COVID-19 small business loans

Updated on July 6, 2020

On July 4, the president signed legislation to extend the PPP application deadline to August 8.

Unprecedented emergency stimulus legislation has provided significant federal funding through the U.S. Small Business Administration (SBA) for loan programs to assist small businesses, independent contractors, and the self-employed coping with the financial impacts of COVID-19. There is still money available for loans for those in need. The SBA website includes a tool to find the nearest eligible PPP lender.

Federal agencies have moved quickly to implement these programs and Congress has changed them along the way. This has resulted in the frequent release of additional information, guidance, and clarifications. AVMA will update these resources as information becomes available.

Here we detail two loan programs available to veterinarians: the new, temporary Paycheck Protection Program (PPP) and the SBA’s pre-existing Economic Injury Disaster Loan (EIDL) program, which has a new opportunity for a cash advance. Visit the SBA COVID-19 webpage for full details on these programs.

New temporary Paycheck Protection Program (PPP) with loan forgiveness


PPP is a new, temporary loan program for small businesses that offers forgiveness for up to 24 weeks of qualified expenses including payroll costs, mortgage interest payments, rent and utilities. Payroll costs include wages up to $100,000 per employee, paid leave (excluding FFCRA requirement and when a tax credit is available), as well as group health and retirement benefits. The program is first come, first served. Learn more.


Small businesses that were operating on March 15, 2020, with 500 or fewer employees may apply. Sole proprietorships, independent contractors and self-employed are also eligible. Borrowers are limited to one PPP loan only. Businesses with more than 500 employees may be eligible if they satisfy additional criteria. There are affiliation rules in place to address common ownership and control of multiple businesses. The U.S. Department of Treasury FAQs provide more details.


Up to $10 million is available for payroll and other eligible costs, which include rent, mortgage interest payments, and utilities. Loan amount will be 2.5 times the business' average monthly payroll costs from either the previous twelve months or calendar year 2019.

What is the covered period?

The covered period begins with the origination of the loan and ends 24 weeks later, or on December 31, 2020, whichever is earlier. The loan proceeds must be spent on qualified payroll or non-payroll costs during the covered period to be eligible for forgiveness. Guidance permits a borrower to opt for an “alternative covered period” that corresponds with the first day of the next payroll cycle. For nonpayroll costs, the alternative covered period permits costs that are incurred during the covered period and paid on or before the next regular billing date, even if that is outside the covered period. The lender is required to make the first disbursement of the loan no later than 10 calendar days from date of loan approval. Borrowers that received a PPP loan before June 5, 2020, may elect to maintain the original 8-week covered period.

What is included in payroll costs?

Payroll costs are calculated on gross basis and capped at $100,000 per employee for cash-compensation on an annualized basis for each employee (with a maximum of $46,154 per employee for a 24-week period). But an employer can also include the cost of group health and retirement benefits, paid leave, state and local taxes, and hazard pay and bonuses. Wages for furloughed employees are also eligible. Form 1099 employees cannot count towards an employer’s payroll and will need to file for their own PPP loan directly. Additionally, there are special rules for determining eligible payroll costs for owners, owner-employees and partners.


The program is available to small businesses, self-employed and independent contractors. Individuals in need can apply through existing SBA lenders and participating banks or other institutions as they enroll in the program. The SBA website includes a tool to find the nearest eligible PPP lender. Applications must be submitted by August 8, 2020.

The SBA and Treasury issued a rule detailing the applicability of the PPP program to self-employed individuals, specifically.


The loan application requires that the borrower certify several statements, including that the current economic need makes the loan request necessary to support ongoing operations. Certifications are to be made in good faith, and making an inaccurate certification includes criminal liability for fraud. According to program guidance, borrowers must assess their economic need for a PPP loan at the time of the application. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that "current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant." Borrowers must make this certification in good faith, taking into account their current business activity and ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. Applicants must also certify that they will provide the lender with documentation verifying the number of full-time-equivalent employees on the payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the 24-week period following the loan.

Treasury Department guidance now indicates that loans under $2 million will be considered to have been made in good faith.  However, the Treasury Department may audit any loan and will audit all loans over $2 million. See the department’s PPP FAQs for more information.


PPP loans have a fixed interest rate of 1%. All payments on principal, interest, and fees are deferred until the SBA forgiveness determination is remitted to the lender; however, interest will accrue during this time. The remaining balance is due in five years. For borrowers that received a PPP prior to June 5, 2020, the repayment period remains the original two years unless the lender and borrower mutually agree to extend the loan to a five-year repayment period. Repayment terms apply to the remaining balance of a loan that is partially forgiven, or if forgiveness is denied altogether. If no forgiveness application is made, repayment begins 10 months after the covered period ends.


