Paycheck Protection – A Practical Guide to Small Business Loan Provisions of CARES Act

On March 27, 2020, United States President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act, passed to combat the devastating economic effects of the COVID-19 pandemic, allocates over US$2 trillion in aid to various sectors of the American economy. Of particular interest to small businesses is Section 1102, known as the Paycheck Protection Program (“Paycheck Protection”) and Section 1106, which provides for forgiveness of Paycheck Protection loans in some circumstances. Under this program, the Small Business Administration (the “SBA”), with support from the US. Department of the Treasury (the “Treasury Department”), is authorized to allow the issuance of special loans that carry both generous terms and the possibility of forgiveness if used to pay for certain costs, which include payroll, mortgage interest, rent, and utility expenses. In this tech law update, we will focus on the following key aspects of Paycheck Protection: 1) program benefits, 2) program eligibility, 3) application procedures, and 4) miscellaneous concerns that small business owners may have regarding the program.