SBA Paycheck Protection Program:

1% Fixed Interest Loans to Cover Payroll, Mortgages, Rent, and Utilities

Updated August 24, 2020 at 11:58am AZ.

NOTICE: The PPP program closed on August 8, 2020.

What are the terms?

Maximum loan amount = 2.5 * Average Monthly Payroll (determined by looking at your payroll records over the past 12 months), up to a maximum loan of $10 million.

Interest rate = 1%

Loan payments are deferred for 6 months, but interest will accrue during that time.

No collateral or personal guarantees are required.

The loan must be paid in full within 2 years, unless a loan forgiveness application is submitted and approved by the SBA.

The SBA may forgive loans if at least 60% of loan proceeds are used to cover payroll expenses, including:

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
  • Employee benefits including costs for paid vacation, parental, family, medical, or sick leave; allowance for employee separation or dismissal; payments required for group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State and local taxes assessed on compensation (but not federal employment taxes); and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

***Employers must maintain salary levels and number of employees to be eligible for loan forgiveness.

The remaining 40% may be used for mortgage payments, rent, or utilities. Alternatively, all 100% of loan proceeds may be used for payroll expenses.

Who can apply?

Any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19. (U.S. Small Business Administration, 2020).

Businesses with more than 500 employees may still qualify. To determine if your business qualifies , use the SBA’s size standards tool

You will need your North American Industry Classification System Code to use the tool.

Where to apply?

According to the U.S. Small Business Administration "[The] SBA is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding."

What information will I need to apply?

  • Detailed information calculating your average monthly payroll costs for the last 12 months.
  • EIN (employer identification number)
  • Name, title, SSN, and address for each owner with 20% or more ownership stake in business

The U.S. Treasury released the borrower application together with a borrower fact sheet to help business owners understand what documentation and information they will need to apply.

When can I apply?

The Paycheck Protection Program closed on August 8, 2020. Thus, the Small Business Administration is no longer accepting applications.


JP Morgan Chase. (2020). Small Business Administration (SBA) Paycheck Protection Program. Retrieved from Chase:

U.S. Small Business Administration. (2020). Paycheck Protection Program. Retrieved from SBA:

U.S. Treasury. (2020). Assistance for Small Businesses. Retrieved from U.S. Treasury:

Attorney Whitney L. Sorrell sitting in chair

About the Author

Whitney Sorrell, Esq. is the founder of Sorrell Law Firm, PLC. When he's not serving his clients or teaching courses to Attorneys and CPAs on estate planning. business, and tax topics, he's practicing martial arts, relaxing by the pool, or walking his dog Bemo. He resides in Scottsdale, Arizona with his loving wife, Diana.