ContractsCounsel Logo

COVID-19 and Contracts: The CARES Act and SBA Loans

Updated: October 31, 2023
Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 10,596 reviews
No Upfront Payment Required, Pay Only If You Hire.
Home Blog COVID-19 and Contracts: The CARES Act and SBA Loans

Jump to Section

Key Takeaways

  • Most businesses up to 500 employees are eligible for a loan under the CARES Act. The eligibility criteria are based on the SBA’s size standards, which vary by industry, so check to make sure it covers your industry.
  • The amount a business can borrow is 2.5 times monthly payroll expenses up to $10 million.
  • Loan forgiveness is available for funds used toward eligible expenses within 8-24 weeks of receipt.

CARES Act

As we all know, the federal government recently enacted the Coronavirus Aid Relief and Economic Security (CARES) Act, providing emergency assistance the likes of which have never been seen to individuals and business impacted by the pandemic. While the individual distribution seems fairly straightforward and keyed toward an individual’s income, the government’s actions concerning their plans to help small-business owners needs further implementation through the Small Business Administration.

ContractsCounsel is pleased to provide a platform for small-business owners, sole proprietors, and anyone contemplating launching a start-up access to top legal talent. To that end, many of you may be curious to how the government’s recent measures might apply to you.

Paycheck Protection Plan.

While the name may be a little misleading, the Paycheck Protection Program provides up to $359 billion in loans through the Small Business Administration. This was later increased to $659 billion due to high demand. The loans are subject to forgiveness under certain circumstances to eligible entities employing less than 500 people. Keep in mind the eligibility criteria are based on the SBA’s size standards, which vary by industry, so double check the criteria for your industry. Economists are therefore considering these payments to be more like grants or gifts rather than traditional loans.

The money cannot be used for any purpose. Instead, it can only be applied to payroll costs (wages, salary, paid-time office, health insurance premiums, etc.), rent, utilities, mortgage interest, and debt existing prior to the COVID-19 pandemic. Businesses, non-profit organizations, veterans’ groups, certain self-employed individuals, independent contractors, and sole proprietors will especially benefit from this program.

Maximum Amount Available.

The calculation of the maximum amount available under the CARES Act is tricky: it is the lesser amount of $10 million or the average monthly payroll cost times 2.5 plus any SBA Economic Injury Disaster Loans received after January 31, 2020. The amount can be complex as it also takes into account other factors such as seasonal businesses and businesses that were not in operation during the period of February 15, 2019, to June 30, 2019.

Loans are available for up to a 10-year term (amortized) at 4% interest, with six months (and up to one year) deferral of principal and interest payments, providing significant cushion to small-business owners. They may also be eligible for forgiveness in the amount equal to the amount actually paid for payroll costs, salaries, benefits, rent, utilities and mortgage interest during the eight weeks following disbursement of the loan. To put it another way, if a small-business utilizes its loan immediately, it will be forgiven rather than subject to repayment. These forgiven loans are also excluded from taxable income.

How to Apply.

According to the CARES Act, the Small Business Administration must issue regulations within 15 days of enactment, meaning that it is possible that lenders could begin taking loan applications as soon as mid-April. ContractsCounsel expects that those regulations will provide additional guidance from the SBA about how to find a qualified lender. Nevertheless, those businesses who already have an SBA loan should contact their existing lender in order to potentially expedite the process.

Should I Apply?

It depends. Even the most well-thought-out business plan did not anticipate this level of economic volatility. Consult with an attorney and your tax professional to see if a CARES Act SBA loan is right for you, especially in terms of whether you anticipate using the loan quickly (and therefore avoiding repayment) or over the long-terms (therefore subject to modest interest and deferment).

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

Brian J R. on ContractsCounsel
View Brian J
5.0 (1)
Member Since:
January 4, 2024

Brian J R.

Managing Partner
Free Consultation
Raleigh NC
38 Yrs Experience
Licensed in CT, DC, NC, NY
Benjamin N Cardoza School of Law

Immigration expert with over 30 years’ experience focused on start-up companies H-1, L-1, E, O-1 visas. PERM and extraordinary ability immigrant visas. Complex family immigration cases and waivers. I also assist early stage comapnies in entity formation and general legal matters for start-up companies in the areas of Telehealth, Technology and International Trade.

