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CARES Act Help For Small Businesses

Learn About Government Loan Programs and CARES Act

Main Street Lending Program

Within the CARES Act, the Federal Reserve and the Department of the Treasury established a provision for an additional lending program called the Main Street Lending Program (MSLP).  Lenders will be able to enhance support to small and mid-sized businesses that were in good financial standing before the COVID-19 crisis, by offering 5-year loans of between $250,000 and $300 million.  These businesses must commit to make a reasonable effort to maintain payroll and retain workers.  Additionally, firms that have taken on a PPP loan may also take out Main Street loans.  You can find details on the program at the Federal Reserve Bank of Boston website.  The program has been opened up by the Fed, and First Merchants Bank is an Eligible Lender.  Please contact your banker to discuss your interest in the MSLP.  

Paycheck Protection Program

As part of the CARES Act, the Paycheck Protection Program (PPP) put in place provisions for loans to be issued that can cover payroll costs and a number of other costs. Congress passed several rounds of funding, with the third in the 1st Quarter of 2021. To promote access to capital, SBA is currently only accepting applications from select small financial institutions. The PPP will open to First Merchants and all other participating lenders shortly. For the time being, we are not accepting applications until further SBA guidance is provided. We appreciate your patience and understanding as we move into this next stage with this program.   

On January 6, 2021, the SBA issued guidance regarding the new round of PPP funding and has since released loan application documents.  This is in line with the Economic Aid to Hard-Hit Small Businesses, Non-Profits and Venues Act (Economic Aid Act).  

The following documents and resources reflect the most recent guidance and may be helpful to review.

The SBA has issued a number of interim final rules and FAQs since inception of the program.  The websites below may be valuable resources as you work through loan application and forgiveness.  

PPP Flexibility Act

The The Paycheck Protection Program Flexibility Act went into effect on June 5, 2020 to provide greater flexibility for PPP borrowers.  Among other things, the bill:

  • Extended the forgiveness period for all PPP loans from 8 to 24 weeks from the date of origination;
  • Reduced the minimum amount that borrowers must devote to maintaining payroll from 75% to 60% in order to receive forgiveness;
  • Allowed for maturity (i.e. 2 years) on previously made PPP loans to be extended by mutual agreement of the lender and the borrower;
  • Modified the rules related to when loan payments would begin for that portion of a loan that is not forgiven.

PPP Loan Forgiveness

Clients whose PPP loan funded in 2020 from First Merchants Bank have entered the loan forgiveness period. Below are some requirements. You should gather your supporting documentation, and also determine which forgiveness application fits your situation. They are included here for your reference:


As you may be aware, the SBA offered 2 EIDL products: an EIDL loan (with a low interest rate and term up to 30 years), and an EIDL Advance (offered in $1,000 increments per employee with a maximum of $10,000). In accordance with the CARES Act, starting on October 2, 2020, the SBA began reducing the PPP forgiveness amount by the amount of the EIDL Advance. The EIDL Advance Deduction was later repealed on December 27, 2020, and as of December 29, 2020, the SBA no longer implemented those reductions. For loans where the SBA remitted a forgiveness amount that was reduced by an EIDL Advance, SBA will automatically transfer the reconciliation payments to First Merchants to be further credited to those borrowers. Borrowers do not need to apply for their funds.

At this time, if you received a PPP loan as well as an EIDL Advance, please review the SBA’s Guidance on Repeal of EIDL Advance Deduction Requirements.  

Additional Provisions in CARES Act

The CARES Act has several additional provisions that may be of particular interest to business owners.  First, it expanded the applicability of Economic Injury Disaster Loans.  Second, a number of changes to business taxes will also help ease the burden on businesses impacted by COVID-19, this includes adding an employee retention tax credit, delaying payroll tax payments, relaxing limitations on businesses with net operating losses, pulling ahead 2021 corporate alternative minimum tax credits, increasing business interest expense deductions, affording immediate write offs associated with improving facilities, and creating a temporary exception for the alcohol excise tax if use to produce hand sanitizer in 2020.  Both individual and business coronavirus tax relief measures can be found here. Business owners should contact their accountant to understand the full scope of these modifications.  Third, the act put in place changes to the Families First Coronavirus Response Act.  These changes affect paid sick leave and paid FMLA coverage. You can find all CARES ACT information on the Treasury page here.

Financial Assistance and CARES Act for Individuals

As we continue to navigate the COVID-19 situation together, we know that you may have questions about how First Merchants is prepared to support our personal banking clients during this unprecedented time. Know that your bankers are here to help. Read information related to financial assistance initiatives that we’re offering as well highlighting important parts of the CARES Act.