CARES Act COVID-19 SBA Loans forgiven as Grants

Last updated March 31st @ 8:05PM



ULECx SBA Paycheck Protection Program Lender Application Package

Federal SBA small business loan turn to grant
While structured initially as a 100% federally-guaranteed
loan, it is effectively a grant program for companies that
retain workers on their payrolls. After June 1, borrowers
may seek forgiveness/cancellation of the debt to the extent
employment levels are maintained.

Covers employees making as much as $100k
Maximum loan volume is the lesser of $10 million, or 2.5
times monthly compensation (not including any compensation
above a rate of $100,000 per person per year). Roughly
speaking, a business with 500 employees making $100,000

Debt forgiven and not counted as gross income
The program loans qualify for the CARES Act’s broader loan
forgiveness provisions in Section 1106. Specifically, indebtedness
is forgiven (and excluded from gross income) in an amount
(not to exceed the principal amount of the loan) equal to the following
costs incurred and payments made during the covered period:

Loan to grant covers business expenses outside of payroll
Payroll costs, interest payments on mortgages, rent, and utility
payments.  Forgiveness amounts will be reduced for any employee
cuts or reductions in wages.


In the near term, borrowers and lenders would interact to initiate
loans. Beginning this summer, borrowers that qualify for forgiveness
(virtually all) would seek cancellation from their lender, who would then
work with SBA to collect on the guarantee.


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For legal consultation reach out to:
Thomas A. McKnight, Jr., Esq.
Wallace, Jordan, Ratliff & Brandt, LLC
Phone: 205.874.0302


Additional CARES Act business resources:
CARES Section-by-Section – McConnell’s Office FINAL pdf for complete market watch
RILEY&JACKSON__Paycheck Protection Loan summary
CARES Act Plain English Business Loan Provisions as
of 3.25.20 – 1145 AM ET