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Free Federal Funds For Small Businesses Now

On Behalf of | Apr 7, 2020 | Firm News |

Free Federal Funds for Small Businesses Now

The Karlin Law Firm is here to help small businesses, as well as landlords who depend on the rent from their small business tenants.  We want every small business owner and their landlords to know about how to obtain the Federal Funds being offered now to small business owners.  Some of the information out there is confusing, disjointed, and frankly, long winded. It can feel like finding a special tree in a forest.  Here’s the keep it simple info you may need.  More detail, limits, conditions, and extension can be found in part on our website at

Free Money Under the CARES Act 

The Paycheck Protection Program (“PPP”) of the CARES Act, provides for what could be free money for small businesses in an amount that will cover two months for the following business expenses: Rent, Employee Related Expenses (salary, withholdings etc), Utilities, and Interest Payments on Mortgages (when the business owns the real estate being used by the business). So, for example, if the business pays $20,000 per month in salaries, withholdings etc, and $8,000 in rent, and $2,000 in utilities, the amount of free money will be $60,000.

That’s the simple version of the free money part. The specific formulas, exceptions, limitations, and qualifications are can be found on our website at:  Basically, you look to what the business paid over the last year related to employees’ salaries and withholdings for an average month, then multiply that by 2.5 (not to exceed $10 million dollars). That’s the maximum amount available for the loan. Then if you maintain about the same level of employment that you had in the quarter before originating the loan for the eight weeks after originating the loan, a portion of the loan is forgiven, namely “free money” referred to in the paragraph above (i.e., up to eight weeks of employee-related expenses, rent, utilities etc, not to exceed the amount of the loan). Please note that if there is a reduction in employee salaries in excess of 25% in the eight weeks following the loan origination (compared to what was paid in the prior quarter), then the amount forgiven will be reduced by the reduction in excess of the 25%. Other limitations and conditions will also apply. This is an overview.

Importantly, the “forgiveness of debt” is not considered income, so its not only free money, its tax-free money. That is a major enhancement. Also note, this “free money loan” does not require any personal guarantees or other security.


Here’s How to Obtain the Free Money

Act now. Don’t wait. Currently there is a June 30 cutoff date to apply. We believe there will be an avalanche of applications and the money may run out. Perhaps more funds will be added later if this happens, but we are advising our clients and those who have obligations to our clients to act quickly. Currently the SBA is not taking applications directly. The SBA is having hundreds of small and large banks administer these loans. I’ve included a list of some of these banks on our website at: I generally find it best to call a few, especially ones which the business currently has a relationship with and speak with the manager about how to complete an application as early as possible. The exact forms may not be available for a few days, but be persistent.


$10,000 Quick Loan

There is an Emergency grant of up to $10,000 which can be applied for and received within a matter of days. Repayment of this grant, which is in the form of a loan advance, is waived if the request for this loan (called an EDIL loan) is ultimately denied. If, however, this emergency loan is obtained and used up, then if the PPP loan mentioned above is later obtained, the amount of forgiveness of the PPP loan may be reduced by any amount of the emergency grant which had been forgiven. In other words, you don’t get the free 10k twice.

Applications for the EIDL loans, and the $10,000 quick loan advance may be made through the SBA’s website:


Larger EIDL Loans

There are also larger EIDL loans up to $2 million, see our website for more information on these.

We hope this is of some help in navigating these troubled waters. Let us know if we can provide you with assistance with any of your business or real estate needs. We are here to help.


All the best to you and your family,