Haroldo M. on ContractsCounsel
View Haroldo
5.0 (1)
Member Since:
January 8, 2024

Haroldo M.

Attorney
Free Consultation
Miami, Florida
16 Yrs Experience
Licensed in LA
Loyola New Orleans College Of Law

A seasoned attorney dedicated to navigating complex legal issues and devising strategic solutions for my clients.

Richard M. on ContractsCounsel
View Richard
5.0 (1)
Member Since:
January 19, 2024

Richard M.

Tax Attorney
Free Consultation
San Diego, California
25 Yrs Experience
Licensed in CA
UCLA School of Law

Richard A. Mathurin is as a member of the professional team at Sage Law. Since graduating cum Laude from The University of Notre Dame and UCLA School of Law, Rich has enjoyed an exciting and diversified career in the practice of law. In his early career, he assisted several energy companies all over the world in the development and funding of major wind energy and other green technology projects. Following an assignment by his firm to their Far East offices in Tokyo and Singapore, Rich represented global corporations such as Hitachi, UPS, and Fuji-Xerox in major commercial transactions. More recently, Rich returned to his native San Diego to care for an ill family member and work in the local community. Rich specializes in tax resolution, bankruptcy and small business services helping clients get in compliance with complex tax laws and manage their personal and business finances. When he is not working servicing his valued clients, Rich is an ardent golfer and enjoys rooting for his favorite Boston sports teams.

Zenaida R. on ContractsCounsel
View Zenaida
Member Since:
January 3, 2024

Zenaida R.

Associate Attorney
Free Consultation
Miami, Florida
1 Yr Experience
Licensed in FL
St. Thomas University

I proudly hold an active membership with The Florida Bar, I successfully passed the Florida Bar examination in September 2023. My journey into the legal realm began over 5 years ago with dedicated service as a law clerk, where I provided indispensable support at previous law firms. I have distinguished legal expertise in the realm of transational matters. I am highly experienced in entity formations, commercial transactions, mergers & acquisitions, corporate governance & compliance, and business immigration services. I have prepared many independent contractor agreements, employment agreements, purchase and sale agreements, EB-1 and 2 visas, to name a few. I am an adept learner, professional, and committed to high quality legal work.

Ernestas P. on ContractsCounsel
View Ernestas
Member Since:
January 21, 2024

Ernestas P.

Attorney
Free Consultation
New York, New York
1 Yr Experience
Licensed in NY
University of Maryland Francis King Carey School of Law

I am a broadly skilled legal professional. I am highly drawn to technology, fintech, intellectual property, privacy law, contracts. I am also experienced in business litigation and business transactions. I have been told to have the following skills perfect time management, critical thinking, problem solving, attention to detail, communication and decision making. As a former flight attendant, I am well versed and acquired many of those skills in a fast faced multicultural/multilingual setting. I am able to work solo or as a team member and quickly adapt to changes. Finally, I am fluent in English, Lithuanian, Russian.

Scott B. on ContractsCounsel
View Scott
Member Since:
January 26, 2024

Scott B.

Partner
Free Consultation
Los Angeles, CA
1 Yr Experience
Licensed in CA
Purdue Global Law School

Scott Bowen, Esq brings legal experience in family law, special education law, and healthcare law matters. Scott also has over 20 years of expertise in healthcare compliance, medical coding, and healthcare consulting to the firm.

Damian T. on ContractsCounsel
View Damian
Member Since:
January 29, 2024

Damian T.

