There is a lot of misinformation around the CARES Act and the support small businesses receive as a result. We understand this is a confusing time, and we’re here to help. Below, we get to the bottom of some common misconceptions around the resources provided for small businesses at this time. We also included our small business resources webinar to help small business owners get an in-depth understandings of the ins and outs of these programs.

Myth: If an employee quits after I have received my small business loan, I will immediately lose the Paycheck Protection Program (PPP) loan.

Fact: You won’t immediately lose the loan if your employee quits during the impacted period. In fact, according to the most recent Small Business Administration (SBA) guidance, if you try to rehire the employee who quits (and can provide documentation showing this rehire attempt), your forgiven amount may not be reduced even if the previous employee refuses the offer. It is true that 75 percent of the amount that can be forgiven (which you wouldn’t have to pay back) must go toward payroll. If there are no more employee salaries on which to spend the PPP loan and you don’t want to try and rehire the previous employee, the forgivable amount may be reduced and converted into a loan that you could either return immediately or would have to eventually pay back with 1 percent interest.

Myth: Shake Shack took a loan that could have helped my business. I thought these loans were supposed to go to SMALL businesses?!

Fact: The PPP exempts large chain restaurants from small business requirements, applying those requirements to each location rather than to the company as a whole. Shake Shack received the full $10 million amount because each of its locations meets the small business threshold of fewer than 500 employees. However, once the company’s leadership realized funds were going to run out for everyone in the restaurant industry, they returned their $10 million loan to government coffers so that other restaurants and truly small businesses might have a fighting chance.

Myth: I heard that if I apply and am approved for the PPP, I am automatically approved for other programs and loans, like the Economic Injury Disaster Loans (EIDL).

Fact: While the eligibility requirements for EIDL and PPP are the same, they are separate applications because each have backing from different lenders and are approved separately. Your local bank is responsible for reviewing PPP applications and disbursing PPP funds, but the SBA itself disburses EIDLs and determines eligibility for that program. You can view a sample application for PPP here and apply here for EIDL.

Myth: I thought there were no funds left for the PPP. How am I supposed to get support? What now?

Fact: Good news! Congress recently passed $310 billion more in funding for the PPP. The program resumed on April 27.

Webinar: Small Business Resources COVID-19 Pandemic and the CARES Act

Authors: Caitlin Irr, Madeline Zick, Graham Dufault