How Small Businesses Can Take Advantage of the U.S. Stimulus Package

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Pamela Bump
Pamela Bump



To aid small businesses and individuals impacted by the COVID-19 pandemic, the United States government recently passed three landmark acts, including the largest economic stimulus package in history.

how small businesses can take advantage of the stimulus package

The Coronavirus Aid, Relief, and Economic Security Act (or CARES Act), passed March 27, directs more than $2 trillion to the U.S. economy. The history-making stimulus package allocates funds to citizens, relief-oriented aid, government departments, and businesses of all sizes.

Notably for small businesses the package offers low-interest loan options, tax deferrals, and other financial aid opportunities to help companies stay in business during this time.

The passing of the 800-page CARES Act comes after the Coronavirus Preparedness and Response Supplemental Appropriations Act was signed into law. This earlier act directs emergency funds to essential government departments including the Department of Health and Human Services, state governments, and the Small Business Administration.

The U.S. government has also passed the Families First Coronavirus Response Act (FFCRA), which protects families and individuals from unpaid sick or family leave. This act also directs necessary funding to departments overseeing U.S. unemployment insurance.

While the CARES Act, and the other acts noted above, provide urgent relief and assistance to small businesses and individuals, the sheer size of the documents, and the legal jargon within them, can overwhelm anyone trying to make sense of the information.

At this time, we recognize that those who run or work for a small business are trying to quickly research their options and piece together what these laws might mean for their companies, personal finances, and future.

To help our readers learn how small businesses can take advantage of the stimulus package and related acts, we'll walk through each major benefit that the acts offer. For the many small business owners with a list of questions about the stimulus package, we've also included a quick FAQ at the end of this post.

In the coming weeks, we'll continue to update this piece as more news related to small business funding, aid, and stimulus packages circulates.

To jump to different sections of this post, click on the links below:

How Small Businesses Can Take Advantage of the U.S. Stimulus Package

Since the CARES Act U.S. citizens have been able to access low-interest loans for small businesses, tax deferrals to organizations of all sizes, expanded unemployment options, and one-time taxpayer payouts. The act also provides education, training, and advising grants to small business development organizations, women's business centers, and the Minority Business Development Agency.

Meanwhile, the Coronavirus Preparedness and Response Supplemental Appropriations Act, passed earlier in March, allocated funding to essential government initiatives, including the Small Business Administration's Disaster Loan program.

Below, I've broken down four major factors of the governances that have impacted and could continue to aid small businesses, employees, and owners in the near future.

Low-Interest Loans and Paycheck Protection

Both the CARES Act and the Coronavirus Preparedness and Response Supplemental Appropriations Act allocate the Small Business Administration with funding to expand on its loan programs.

As part of the Coronavirus Preparedness and Response Supplemental Appropriations Act, $8.3 billion in emergency funding has been allocated to the Small Business Administration and its Disaster Loans Program.

Following the emergency allocation noted above, the Small Business Administration began offering disaster loans of up to $2 million that can be paid back in a period of up to 30 years. The loans, meant primarily for businesses of under 500 people or sole proprietors, have a low-interest rate of 2.75% for non-profits and 3.75% for other businesses.

Once received, this funding can be used for expenses related to running a business, such as bills, utilities, rent, and payroll costs. Because applications and lending will be handled by the SBA and not the U.S. government, the SBA or its lenders may define the terms of the loan. These terms could include what you can purchase or pay for with the loan, or the length of the loan. However, the U.S. government's Preparedness Act still mandates certain terms, like the interest rate and minimum payback period.

Those interested in the Disaster loan noted above can find an application here.

As part of the CARES Act, the Small Business Administration also directed funds to its Paycheck Protection Program. Through this program, SBA-approved lenders, such as banks could offer small businesses low-interest loans of up to $10 million to cover multiple months of payroll, mortgage or other payments needed to keep a business running at this time.

Interest rates and payback periods for the Paycheck Protection Program were not specified in the CARES Act or the SBA site. Different SBA lenders might require varying interest rates based on their own policies or the type of loan negotiated.

