Government Affairs

Summary of the US Coronavirus Paycheck Protection and Economic Injury Disaster Loans

April 07, 2020
Summary of the US Coronavirus Paycheck Protection and Economic Injury Disaster Loans

1. Paycheck Protection Program Loans (PPP)

• This loan is intended to facilitate near-term continuation of employment for businesses experiencing economic stress due to the COVID-19 crisis.

• It is meant to be used to continue or restore numbers of employees and compensation levels to those existing before February 15, 2020.

• The attractive feature of this program is that amounts paid for payroll and other certain costs during the 8 week period from the loan origination date will be forgiven.

• Eligible businesses: Small businesses under 500 employees including sole proprietors, independent contractors, partnerships and 501c(3) charities who were in business before February 15, 2020,and paying employees or independent contractors and/or self-employment earnings.

• Loan amount: 2.5 X average monthly payroll costs for the year prior to loan date.

• Payroll costs include: Employee compensation up to $100,000 per employee including commissions, tips, vacation, sick, family leave and separation pay. Employer paid group health premiums, retirement benefits and state/local payroll taxes.

• Documentation: Quarterly payroll returns, Forms 1099, Income/expense records for sole proprietors.

• Forgiveness amount: Amount used to pay payroll costs, mortgage interest, rent, and utilities for the 8 week period from loan date.

• Loan repayments: Amounts not forgiven are repaid over 2 years at .5% interest. No payments required for first 6 months.

• No guarantees or collateral required.

• How To Apply: Start with your bank. Many are SBA lenders. Visit the SBA website to locate one if not.

• When to apply: As early as possible as funding is not unlimited. Many small businesses can begin applications starting April 2, 2020 and lenders can begin processing them on April 3, 2020. Self -employed applications begin processing on April 10, 2020.

2. Economic Injury Disaster Loans & Grants (EIDL)

• This loan program includes two features. All applicants will receive a $10,000 grant within 72 hours of applying.

• There is no obligation to repay even if the loan is ultimately denied.

• Loan amounts up to $2,000,000 are available and will be determined by the lender based upon economic injury/need of the applicant.

• This loan is available for all general working capital needs.

• Guarantees and collateral may be required depending on amount of loan.

• Eligible businesses are generally the same as for PPP loans above but also include all types of non-profit organizations besides 501c(3) charities.

• Loan terms: Repayment periods up to 30 years. Business interest rate is 3.75% and Non-profit rate is 2.75%.

• Online applications are at: https://disasterloan.sba. gov/ela/

• We understand the applications will be directed to your bank noted in the application or another local SBA lender if needed.

Back to all news

We are using cookies on our website

Please confirm, if you accept our tracking cookies. You can also decline the tracking, so you can continue to visit our website without any data sent to third party services.