Paycheck Protection Program (PPP)
The FORGIVABLE loans are under the SBA’s “Paycheck Protection Program” (PPP). These are the short-term loans intended to help business owners make payroll for the next few months. They are available for a maximum amount of 2.5x your average monthly payroll costs. Forgiveness will be based on the money’s usage towards eligible costs – payroll (of employees making less than 100k/year), rent, utilities, and mortgage interest.
The SBA will NOT be handling the applications for these loans directly.
You will need to coordinate with a local, SBA approved lender to apply for these loans. At this time, it does not appear that many, if any, banks are set up to take applications. If you are interested in applying for a PPP loan, and have a banker or lender that you typically work with, please contact them immediately to see if they are capable of handling this loan, and find out what information you’ll be required to submit once they begin accepting applications.
Economic Injury Disaster Loan (EIDL)
The NON-FORGIVABLE loans are processed under the SBA’s “Economic Injury Disaster Loan” (EIDL) program. These are low interest, longer term loans for higher dollar amounts that can be used for a broader category of expenses. Unlike the PPP loans, you can apply for these directly through the SBA. The SBA website was updated last night and is online (for now!) with a streamlined application with much fewer of the required documents up front.
Based on the Senate committee’s guidance, if you apply for and receive an EIDL loan before the PPP loans are available, you can refinance the EIDL loan into a PPP loan and still receive the forgiveness for the qualifying expenses. You cannot have both an active EIDL loan and PPP loan if they are used for the same purposes (ex. to cover payroll and rent).
The CARES Act passed Friday also allows the SBA to provide immediate advances on EIDL Loans up to $10,000 to eligible businesses. The SBA’s new streamlined application (link above) has now been updated for this. This advance does NOT have to be paid back, even if you are denied for the EIDL loan, however any amount you receive is subtracted from what is forgivable under a PPP loan. The SBA should send this money within 3 days of receiving the application. To apply for the advance, you just need to go through the SBA website’s new application. If you have already submitted your application on the previous system, or by paper upload, the SBA’s site says to APPLY AGAIN through the streamlined application to apply for the advance.
APPLICATIONS FOR THESE ADVANCES ARE PROCESSED ON A FIRST COME FIRST SERVE BASIS FROM THE APPROPRIATED FUNDING.
We cannot complete these applications for you – by law the business owner must be the one to certify the information is correct. If you are a business owner with multiple businesses, the EIDL loans are processed by entity, so you will need to submit applications for each entity.
https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources