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Federal Stimulus Package Makes Loans Available to Tribal Business Concerns to Help Keep People Employed


Tribal enterprises owned in whole or in part by federally recognized Indian tribes may be eligible to receive some relief in the form of low-interest and, in some cases, forgivable loans as part of the Coronavirus Aid, Recovery, and Economic Security Act (“CARES Act”). The U.S. Small Business Administration (“SBA”) will make the loans available to Tribal business concerns that employ fewer than 500 people (generally) through the new Paycheck Protection Program (“PPP”) and the existing Economic Injury Disaster Loan (“EIDL”) Program.

PPP loans are 100% federally guaranteed loans that are generally meant to be used by eligible applicants to keep their workers employed through the crisis. EIDL loans are meant to help eligible applicants recover from economic losses sustained because of the pandemic.

Under each program, SBA-approved lenders will accept loan applications from eligible businesses, including Tribal business concerns, on a case-by-case basis. The SBA has issued Interim Final Rules to implement PPP, as well as guidance and FAQs for lenders and borrowers. You are encouraged to consult this information for more detail on how the SBA will implement the PPP. Below is a high-level summary of the PPP and the EIDL programs.

Paycheck Protection Program

Tribal Business Concerns may apply for PPP loans that may be eligible for forgiveness.

Size of Program

As of the date of publication, Congress has appropriated $349 billion to fund PPP loans on a first come, first serve basis.

Maximum PPP Loan Amount

The lesser of:

  • $10,000,000
  • 2.5 times the average monthly “payroll costs”

“Payroll Costs”

The definition of “payroll costs” includes, among other items:

  • salary, wage, commission, or other similar compensation
  • payments of cash tips
  • payments for vacation, parental family, medical, or sick leave
  • allowance for dismissal / separation
  • healthcare benefits (including insurance premiums)
  • retirement benefits
  • state or local taxes assessed on the compensation of employees

The definition of “payroll costs” excludes, among other items:

  • compensation of an individual employee to the extent in excess of $100,000 per year
  • sick and family leave wages for which a credit is allowed under Families First Coronavirus Response Act
  • Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020
  • compensation paid to employees with primary residence outside the U.S.

Interest Rate

1% per annum

Loan Forgiveness

PPP loans may be used for allowable uses described in section 7(a) of the Small Business Act (15 U.S.C. 636(a)). However, PPP loan proceeds will only be eligible for forgiveness to the extent the loan proceeds are used for payments of:

  • “payroll costs” (except for the exclusions described above, including compensation of an individual employee to the extent in excess of $100,000 per year);
  • costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
  • mortgage interest payments;
  • rent payments;
  • utility payments;
  • interest payments on any other debt obligations that were incurred before February 15, 2020; or
  • refinancing an EIDL made between January 31, 2020 and April 3, 2020.

Limitations on Loan Forgiveness

Workforce Reductions and Salary/Wage Reductions: The amount of a PPP loan subject to forgiveness shall be reduced if, between February 15, 2020, and June 30, 2020, the recipient of the PPP loan (i) reduces the number of full-time equivalent employees, or (ii) reduces the wages/salary of certain employees below a certain threshold.

Cure: If the recipient of a PPP loan reduces its workforce or reduces salary/wages during the period between February 15, 2020, and 30 days after enactment of the CARES Act, but subsequently rehires employees or eliminates salary/wage reductions by June 30, 2020, the PPP loan may again be eligible for forgiveness.


2 years for any portion of a PPP loan that is not forgiven.

Personal Guarantee

No personal guarantees required.



Payment Deferments:

Payments of principal, interest and fees are automatically deferred for six months.

Period of Loan Availability

February 15, 2020, to June 30, 2020, provided, however, the funds will be disbursed on a first come, first serve basis.

Permitted Use of Proceeds

PPP loans are forgivable only if proceeds are used to pay for items listed above. Further, SBA has determined that at least 75% of loan proceeds must be used for payroll costs and 25% can be used for the remaining permitted costs.

If a PPP loan recipient knowingly uses PPP loan funds for unauthorized purposes, such recipient will be subject to additional liability such as charges for fraud. If a recipient's shareholders, members, or partners uses PPP funds for unauthorized purposes, SBA will have recourse against the shareholder, member, or partner for the unauthorized use.

Primary Eligibility Requirements

To qualify, a Tribal business concern must be a small business concern that:

  • is wholly owned by one or more Indian Tribal Governments, or by a corporation that is wholly owned by one or more Indian Tribal Governments; or
  • is owned in part by one or more Indian Tribal Governments, or by a corporation that is wholly owned by one or more Indian Tribal Governments, if all other owners are either United States citizens or small business concerns;
  • has fewer than 500 employees (generally), or has the number of employees permitted based on SBA industry size standards, whichever is greater (find the SBA’s “Size Standards Table” here);
  • has been in operation on February 15, 2020;
  • either (i) has employees to whom it has paid wages and on behalf of whom it has paid payroll taxes or (ii) has paid independent contractors.

