CoronaVirus Loans 

§1102.7 (a) Loans

PPP Paycheck Protection Program

Here’s our research on how Small Business & 1099’s Independent Contractors can get Government help, due to the CoronaVirus Shelter At Home Rules

The SBA will work directly with state Governors to provide targeted, low-interest loans to small businesses and non-profits that have been severely impacted by the Coronavirus (COVID-19). The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

$350 Billion allotted, hard to get a loan, money ran out   LA Times 4.16.2020 LA Times 4.16.2020 *

The SBA Debt Relief program will provide a reprieve to small businesses as they overcome the challenges created by this health crisis.

Under this program:

  • The SBA will also pay the principal and interest of new 7(a) loans (FAQ’s from Senate Committee)  issued prior to September 27, 2020.
    • 7(a) program offers loan amounts up to $5,000,000 and is an all-inclusive loan program deployed by lending partners for eligible small businesses within the U.S. States and its territories.
      • The uses of proceeds include:
        • working capital;
        • expansion/renovation;
        • new construction;
        • purchase of land or buildings;
        • purchase of equipment,
        • fixtures;
        • lease-hold improvements;
        • refinancing debt for compelling reasons;
        • seasonal line of credit;
        • inventory; or
        • starting a business.
        • Paycheck Protection
  • The SBA will pay the principal and interest of current 7(a) loans for a period of six months.

SBA is here to assist small businesses with accessing federal resources and navigating their own preparedness plans as described by the CDC’s Guidance for Businesses and Employers.

Click here to apply on SBA’s Website

Wells Fargo

Find more information on the SBA’s Economic Injury Disaster Loans at:

How does Health Insurance cover Coronavirus?

In addition to traditional SBA funding programs, the CARES Act established several new temporary programs to address the COVID-19 outbreak.
Image of shield with money in it.


Paycheck Protection Program

This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program.

Learn more

Circle with document in it and text that says 10,000 dollars.


EIDL Loan Advance

This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.

Learn more

Circle with word "express" in it and timer.


SBA Express Bridge Loans

Enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.

Learn more

Heart with hands exchanging coins.


SBA Debt Relief

The SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic.

Learn more


The following is from an email  my CPA  Bruce Bialosky sent.

Many of our clients have expressed a high level of interest in this part of the CARES Act.

Check out these two links for more detail.

NPR Summary

Due to the limits on funds available for this program, if you are interested I encourage you to apply for this as soon as possible. Following are the key parts as we understanding them today:

  1. These loans are referred to as Payroll Protection Program PPP Loans. The maximum amount of a loan is $10 million. That amount is limited by the amount of payroll with a somewhat complicated calculation. If you are involved in a loan, this part can be discussed, but the lender will review that with you.
    1. Wells Fargo
    2. Explanation from
    3. Treasury.Gov Fact Sheet
  2. The total pool provided for these loans in CARES is $349 billion.
  3. The loan must be taken out between February 15, 2020, and June 30, 2020.
  4. They have a maximum period of ten years. Interest payments are deferred for a year.
  5. There is no prepayment penalty.
  6. The debt the business has elsewhere is not considered during this covered period.
  7. Collateral and personal guarantees are waived during this period.
  8. The allowable use of the funds is to meet payroll costs/covered employee benefits including commissions or similar compensation; operating costs such as rent, mortgage interest payments, utilities, interest on other debt incurred before February 15, 2020. (This is questionable how this could be enforced, but they are saying it is to be spent on your business — not a Hawaiian vacation).
  9. The interest rate can be no more than 4%.
  10. Eligible borrowers – Companies with 500 employees or less. There are exceptions for the following:
    1. Sole proprietors/independent contractors/self-employed persons;
    2. food service business concerns with more than 500 employees, but not more than 500 employees at one location.
  11. Borrowers must make good faith certification to lenders that a borrower needs funds to operate because of current economic disruption and will use funds for eligible uses.
  12. Lenders for this are ones that have worked with the SBA in the past.  Most Banks have departments/personnel experienced with these loans.   The loan process has been challenging in the past, but the Act streamlines the process and it will make it much easier.
  13. If you have a bank with which you currently work, they should be able to help you. If you need help with that, we have multiple sources to help in this regard.
  14. These loans are eligible for forgiveness §1105.   Again, how this is calculated is somewhat complex, and we will not address that here. If you apply for a loan at that time, the lender will advise you on the rules to achieve forgiveness. Basically, you must show you are using the funds for eligible uses. Cancelled loans are not subject to taxation unlike most cancelled debt. Regulations regarding this are yet to be issued.
    1. Chamber of Commerce Summary
  15. The SBA may still issue some regulations regarding these loans, but they must do so within 15 days from March 27th – the date when the President signed the bill.