For Paycheck Protection loans granted under the CARES Act, the SBA will collect no fee or the smallest fee possible from businesses. However, businesses who have gotten other SBA loan assistance related to COVID-19 might not be eligible.

In early April, the U.S. government and SBA released clarifications to the Paycheck Protection Act. These clarifications noted that small businesses could receive up to $100,000 in PPP loans for each employee. The exact amount would be determined by a lender after examining the small businesses' payroll documentation. It was also clarified that small businesses can not get this amount of funding for independent contractors who can apply for their own funding and assistance as part of the CARES Act and other SBA regulations.

Later, due to high demand for Paycheck Protection loans, funding directed through the SBA ran out within two weeks of becoming available. However, the Senate passed a bill in response to this which will add another $320 billion to the program. It is not clear if this funding is available yet. Those interested in taking advantage of this program can continue to read more about it below.

Aside from the Paycheck Protection Program and Disaster Loan offerings, SBA will also be providing debt relief to small businesses that took out 7(a) loans in recent months. According to its website, "The SBA will also pay the principal and interest of new 7(a) loans issued prior to September 27, 2020." The SBA will also pay "the principal and interest of current 7(a) loans for a period of six months."

Because the loans noted are handled by SBA-approved lenders, those interested in pursuing this loan should talk to their chosen lender to determine which expenses can be covered.

For example, if you need to purchase a software at this time, but your business has been impacted by COVID-19, you might want to ask your lender if you can use your loan funding for this purchase, especially if it might not directly relate to vital business needs or employee costs. 

Here's a quick rundown of some need-to-know details about loan assistance from the CARES Act and the Preparedness and Response Supplemental Appropriations Act:

Preparedness and Response Supplemental Appropriations Act


  • The SBA has directed $349 million to its Paycheck Protection Program, which will temporarily lend low-interest loans of up to $10 million to small businesses impacted by COVID-19. Interest rates and payback periods are not specified in the act.
  • As part of the PPP, small businesses can receive up to $100,000 for every non-contracted employee. However, the exact amount for each employee will be determined by the lender and the small business's payroll documentation.
  • Additionally, Express Small Business Loans from SBA will be increased from a maximum of $350,000 to $1,000,000 until January 2021.
  • Eligible small businesses can receive forgiveness of part of a 7(a) Small Business Administration loan. The forgiven amount must be less or equal to the cost of maintaining payroll continuity during the covered period.
  • Note: After high applicant volume led PPP funding to run dry by mid April, the Senate has passed a bill which will add another $320 billion to the program. It is not clear if this funding is available yet.

How Small Businesses Can Take Advantage of Stimulus Loans

The loan and debt relief opportunities above provide small businesses in dire need with funding to keep their business running. Due to the economic climate, these loans also offer longer payback periods, debt-relief options, and low-interest rates which might make it easier for small businesses to pay them back without experiencing additional financial burdens in the future.

Small businesses and sole proprietors in all U.S. states and territories can now start applying for low-interest Economic Injury Disaster loans on You can apply for the Paycheck Protection Program through most SBA-approved lenders after April 3, 2020.

Businesses with accepted Economic Injury Disaster loan applications will receive an advance within three days of an approved application.

Additionally, if small businesses that qualify for the Economic Injury Disaster Loan are in dire need and must have more funding before their full loan is disbursed, they can apply for the Express Economic Injury Disaster Loan Bridge. This shorter-term loan can be up to $25,000, has a faster application turnaround, and will be automatically paid back with funds from the Economic Injury Disaster Loan.

When it comes to the Payroll Protection Program, SBA lenders will begin processing applications on April 3. Because funds will be loaned by SBA lenders exclusively, decision times and interest rates will vary and are not noted on the SBA site. However, as noted in the CARES Act, lenders must provide loans at a low-interest rate with minimal to no fee. Those who receive this loan can also request partial or full forgiveness.

Once the funding is received, these loans can be used for paying payroll or other business-related bills, such as building rental or utilities.