Further, Tribal business concerns are generally exempt from the SBA’s affiliate rules. Find guidance to the SBA’s affiliation rules here.


The SBA has applied the regulatory list of "ineligible" businesses to determine eligibility. The following types of Tribal business concerns are currently ineligible:

  • Legal gaming when gaming revenues are more than one-third of total revenues;
  • Financial services, including banks, finance companies, lending companies;
  • Life insurance companies;
  • Businesses engaged in speculation;
  • Passive real estate businesses; and
  • Businesses engaged in illegal activity.

Special Exemptions for Hospitality / Foodservice Businesses

If a Tribal Business Concern’s NAICS Code begins with “72” (hospitality/foodservice businesses, such as hotels, RV parks, restaurants):

  • Special Size Rule: Applicants that do not otherwise qualify as “small business concerns” will qualify if they have no more than 500 employees at any one location.
  • Affiliation Rules Waived: The SBA’s affiliation rules described above are waived.

Fee Waivers & Reimbursement

SBA will not collect certain fees, will reimburse the processing fees of SBA-approved lenders up to a certain amount, and will not assess prepayment penalties.

Eligibility for EIDLs

SBA has issued guidance that if an applicant received an EIDL between January 31, 2020 and April 3, 2020, proceeds from any advance up to $10,000 on the EIDL will be deducted from the loan forgiveness amount on the PPP Loan. Further, the proceeds from a PPP Loan may be used to refinance such EIDL.

Application Forms

Borrowers must carefully review the certifications required to be provided by Borrowers to further confirm their eligibility for a PPP Loan.


Existing SBA-approved lenders will make and administer the loans. Under the CARES Act, the SBA may give additional lenders authority to make PPP Loans. The SBA has a tool to help companies find SBA-approved lenders found here.


See Title I of CARES Act, Sections 1101–1114

Economic Injury Disaster Loan (EIDL) Program

Please see SBA.gov/disaster and a prior Q&B Client Alert for an overview of the existing EIDL program administered by the SBA. Applicants are encouraged to apply online at SBA.gov/disaster. Businesses can use EIDL loans to address damages caused by a “disaster,” which includes COVID-19 in all 50 states.

The COVID-19 pandemic has prompted special modifications and provisions to the SBA’s EIDL program, either in connection with the recently enacted CARES Act legislation or pursuant to actions already taken directly by the SBA under its existing authority or discretion. The changes are generally designed to expand access to EIDLs and to reduce the time it will take to obtain EIDL funding.

EIDLs are made directly by the SBA in an amount not to exceed $2 million. Certain key updates to the program are summarized below:

  • Under the CARES Act, Congress has appropriated $10 billion of additional funding for EIDLs.
  • Ordinarily, to qualify for an EIDL, the applicant must establish that it is a small business concern, private nonprofit organization, or small agricultural cooperative. The CARES Act has expanded its eligibility criteria to also include any business with less than 500 employees, including Tribal business concerns (using the same definition as set forth above).
  • The SBA may advance up to $10,000 of the proceeds of an EIDL to an applicant on an expedited basis, within three days after the SBA receives an application. If the SBA ultimately rejects the application, the applicant may retain this initial $10,000 advance without needing to repay it.
  • According to SBA officials, payments of principal and interest under all new and existing EIDLs will automatically be entitled to deferment through the remainder of 2020.
  • Ordinarily, to qualify for an EIDL, an applicant must show that it is unable to obtain credit elsewhere. This requirement is waived.
  • The requirement that an applicant be in business for one year prior to date it applies for an EIDL also is waived, so long as the business was in operation by January 31, 2020.
  • Personal guarantees will not be required for loans of less than $200,000.
  • The SBA will not require prior year tax returns to be included in the application. The CARES Act authorizes the SBA to approve EIDLs based solely on an applicant’s credit score or “alternative appropriate methods” for determining the applicant’s ability to pay.
  • The SBA is foregoing some of its ordinary requirements to speed up the application process. For example, according to SBA officials, for loans of $500,000 or less, the SBA will rely on the applicant to certify that it is a small business concern.

As with all aspects of the COVID-19 pandemic, this is a fluid and rapidly changing environment and SBA loan applicants should closely monitor developments.

The complete text of the CARES Act is here. For more information, please contact your Quarles & Brady attorney or:

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