We are continuing to learn more about the COVID-19 relief programs as state and federal agencies release additional guidance on a daily basis.  This newsletter provides updates on the various programs based on new information that has been released this week.

SBA Loan Programs

Payroll Protection Program (“PPP”) Loans

PPP loans are one of the best relief programs available to small businesses.  Under the PPP program, small businesses can receive a low-interest loan (currently set at 0.5% interest) to cover payroll, rent or mortgage interest, and utilities.  The maximum loan amount is 2.5 times average monthly payroll.  Businesses can get loan forgiveness for any amounts spent on payroll, rent or mortgage interest, and utilities over an 8-week period.

In addition to these terms, the Treasury Department and Small Business Administration have offered the following additional guidance:

  • To qualify for forgiveness, at least 75% of loan proceeds must be applied to payroll. 25% can be used for rent/mortgage interest and utilities.
  • Applications are supposed to open on Friday, April 3. However, the Treasury Department only released its guidance on how the program will be administered late on Thursday evening, so banking industry experts expect banks to be overwhelmed with applications on Friday.
  • We recommend that businesses work with their existing lenders or bankers to apply for the loans as soon as possible. The program will be administered first-come, first-served, and the funds are finite and could run out.

Economic Injury Disaster Loans (“EIDL”)

EIDL loans are another option under the CARES Act for distressed businesses.  Like PPP loans, EIDL loans can be used to cover operating expenses such as payroll, rent, and utilities, plus fixed debts and other bills that cannot otherwise be paid.  The loan maximums are higher than PPP loans (up to $2 million).  In addition, businesses can get a $10,000 upfront grant when they apply for an EIDL loan, which does not need to be repaid.  When considering an EIDL loan, businesses should take the following into account:

  • Businesses can apply for both a PPP loan and an EIDL loan. However, the $10,000 upfront grant will be deducted from any loan forgiveness under a PPP loan.
  • Other than the $10,000 grant, EIDL loans do not offer any loan forgiveness.
  • EIDL interest rates are higher than PPP loans (3.75% for small businesses; 2.75% for non-profits).
  • EIDL loans are available now and banks are already accepting applications.

Pandemic Unemployment Assistance

The CARES Act provides funding for states to expand unemployment assistance to individuals who would not qualify under ordinary unemployment rules, including independent contractors and sole proprietors.  Individuals must apply directly through their state unemployment program.

As of Friday, April 3, the Massachusetts Department of Unemployment Assistance (“DUA”) is not yet accepting claims for the expanded pandemic unemployment assistance program.  The DUA has stated that they are awaiting federal guidance before they can open the claims process.

Governor Baker has asked that independent contractors and self-employed individuals wait until the new program opens and not apply for unemployment under the existing process because it will delay the processing of all claims.

We will keep you posted on when DUA opens the claims process for pandemic unemployment assistance.  In the meantime, if you need to lay off workers but are concerned that they will not be able to pay their bills in April, you can offer them severance in exchange for a release of claims.  In some states, including Massachusetts, as long as severance is tied to a release, it will not count against an individual’s unemployment benefits.

FFCRA – More Guidance from DOL

The Department of Labor continues to release additional guidance on paid sick leave and paid family leave due to COVID-19.  This additional guidance includes the following:

  • Employees cannot take more than 12 weeks of paid family and medical leave in a 12-month period under both FMLA and FFCRA. If an employee has already used some FMLA leave in the past 12 months, that amount should be deducted from their 12 weeks of paid family and medical leave under the FFCRA.
  • Paid sick leave under the FFCRA is in addition to any sick leave available under state law or an employer’s policy. For example, in Massachusetts, employees will be able to take their full 40 hours of Massachusetts sick leave in addition to the 80 hours of FFCRA sick leave.
  • Employers are required to pay employees for all hours worked via telework. In addition, employers are encouraged to allow employees to adopt flexible schedules for telework that may include working at non-traditional times or with large breaks in the day to accommodate taking care of children who are out of school.  Employers do not need to pay employees for these large breaks, but do need to pay employees for all hours actually worked.  Employers should be sure that their employees are accurately recording all hours worked, regardless of when these hours occur.
  • State or local shutdown orders qualify as “quarantines” for paid sick leave. Employees can only take paid sick leave due to a shutdown order if the order itself is the reason they cannot work.  If employees can telework, then they cannot take paid sick leave due to the shutdown alone.  Or if they are laid off because business has slowed down or closed, they are not eligible for paid sick leave and should rely on unemployment instead.


We recognize that these rules are changing rapidly and it is difficult for small businesses to keep up.  As always, please reach out with any questions or if you need help navigating the COVID-19 crisis and all of the available programs.