For anyone who may have a question on this matter, please contact Bruce Bialosky CPA or leave a question in our FAQ

SEC. 1102. 7(a) LOAN PROGRAM.


SEC. 1105. 




Sec. 1101. Definitions.

Sec. 1102. 7(a) loan program.

Sec. 1103. Entrepreneurial development.

Sec. 1104. Waiver of matching funds requirement under the women’s business center program.

Sec. 1105. Loan forgiveness.

Sec. 1106. Direct appropriations.

Sec. 1107. Minority business development agency.

Sec. 1108. Waiver of prepayment penalty.

Sec. 1109. United States Treasury Program Management Authority.



In this division—


During the 3-month period beginning on the date of enactment of this Act, the requirement relating to obtaining cash contributions from non-Federal sources under section 29(c)(1) of the Small Business Act (15 U.S.C. 656(c)(1)) is waived for any recipient of assistance under such section 29.


Notwithstanding any other provision of law, for a loan made under the authority under this division or an amendment made by this division, there shall be no prepayment penalty for any payment on the loan made on or before December 31, 2020.


21 comments on “SBA CoronaVirus Loans

  1. My CPA’s Newsletter

    BIALOSKY NEWSLETTER – December 29, 2020





    Dear Steve,
    Let’s address the tax issue: You may know the IRS ruled that if your PPP loan is forgiven you cannot deduct the related expenditures. This new Congressional bill overrules that and makes all the expenses deductible for anyone with a PPP loan. That is a big deal. Unfortunately, the State of California will not allow deduction of the expenses.
    A Major Concern:
    For people who own a partnership, LLC or S Corporation if you received a PPP Loan you must have basis to write off the expenses. IRS basis rules may prevent a current write off of expenses paid with PPP loan proceeds. This results from the fact that the basis increase for forgiveness of PPP loan proceeds does not occur until the loan is actually forgiven. For some borrowers that will be 2021. It may be advisable for a partner or a shareholder to contribute an amount equal to their PPP loan funds to their partnership, LLC or S Corporation before December 31, 2020 if basis is an issue.
    In addition:
    Second, more excellent news. As predicted previously, all loans under $150,000 will automatically be forgiven with the completion of a one-page certification of expenditures. Life just got easier for the vast majority of people with PPP loans. Go ahead and contact your lender and tell them you want to process forgiveness under the new guideline.
    Third, even more excellent news: Those $10,000 EIDL loans which everyone was questioning as to how they are being handled. They have been turned into grants thus the income loan is relieved and you do not have to do a thing. They do not have to reduce your PPP loan forgiveness.
    If your loan is above $150,000 there is no reason to wait to submit your application if your lender is accepting applications. If you need help with that, please contact me. There are some additional expense categories that can be used for forgiveness. Please contact me if you want to understand those.
    If you want to participate in the new round of PPP loans there are two groups.
    The first group is those who received loans in the last round:
    1.  If you have previously had a PPP loan you can get one if you have less than 300 employees.
    2.  You have to show that you had a drop in income of 25% in 2020 from 2019 in any one quarter. That income drop does not include your prior PPP loan.
    The second group is someone who has never filed for a PPP Loan:
    That is for those who have not received a loan previously. The new rules are much like the old rules with a $2 million cap on the loans and the maximum 300 employees. You will be able to choose either an 8-week or 24-week period for your calculating your expenses.
    Loan applications will open up for both groups sometime next year. It appears applications will need to be done in the first three months of 2021. Contact your Lender.
    Please contact me with any questions.


