Small businesses reeling from the coronavirus pandemic have been thrown a lifeline through the Congress and the $2.2 Trillion Cares Act, a combination of loans, grants and tax policy changes designed to keep businesses afloat and capitalized until the world and economy returns to normalcy.
The Small Business Administration has made available Economic Injury Disaster Loans as a recurring source of loan funds during natural disasters and now again during this public health crisis. The Federal Government has also passed the $2.2 Trillion Cares Act and has placed additional assistance for small businesses as one of it's top priorities.
The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million. Additionally, small business owners are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.
Through the CARES Act, a new resource is available to American businesses called the Paycheck Protection Program. The Paycheck Protection Program (“PPP”) authorizes up to $349 Billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone. These loans are forgivable after certain criteria have been met and the application for this program opens today, April 3! However, many lending institutions have remarked that their processes for taking in these applications will likely be delayed to next week.
Below you will see a document outlining the differences between the two programs that may help you decide if you should apply for one or both loan funds. Click here for a link to the full list of resources offered by the SBA.
A word of advice, businesses are allowed to double dip into both the EIDL and PPP, but PPP is much more restrictive on it’s uses, so when applying, use it for payroll and use the EIDL for other bills like utilities and rent.
A reminder: The Economic Injury Disaster Loans have been open to applications for some time now and the Paycheck Protection Program's application just opened! Follow this link for the program description and instructions on how to apply!
One final note: Many of the rules and regulations for PPP and EIDL are in flux and subject to change. Please check with the SBA and your lenders on how they will be processing these applications and programs.
Need to see some more discussion on these programs? Check out the links below!