Although these loans are low interest and have a longer payback period, small businesses should still consider their finances and the future economic landscape before committing to an amount of lent money. For small business owners, it will be important to make a future plan for how they might pay off loans in order to prevent any debt from hindering them in the future.

The goal of the funding noted above is to provide aid to small businesses that are in need, at risk of financial barriers, or have already been impacted by COVID-19. While many small businesses fall within the broad loan criteria noted above, it's important to note that there might be more specific limitations determined by lenders, such as what companies can purchase or pay for with each type of loan.

Before committing to any loan, it's important for small business owners to talk with lenders to make sure the funding option is right for their business needs.

If you determine that one of the loans above isn't right for you, you can also consider alternative funding options from the SBA, public organizations, and private institutions. To learn more, click here to find a list of small business funding options

Tax Deferrals for Small Businesses and Corporations

As part of the CARES Act, tax payment for corporations will not be due until October 15, 2020.

Small businesses can also defer federal payroll taxes until Dec. 31, 2021, at which time, 50% of the tax will be due. The remaining tax must be paid by Dec. 31, 2022.

How Small Businesses Can Take Advantage of Tax Deferrals

Aside from funding opportunities provided by SBA, the stimulus package bill also helps companies that cannot pay payroll taxes at this time by deferring them until December 31, 2020.

While this payroll tax deferral regulation does not allow businesses to withhold paychecks from employees, it does lower the burden as businesses will not need to pay one sometimes-costly tax. For each employee paycheck, a small business must pay 6.2% toward Social Security and 1.45% toward Medicare taxes. Deferring this tax until 2021 would make 7.65% of tax money spent for each employee immediately available to a small business.

If a small business owner has a handful of employees, this extra money could add up quickly and provide solid temporary funding before needing to be paid to the IRS in Dec. 2021 and 2022.

Similarly to taking out loans, businesses should consider the future economic landscape and their future finances when deferring any sort of payment. This could ensure that they will still be able to make the payment later on.

Employee Leave and Unemployment Regulations

Both the CARES Act and the FFCRA aim to protect employees of large and small businesses. Here are a few regulations that business owners should keep in mind at this time:

How Leave Policies Impact Small Business Owners and Employees

Ultimately, the regulations above have been implemented to protect the employees of all businesses, as well as families of business owners that might be struggling.

Additionally, sole proprietors, which did not previously qualify for unemployment, can temporarily take advantage of this benefit until December 2020. This allows them further funding on top of stimulus checks if they can't continue to do their work remotely.

While businesses are trying to determine funding opportunities at this time, small business employees might also worry about what could happen if they need to take leave because they or a loved one is sick.

Leave regulations in the CARES Act protect members of the workforce who must call out sick due to COVID-19 or other illnesses. Employees will still get full paid sick leave from an employer for the first week they're out of work and partial sick leave the week after.

At this time, small businesses should be sure to budget any potential cost they might need to pay related to sick or family leave of employees who have worked for them for 30 days or longer.

When it comes to family leave, small businesses under 50 employees can reportedly get approved from a family leave exemption related to only closed schools or childcare facilities. However, the business owner must provide forms and documentation to prove that they would see a financial burden if they covered this leave.

Stimulus Aid for Individuals

Aside from assisting small businesses and small business employees impacted by COVID-19, the CARES Act also allocates funds to individuals to offset the current financial burdens. Here's a quick rundown of the one-time payments that each tax-paying U.S. citizen will receive, according to the CARES Act:

Since the passing of the CARES Act, the IRS has launched a portal that citizens can use to fill in direct deposit information and track the delivery of their stimulus check. To access tracking and fill in direct deposit information, you will have to give some other data related to your 2018 or 2019 tax return. 

However, news outlets, including the Washington Post, have noted that the IRS system has run into various glitches which have delayed stimulus checks. These glitches have also caused some to receive payments that were too large or small. Those who have not updated their direct deposit information with the IRS, or cannot access the IRS portal to do so, will receive a paper check in the mail at a later date than some of the recipients. 

How Small Business Owners and Employees Can Take Advantage of Stimulus Aid

Although the one-time aid will not directly impact small businesses, these payments could help small business owners, the families of small business owners, sole proprietors, and small business employees in other ways.