SBA will generally forgive loans for actual amounts expended for payroll (note that wages are capped at $100,000 per employee), rent, mortgage interest, or utilities. At least 60% of the covered loan must be used for payroll costs and up to 40% for non-payroll costs. Failure to use at least 60% for payroll won’t preclude forgiveness, but will reduce the amount forgiven. Borrowers have the option to pick and choose which non-payroll costs to submit for forgiveness.

PPP loan repayment is deferred until the SBA remits the forgiveness determination to the lender. 

Because policy discussions about PPP and the loan forgiveness criteria are ongoing, retroactive changes by Congress or the Administration are possible. Therefore, it may be advantageous to utilize the repayment deferral and apply for forgiveness at a later date. Veterinarians should review the forgiveness application and consult with appropriate advisors as they seek forgiveness.


Applicants will need to submit an application along with required documentation to an approved lender. The application requires borrowers to certify in good faith that their intent to use the funds is consistent with requirements. Electronic signatures and submission are permitted.


To seek forgiveness, borrowers must complete and submit a PPP loan forgiveness application to the lender servicing the loan and provide the required documentation to demonstrate actual costs for qualified expenses.

To apply for forgiveness, borrower must complete the PPP loan forgiveness application (updated on June 16). Alternatively, there is a new “EZ form” available to borrowers that satisfy one of the following criteria:

  • Self-employed with no employees; or
  • Borrower did not reduce salaries or wages of their employees by more than 25% and did not reduce the number of hours; or
  • Borrower experienced reductions in business activity as a result of compliance with health directives and did not reduce the salaries or wages of their employees by more than 25%.

Once the application is submitted to the lender, the lender must provide a decision on forgiveness to the SBA within 60 days after receiving the loan forgiveness application; then SBA has up to 90 days to confirm and forward the total forgiveness amount plus any interest incurred to the lender.

A borrower that seeks early forgiveness—before the end of the borrower’s  8-week or 24-week covered period—and has reduced any employees’ wages or salaries by more than the 25%  allowed for full forgiveness, then the borrower is responsible for the excess salary reduction for the full covered period (8-week or 24-week covered period).


Loan forgiveness through PPP will not be counted as taxable income and will be made on the actual costs. You are not eligible for the Employee Retention Tax if you accept a PPP loan. Wages that are eligible for the Mandated Paid Sick Leave Tax Credit and the Mandated Paid Family and Medical Leave Tax Credit are not to be considered payroll costs under the PPP.

However, on May 1, 2020, the IRS released Notice 2020-32, which “clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)." This confirms that you cannot claim tax deductions that are normally fully deductible, such as covered rent obligations, covered utility payments, and payroll costs consisting of wages and benefits paid to employees. However, lawmakers have said this policy is counter to the intent of the legislation, and AVMA is among groups calling for the administration or Congress to reverse it.

Economic Injury Disaster Loan (EIDL) with $10,000 advance


SBA’s EIDL program provides small businesses with working capital loans to help small businesses overcome temporary losses in revenue. COVID-19 legislation expanded the existing EIDL program to provide for an advance of up to $10,000, distributed within three days, that is used to cover payroll costs, rent and mortgage payments, and other repayment obligations


Small businesses that were operating on March 15, 2020, with 500 or fewer employees and need immediate cash may apply. This is also available to small businesses with pending applications for EIDL. Sole proprietorships, independent contractors, and self-employed are also eligible.


Yes, if you received an EIDL loan between January 31 and April 3, 2020, you can apply for a PPP loan. If your EIDL loan wasn’t used for payroll costs, it doesn’t affect your eligibility for a PPP loan. If your EIDL was used for payroll costs during the time period of January 31, 2020 through April 3, 2020, then your PPP must be used to refinance your EIDL. If the PPP lender has already disbursed the loan proceeds to refinance an EIDL loan to the borrower, then the lender must notify the borrower the amount of PPP loan proceeds that must be remitted by the borrower back to SBA. The borrower must complete this form to repay the EIDL loan that is being refinanced with PPP loan proceeds

Proceeds from any EIDL advance up to $10,000 will be reduced from the PPP loan forgiveness amount. Additionally, the requirement to use at least 60% of loan for payroll costs still applies to EIDL loans refinanced into PPP loans.


Up to $2 million is available for economic injury including fixed debts, payroll, accounts payable, and other bills that cannot be paid because of the pandemic’s impact. It has been reported that SBA may be limiting these loans to $15,000-$25,000, including the advance, in order to support as many businesses as possible.


EIDL loans have a 3.75% interest rate and up to 30-year repayment window. Payments are deferred for one year; however, interest will accrue during this time. Note that an applicant is not required to repay the advance even if denied the loan.


Apply on the SBA website


Contact the SBA disaster assistance customer service center at 800-659-2955 (TTY: 800-877-8339) or e-mail disastercustomerserviceatsba [dot] gov.