    Love and Kisses,
    Your Devoted CPA
    • business interruption coverage generally allows a business to recover certain losses in the event that the business suffers physical damage or loss that prevents it from operating its business, whereas civil authority coverage, generally allows a business to recover losses when it a civil authority issues an order that closes a business or prevents it from normal operations.
      Does the policy expressly excluded coverage for viral contamination. communicable disease?
      some state legislators, including lawmakers in New Jersey, New York, Ohio, Louisiana and Pennsylvania, have proposed legislation that would require insurers to provide some coverage for losses stemming from COVID-19.
      Contracts Clause of the U.S. Constitution, which, with some exceptions, generally prohibits states from enacting legislation that impairs contractual obligations.
      Our webpage on contracts & plain meaning rule
      Our webpage on Health Reform Mandate Penalty and Commerce Clause, etc.
      Insurance policies are contracts and thus, are interpreted as such. Accordingly, a business whose policy expressly covers viral contamination or a pandemic is more likely to succeed on a claim for coverage than a business whose policy expressly excludes coverage for viruses. National Law Review

  2. I’m self employed – sole proprietor – I don’t have payroll – what do I show to get a loan?
    How do I figure out the loss I expect for my business to drop because of coronavirus?

    • If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents (final requirements will be announced by the government) such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship Schedule C 1099 Income
      2. For Sole Proprietors, Independent Contractors, and Self-Employed Individuals:
      The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period.
      Small Biz Guide & Checklist
      Interim Guidance
      16. What is the maximum amount you can borrow?
      If you are an independent contractor or sole proprietor (self-employed):
      Step 1: Aggregate “payroll costs” from the last 12 months (e.g., calendar year 2019, March 2019 to March 2020). For what constitutes “payroll costs,” see Question 17 below.
      Step 2: To the extent not already taken into account when calculating Step 1, make sure that the annualized wage, commissions, income, or net earnings paid to yourself is capped at $100,000. Subtract any amounts paid to you as an independent contractor or sole proprietor in excess of $100,000.
      Step 3: Divide by 12 to calculate the average monthly payroll costs.
      Step 4: Multiply by 2.5.
      Step 5: If you have any outstanding amount of an Economic Injury Disaster Loan (“EIDL”), which you received between January 31, 2020 and April 3, 2020, add the outstanding amount, less the amount of any “advance” under an EIDL COVID-19 loan.
      17. What costs are included in payroll costs?
      For businesses: “Payroll costs” consist of any compensation to employees (whose principal place of residence is in the U.S.) in the form of:

      salaries, wages, commissions (as noted above, capped at $100,000 per employee);
      cash tips or the equivalent (calculated based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips);
      payments for vacation, parental, family, medical, or sick leave;
      allowance for separation or dismissal;
      payments for the provision of employee benefits consisting of group health care coverage, including insurance premiums and retirement; and
      payments of state and local taxes assessed on compensation of employees.

      For an independent contractor or sole proprietor: “Payroll costs” consist of wage, commissions, income, or net earnings from self-employment or similar compensation.
      Moreover, the CARES Act expressly excludes from the definition of “payroll costs”
      (i) any compensation to an employee whose principal place of residence is outside of the United States,
      (ii) qualified sick and family leave wages for which a credit is allowed under the Families First Coronavirus Response Act, and
      (iii) federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of Federal Insurance Contributions Act and Railroad Retirement Act taxes and income taxes required to be withheld from employees. Paul Hastings

        • As you analyze your P & L —- Maybe you can find ways to still work or even find a niche to open up new markets. If you’re a Gym or P.E. instructor check this out.

          6. Jump into online workout classes.
          Online workout classes are the perfect solution to being shut out of your local gym or studio. There are many online class options including ballet, yoga, boxing, and, lest we forget, those retro Jane Fonda workouts. This is the time to try something new in the safety of your home or perfect a technique you’ve been working on for months so you don’t lose your progress. Move your furniture, blast some music, and break a sweat, because endorphins make you happy.

