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FAQ: Loan Provisions - SBA and Mid-Size Business Loan Programs


Q.  What loan funds are available for institutions with more than 500 employees?

A.  Final details details are not yet available. We are expecting the Department of the Treasury to issue guidance on this program in the near future.

There are provisions that instruct the Secretary of the Treasury, through the Federal Reserve, to create a Mid-Size Business Loan Program to ensure that nonprofit organizations and businesses between 500 and 10,000 employees have access to a specific loan facility with loans not higher than two percent per year and no payments due for the first six months. In order to qualify, the eligible borrower must self-certify, among other things, that the loan is necessary to support the borrower’s ongoing operations, and that the borrower will retain 90 percent of its workforce until September 30, 2020. 

The CARES Act also outlines the Main Street Lending Program, which is designed to support lending to small and medium-sized businesses that were in good financial standing before the onset of the COVID-19 pandemic. The Federal Reserve has announced it will run the program by providing direct capitol to eligible lenders. U.S. businesses are eligible for loans if they meet either of the following conditions: (1) the business has 10,000 employees or fewer; or (2) the business had 2019 revenues of $2.5 billion or less. Loans would have a four year maturity, and principal and interest payments on the loans will be deferred for one year. 

NAICU is currently working to clarify that institutions of higher education will be eligible for this fund.  It is unclear if the Main Street lending program will supersede the need for a separate Mid-Size Business Loan Program.

Q.  What is the Small Business Administration’s Paycheck Protection Program?

A. The CARES Act established the Paycheck Protection Program (PPP) under the Small Business Administration (SBA). The CARES Act allocated $350 billion to help small businesses during the COVID-19 pandemic. Specifically, the Act established the Paycheck Protection Program to help small businesses, including nonprofit colleges and universities, retain employees and sustain operations during these challenging months. For those entities that have already laid off workers or cut salaries, rehiring and pay restoration is allowed. Federal regulations, in an easy to read question and answer format, were recently issued.

Q.  Who is eligible for relief under the PPP?

A. Any private, nonprofit college or university with fewer than 500 employees, including part-time and student workers who do not participate in the Federal Work-Study (FWS) program.

Regarding student worker counts, the SBA issued regulations on May 5, 2020 determining that student workers who participate in the Federal Work-Study, Work Colleges, or Job Locator and Development programs, or similar programs funded by states and municipalities, can be excluded from the employee count for eligibility (see specific eligibility language) in the Paycheck Protection Program (PPP). 

This is an important step. These new regulations will allow some institutions that were previously ineligible to now participate in the program.  However, the regulations come up short and will continue to keep most institutions with fewer than 500 employees ineligible for critically-needed funds. NAICU will continue to work to expand the exclusion to all student workers.

The new regulation also clarifies that Title IX exemptions for single-sex colleges, as well as religious exemptions, including those under Title VII of the Civil Rights Act, also apply to the PPP program.  Therefore, applicants that rely on these exemptions are not excluded from participation in the PPP program.

Q.  Are institutions that meet the traditional $30 million annual revenue standard for
     colleges to qualify for an SBA loan, but have more than 500 employees, also eligible to
     apply to the PPP?

A.  A plain reading of the statute and regulations would indicate that the only standard that now applies is the employee count. 

Q.  How much can I borrow under the PPP?

A. Colleges may borrow the lesser of $10 million or 2.5 times the average total monthly payroll costs from the prior year (with some exclusions, including any earnings paid to someone that are in excess of $100,000 per year).

Q.  What can the PPP loans be used for?

A. Loans can be used for a wide variety of purposes, including: payroll costs; payments for vacation, parental, family, medical, or sick leave; severance payments; payments required for group healthcare benefits, including insurance premiums; and retirement benefits. Loans can also be used to pay local, state, and employment taxes, interest payments on any mortgage obligations or other debts incurred, and rent and utilities.

The loans cannot be used for compensation of individual employees, contractors, or sole proprietors in excess of an annual salary of $100,000.

Q.  Under what conditions does the PPP loan become a grant?

A. To receive full forgiveness you must use 75% of the funds for payroll costs and expend those funds within eight weeks of funds being disbursed. Twenty-five percent of the remaining total loan amount is forgivable if spent on specific overhead expenses, including mortgage interest, rent, and utility costs.

Employee and compensation levels must also be maintained at certain levels.

Organizations that rehire employees previously laid off as a result of the COVID-19 crisis will not be penalized for having a reduced payroll for the beginning of the relevant period.

If you do not meet all of the employment targets then your forgiveness will be prorated and the loan interest rate will be set at one percent.

Q.  Are there any other limitations on participating in the PPP?

A. Eligibility for the Program is on a first-come, first-served basis. When the funds allocated for the Program are exhausted, the Program will be terminated. Small businesses cannot use this Program and the employee retention tax credit simultaneously.

Q.  How do I apply for a PPP loan?

A. Applications opened on April 3, 2020 and can be found here. NAICU members who are interested in securing funds through this program should immediately contact their bank to see if it is one of the 1,800 approved SBA lenders. Also, any federally insured depository institution, federally insured credit union, and Farm Credit System institution may be participating.


Q.  What other Small Business Administration loans are colleges and universities
     eligible for?

A. Colleges and universities are also eligible for Economic Injury Disaster Loans. For further information on loan programs visit

Print the FAQs:  CARES Act Frequently Asked Questions