, utilities, etc.), payroll, accounts payable, and debts that could have been paid had the coronavirus pandemic not occurred. An EIDL may have a term of up to 30 years and includes a 12-month payment deferral. Applicants are also eligible for a cash advance of up to $10,000 on the EIDL to be disbursed within 3 days of submitting the application. The EIDL advance does not have to be repaid, regardless of whether the application is denied.

COVID-19 Express Bridge Loan (EBL)

EBLs of up to $25,000 are available to currently 7(a) loan eligible small businesses that can demonstrate that they were adversely impacted by COVID-19. The loans must be used exclusively to support the survival or reopening of the business and must be disbursed as working capital. An EBL may have a term of up to 7 years, and a maximum interest rate of 6.5% over the Prime rate. EBL proceeds will be received within 45 days of approval, and no later than 90 days afterwards.


The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months, and for 7(a), 504, and microloans issued prior to September 27, 2020. 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.

The SBA is expected to continue issuing guidance about these relief options, and certain restrictions and exceptions do apply. If you have any questions about the application process, which program is right for your business or other ways to protect your interests, Neal & Harwell is available to provide legal assistance.