Founding Partner
Free Consultation
Albuquerque, NM
2 Yrs Experience
Licensed in NM
New York University School of Law

Damian is a founding partner of Holon Law Partners. He began his career as an officer in the Marine Corps, managing legal affairs for his command in Okinawa, Japan. In this role, he conducted investigations, assembled juries for courts martial, and advised his commander on criminal justice matters. Damian was twice selected to serve as his unit’s liaison to the Japanese government and self-defense forces. Damian later worked as a transactional attorney in New York, where he handled commercial real estate, finance, and restructuring matters. He has also participated in insider trading investigations at the SEC, worked on compliance at a private equity firm, and managed legal operations and special projects at a vertically integrated cannabis company in New Mexico. Damian draws on these diverse experiences to provide his clients with creative solutions to thorny legal issues – from negotiating commercial leases to managing complex securities offerings. In addition to practicing law, Damian volunteers as a research assistant at the University of New Mexico Medical School’s McCormick Lab – studying the microbiology of longevity and aging. When not working, he enjoys spending time with his two pit bulls and pursuing his passions for foreign languages, art, philosophy, and fitness. Damian resides in Albuquerque, New Mexico.

Jonathan F. on ContractsCounsel
View Jonathan
Member Since:
January 28, 2024

Jonathan F.

Senior counsel
Free Consultation
St. Louis, Missouri and The Villages, Florida
32 Yrs Experience
Licensed in MO
Saint Louis University School of Law

Trial and transactional attorney with over 30 years experience with complex business transactions and disputes.

Aaron S. on ContractsCounsel
View Aaron
Member Since:
January 28, 2024

Aaron S.

Attorney
Free Consultation
Los Angeles, CA
5 Yrs Experience
Licensed in CA, TX
University of Texas School of Law

My passion is protecting the passions of others. I have 5+ years of contract review, and all aspects of entertainment law including negotiation, mediation, intellectual property, copyright, and music licensing. I also have experience working with nonprofits, and small businesses helping with formation, dissolution, partnerships, etc. I am licensed in both Texas and California.

Nuo Jia (Lois) L. on ContractsCounsel
View Nuo Jia (Lois)
Member Since:
February 7, 2024

Nuo Jia (Lois) L.

Managing Member
Free Consultation
New York
10 Yrs Experience
Licensed in MI, NY
University of Detroit Mercy

Attorney Lois Li is a bilingual business and commercial attorney licensed in Michigan, U.S. since 2014, in Ontario, Canada since 2015, and in New York, U.S. since 2020. As an attorney licensed in two countries, Lois leads Alpine Law’s US/China/Canada practice. She is experienced in legal and contractual transactions in both English and Chinese. Lois has over six years of experience in assisting clients with business operations and legal services, and is specialized in advising companies with legal needs in International Business, Securities law, Cryptocurrency – Block chain, and Fin-Tech. Having served as both an outside and an in-house counsel, Lois worked with many startup and small businesses. With a strong understanding of core business and the ability to translate business needs into legal requirements, Lois has assisted many companies to establish policies and procedures, and drafted and negotiated employment and transaction contracts. Further licensed as a Registered Nurse since 2010, Lois specializes in healthcare law and is experienced in FDA, HIPAA, Medicare and Medicaid regulations. She has assisted many businesses in the medical and healthcare industry.

Bill C. on ContractsCounsel
View Bill
Member Since:
January 29, 2024

Bill C.

Business Lawyer
Free Consultation
Chicago
11 Yrs Experience
Licensed in IL
Arizona State University

I am a corporate business and securities attorney licensed in Illinois with more than a decade of legal experience holding both a J.D. and Master in Law in Taxation. I specialize in advising technology companies in the cryptocurrency space with regulatory compliance (eg. securities law, FinCen, and MSB rules) and cybersecurity matters (eg. GDPR, HIPAA, and CCPA), licensing agreements (SaaS, End User Licensing Agreement, Master License Agreement and etc), brokerage agreements, vendor agreements, revenue share agreements, affiliate agreements, and other related business and technology contracts. Having served as both an outside and an in-house counsel, I have worked with many early stage and mid-size companies, including blockchain companies with issued tokens in the top 100 ranking. With a strong understanding of core business needs for cryptocurrency companies and the ability to translate business needs into legal requirements, I have successfully helped businesses in the cryptocurrency space establishing their contracts, meeting regulatory compliance requirements (SEC, FinCen), and negotiating contracts with partners and vendors.

Find the best lawyer for your project

Browse Lawyers Now

Need help with a legal contract?

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

CONTRACT LAWYERS BY TOP CITIES
See All Business Lawyers
Learn About Contracts
other helpful articles

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city