How SBA Loans Can Help Your Small Business

Turn to the SBA for everything from COVID-19 relief to expansion funds

Whether you’re seeking financial help for your small business in response to the coronavirus (COVID-19) pandemic or simply wondering how to obtain financing to expand, a loan from the Small Business Administration (SBA) may be just the solution that you need.

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Low-interest, long-term SBA loans are a viable option for business owners suffering substantial disaster-related physical or economic damage or who want to grow their business and can’t obtain other nongovernment financing.

By JIM PROBASCO, Updated September 24, 2022 – You can read the entire article HERE on Investopedia’s website


  • Legislation enacted on December 27, 2020, provides new funding for the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs, along with funding for forgivable EIDL Targeted Advances and Shuttered Venue Operator (SVO) Grants.1
  • As of January 1, 2022, the SBA is no longer accepting applications for COVID-19 EIDL loans.2
  • The American Rescue Plan, signed into law on March 11, 2021, provides additional small business funding and guidance.3
  • The PPP Extension Act, signed by President Biden on March 30, 2021, extends the application deadline for PPP loans to May 31, 2021, continues the covered period for PPP loans through June 30, 2021, and allows lenders to process PPP loans through June 30, 2021, as well.4
  • PPP loans are provided by private lenders, while EIDL loans and SVO grants are generated with funds provided by the government.
  • SBA business expansion loans are guaranteed loans with funds coming from approved private lenders.
  • Additional SBA programs include Express Bridge Loans, 7(a) Debt Relief Loans, Loan Deferrals, and several others.

Consolidated Appropriations Act, 2021 & American Rescue Plan Act, 2021

Neither the Consolidated Appropriations Act (CAA) of 2021 nor the American Rescue Plan Act, 2021 are government loan programs per se. They are laws, passed by Congress, that provide additional funding and rule changes for several government programs, including the Paycheck Protection Program (PPP)Economic Injury Disaster Loan (EIDL) program, and EIDL advances. Also included is funding for a new Shuttered Venue Operator (SVO) Grant program.53

Descriptions of the programs below reflect changes made by the CAA and the American Rescue Plan. Additional guidance from the Treasury Department and the SBA may require further updates.

Paycheck Protection Program (PPP)

The Paycheck Protection Program (PPP) ended on May 31, 2021. The information below provides background for existing borrowers who may be eligible for PPP loan forgiveness.6

The Paycheck Protection Program (PPP), created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020, provided forgivable SBA emergency 7(a) loans of up to $10 million to small businesses with 500 or fewer employees, including sole proprietorships, independent contractors, and self-employed people affected by COVID-19.7

This program was amended by the PPP Flexibility Act of 2020, with new guidelines that allowed full or partial forgiveness of at least 60% (formerly 75%) if the amount forgiven was used for payroll and 40% (formerly 25%) of the amount forgiven was used for mortgage interest, rent, and utilities.89

Instead of a six-month payment deferral, your loan was deferred until the SBA remitted the forgiven amount to your lender. If you didn’t seek forgiveness, then your payments were deferred for 10 months from the end of the covered period.8

As with the original PPP program, no collateral was required and the loan did not carry any fees. However, instead of a two-year term, you now had five years to pay off your loan at the same 1% fixed rate as before.910

The PPP Flexibility Act of 2020 further stipulated that if you make a good-faith offer to rehire a furloughed employee (same hours, same wages) and documented it, then you could exclude that employee from your count for purposes of forgiveness if they refused your offer.119

The PPP loan program, which stopped accepting loan applications on August 8, 2020, due to lack of funds, received new funding via the Consolidated Appropriations Act, 2021, and the American Rescue Plan Act of 2021.1213

Paycheck Protection Program (PPP) Loan Refresh

The Consolidated Appropriations Act and the American Rescue Plan provided additional funding and guidance for the PPP loan program. Presidential executive orders also helped target funds where they were needed most.