On top of budgeting their business expenses, owners and sole proprietors also need to budget their household needs. With this act, business owners who've had to close their stores or offices, as well as their families, will receive checks to help them pay for home needs, along with all other U.S. taxpayers.

One-time checks might also prevent business funds from being used for home needs related to paying rent or food while they are temporarily out of work or seeing less business.

Additionally, those who work for a small business that had to temporarily close its doors can also benefit from these emergency funds for food, rent, or utilities.

Stimulus Package FAQ

From my research, I've found that people online are asking a few common questions about how the package works and what it will accommodate. To further help you understand the governance, I've highlighted a few in the FAQ below.

1. When does the package go into effect?

The CARES Act was signed into law on March 27, 2020. Small business owners can begin applying for Economic Injury Disaster loans now and Paycheck Protection loans after April 3., Individuals can also seek unemployment benefits immediately.

While there's not a set date for individuals to receive stimulus checks, the CARES Act has tasked the government with directly depositing the payments into bank accounts as soon as possible.

In a March 29 interview, U.S. Treasury Secretary Steven Mnuchin said individual's could see deposits within three weeks. If the IRS doesn't have an individuals direct deposit information, there will be measures in place to allow the person to submit it online rather than waiting for a check by mail.

2. Who is eligible for the package?

Each aspect of the stimulus acts passed has different eligibility requirements. Here's a quick rundown:

Low-Interest Loans, Tax Deferrals, Financial Exemptions

Aid for Individuals and Employees

Sick Leave and Unemployment Eligibility

3. Will the stimulus acts help me if I'm self-employed?

If you identify as a sole-proprietor, you might qualify for a Small Business Administration loan.

Additionally, unemployment benefits have been expanded to allow self-employed citizens to apply. But, the government will approve this on a case-by-case basis. Aside from unemployment benefits, individuals and married with taxable income will receive a check as part of the CARES Act.

4. Are there other funding options aside from the stimulus package?

Yes. Aside from this stimulus package, many banks, credit providers, and lenders are offering private low-interest loans that are both related and unrelated to COVID-19. Many businesses, such as non-profits, health and wellness companies, or agricultural organizations, can even apply for small business grants which can be found on

You can also check with your state or the local chamber of commerce to see if your area offers any location-based small business funding.

To help you make financial decisions, this blog post highlights a number of funding opportunities from both public and private organizations.

5. Can I delay paying my employees?

No. This stimulus package provides aid to help small businesses and corporations pay business costs, including payroll. You must still pay employees for the time they've worked as well as sick or family leave. However, you may defer paying your payroll tax until December 2021 and December 2022.

6. Can I buy software with low-interest loans covered by COVID-19-related acts?

Maybe. The CARES Act and the Preparedness and Response Supplemental Appropriations Acts provide more funding to the Small Business Administration to offer loans to small businesses impacted or at risk of financial troubles due to COVID-19. While these various acts and the SBA list that these loans can cover "business expenses," a specific expense list isn't provided. 

Because the Small Business Administration works with lenders who will provide the loans, small business owners should explain the need for the software expense to an SBA-approved lender to determine if this will be covered by a  low-interest loan. If not, there are still a number of public and private funding opportunities that might cover the expense. Click here for a quick list of funding resources.

Resources for Small Business Owners and Employees

We recognize that this is a difficult time for many small businesses that are facing extenuating circumstances.

To help you, a small business owner close to you, or small business employees navigate their next steps further, I will be updating this post regularly with any new information.

Additionally, below are a few of the relief acts passed in the previous month.

To learn more about the stimulus package and other small business governances related to the current financial climate, you can also bookmark these helpful websites:

For a list of both private and public small business funding options, read this blog post.

Disclaimer: This blog post is meant as a basic resource and not a comprehensive guide. We will regularly update it to add more information as it becomes available.

The original post was published April 3, 2020 and was updated on April 9, 2020, April 14, 2020, and April 22, 2020 to add additional information related to ongoing stimulus aid.

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