      • What do I need to certify? As part of your application, you need to certify in good faith that:
        Current economic uncertainty makes the loan necessary to support your ongoing operations.
        The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
        You have not and will not receive another loan under this program.
        You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
        Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
        All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
        You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.
        Get Started on loan

    • How to show a loss on Schedule C
      Lost Income for Cash Basis
      You may or may not need to list lost business income on your Schedule C. If you operate your business on a cash basis, which most proprietors do, there’s no need to list lost income. You can simply deduct the costs associated with providing the goods and services. If your business doesn’t receive cash it’s owed, there’s no income to report on Schedule C; you can report the income when you receive it. Small Biz Chron
      Business Interruption Jones
      Here’s how to calculate how much business interruption insurance you need:
      Calculate your business’s projected income.
      Estimate your business’s annual income for the coming year, and divide your estimate by 12 to get projected monthly income.
      Calculate how long it would take to get your business running again. This is called the period of restoration. For instance, if your business was completely destroyed, you would have to call an insurance adjuster and appraiser to appraise the losses, an architect to design a new building, and a contractor to construct a new building. You might have to relocate while you wait for the new building to be ready. This period of restoration could take several months, depending on the size of your business.
      Calculate lost income and operating expenses during the period of restoration. Since you know your monthly income, add up how much income you’d lose during the period of restoration. You should also write down your monthly expenses for that time period, such as employee wages, loan and rent payments, and taxes.
      Keep in mind that the amount of money you’ll receive from the insurance company for each claim is based on records of your business income and expenses, so you should have an effective business accounting software or system.
      According to Cate Steane, founder of Make It Happen Preparedness Services, “Having a BII policy is useful only if you have current, accurate documentation of your business revenues and expenses.
      Having a good bookkeeper and having your financial records on the cloud is critical to successful pursuit of business interruption claims.” If there are disagreements about the amount of loss you experienced, the insurance company will call in an appraiser.
      Calculating Your Business Interruption Loss
      Add Net Sales Projected
      Less Cost of Goods Sold (COGS)
      Equals Gross Profit
      Less Selling, General and Administrative (SG&A) or Operating Expenses (OpEx)
      Less Interest and Taxes
      Equals Net Income
      Add Continuing Expenses and Adjustments
      Equals Total Estimated Business Interruption Amount
      Here is a sample list of documents typically requested by the insurance company:
      Monthly Profit and Loss Statements
      Monthly and Daily Production Reports
      Monthly Inventory
      Monthly Cost Accounting Reports
      Invoices and Purchase Orders

  3. I have my docs ready.
    ADP already had a certified payroll report for 2019, I downloaded payroll for 2020 through 2/07,
    I have a summary of health insurance costs,
    I have an audited report from my workman’s comp insurance company,
    I downloaded all the invoices from ADP for their payroll and 401k admin services and I got a pdf copy of the amount I contributed to retirement (401k) in 2019.
    From what I read in the Cares Act, this was all I could find that I could include as part of my “payroll” costs.

        • That’s an interesting question. Rent is an allowable use of the proceeds. Section 1102.7 a (d) (D) BUT, it’s not shown as it can be forgiven Section 1105 (d)
          On the other hand, let’s look at the Interim Guidance page 13
          o. Can my PPP loan be forgiven in whole or in part?
          The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. That is, the borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgiveable purposes described below and employee and compensation levels levels are maintained.
          The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020, and utility payments under service agreements dated before February 15, 2020, over the eight-week period following the date of the loan.
          However, not more than 25 percent of the loan forgiveness amount may be attributable to nonpayroll costs. While the Act provides that borrowers are eligible for forgiveness in an amount equal to the sum of payroll costs and any payments of mortgage interest, rent, and utilities, the Administrator has determined that the non-payroll portion of the forgivable loan amount should be limited to effectuate the core purpose of the statute and ensure finite program resources are devoted primarily to payroll.
          The Administrator has determined in consultation with the Secretary that 75 percent is an appropriate percentage in light of the Act’s overarching focus on keeping workers paid and employed. Further, the Administrator and the Secretary believe that applying this threshold to loan forgiveness is consistent with the structure of the Act, which provides a loan amount 75 percent of which is equivalent to eight weeks of payroll (8 weeks / 2.5 months = 56 days / 76 days = 74 percent rounded up to 75 percent). Limiting non-payroll costs to 25 percent of the forgiveness amount will align these elements of the program, and will also help to ensure that the finite appropriations available for PPP loan forgiveness are directed toward payroll protection.
          SBA will issue additional guidance on loan forgiveness.

          • Certifications? Page 17
            iv. Documentation verifying the number of full-time equivalent employees on payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight week period following this loan will be provided to the lender.
            v. Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities.

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