Changes to the PPP made by the Consolidated Appropriations Act, 2021

The Consolidated Appropriations Act, 2021 provided $284 billion in new PPP loan funding through March 31, 2021, including special set-asides for companies in depressed areas and those with 10 or fewer employees.114

The legislation provided first-time forgivable PPP loans of up to $10 million for qualifying companies with 500 employees or fewer and second-draw loans of up to $2 million for previous borrowers with 300 or fewer employees.14

If you returned all or part of your PPP loan, you could reapply for the maximum amount applicable—provided you had not already received forgiveness. Further, if you would be eligible for a higher loan amount due to interim final rule changes, then you could work with your lender to modify the amount of your loan—even after forgiveness.15

The list of forgivable expenses was expanded to include:

  • Personal protective equipment (PPE)
  • Complying with federal or state health and safety guidelines
  • Software, cloud computing, and other human resources and accounting needs
  • Property damage due to public disturbances that took place in 2020 and were not covered by insurance

Also new, expenses that you paid with PPP loan proceeds were tax-deductible even if the loan was forgiven. This applied to both first- and second-draw loans.16

You could select a covered period between eight and 24 weeks from when you received your loan, instead of needing to pick either eight or 24 weeks. Your covered period could extend through March 31, 2021.17

New, simplified applications for loans under $150,000 and for forgiveness of those loans were made available.18

You no longer had to deduct your $10,000 Economic Injury Disaster Loan (EIDL) advance from the forgivable amount of your PPP loan, and the new legislation directed the SBA to treat previous PPP loans and EIDL advances the same.1920

Changes to the PPP loan program that target very small businesses

On February 22, 2021, the Biden administration announced several changes to the PPP program designed to make PPP funds available to the smallest businesses, including some excluded from previous relief efforts.2122

  • Beginning February 24, 2021, businesses with fewer than 20 employees had an exclusive two-week window to apply for PPP funding. During this period, larger businesses were not allowed to apply.
  • The formula used to calculate PPP loans was revised to allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support.
  • Eligibility rules were changed to let small business owners with non-fraud-related felonies receive PPP loans as long as the applicant was not incarcerated at the time of the application.
  • Also newly eligible were those who were delinquent on federal student loans.
  • Non-citizen small business owners who are lawful U.S. residents, including green card holders and those here on a visa, also were eligible and allowed to use their Individual Taxpayer Identification Numbers (ITINs) to apply for PPP relief.

Changes to PPP made by the American Rescue Plan Act of 2021

When the American Rescue Plan Act was signed into law on March 11, 2021, it provided $7.25 billion for PPP forgivable loans.233 Additional legislation known as the PPP Extension Act of 2021, signed by President Biden on March 30, 2021, let business owners apply for a PPP loan through May 31, 2021, extended the covered period for PPP through June 30, 2021, and allowed lenders to process PPP loans through that date.4

The American Rescue Plan Act further enhanced the PPP program by: 

  • Making more not-for-profits eligible for the PPP by creating a new category called “additional covered nonprofit entity”
  • Widening PPP eligibility to include 501(c)(3) organizations and veterans’ organizations that employ not more than 500 employees per physical location 
  • Including 501(c)(6) organizations, domestic marketing organizations, and additional covered not-for-profit entities that employ not more than 300 employees per physical location 
  • Allocating $15 billion for targeted Economic Injury Disaster Loan (EIDL) advance payments
  • Providing funds to businesses located in low-income communities that have no more than 300 employees and have suffered an economic loss of more than 30%, as determined by the amount that the entity’s gross receipts declined during an eight-week period, between March 2, 2020, and December 31, 2021, relative to a comparable eight-week period immediately preceding March 2, 2020 
  • Ruling that funds from Targeted EIDL Advances shall not be included in the gross income of the person who receives the grant and that no tax deductions will be denied, no tax attribute reduced, and no basis increase denied due to the exclusion of the grant funds from gross income
  • Instituting the Restaurant Revitalization Fund: $28.6 billion for restaurants, bars, and other eligible providers of food and drink.23 It allows for grants equal to the pandemic-related revenue loss of the eligible entity, up to $10 million per entity, or $5 million per physical location.24 The grants are calculated by subtracting 2020 revenue from 2019 revenue. Entities are limited to 20 locations.25
  • $1.25 billion for shuttered venue operators 
  • $175 million to create a “community navigator” pilot program to increase awareness of and participation in COVID-19 relief programs for business owners currently lacking access, with priority for businesses owned by socially and economically disadvantaged individuals, women, and veterans

Where to apply for an SBA Paycheck Protection Program (PPP) loan

Applications for this loan were made through any existing SBA 7(a) lender or through any participating federally insured depository institution, federally insured credit union, and Farm Credit System institution.

The SBA and the Treasury Department announced that the PPP would reopen the week of January 11, 2021, for new borrowers and existing PPP loan recipients.27

Initially, only community financial institutions, including…

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