Economic Injurty and Disaster Loans (EIDLs). As Monument notes, the CARES Act temporarily expands eligibility for SBA Economic Injury Disaster Loans.
- What they are: An emergency loan program for federal disasters, including COVID-19. This program offers up to $2 million in assistance for fixed debts, payroll, and other account expenses with an interest rate of 3.75 percent for small businesses and 2.75 percent for nonprofits.
- What’s new: The CARES Act opened EIDLs to more types of small businesses, made it easier to apply, and ensured that EIDLs smaller than $200,000 can be approved without a personal guarantee.
- Additional feature: Through the SBA Economic Injury Emergency Grant Program, businesses can receive an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA EIDL.
- How to access the advance: Companies must first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
- Who is eligible: Small businesses with fewer than 500 employees (including sole proprietors with or without employees), independent contractors, cooperatives and employee owned businesses, private non-profits and tribal small businesses impacted by COVID-19.
- How to apply: Use the SBA’s application portal here
The Paycheck Protection Program. Key parts of the program, via initial guidelines from the U.S. Treasury:
- What it is: A new program that provides small businesses with funds in the form of loans to pay up to eight weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.
- When to apply: Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply.
- How to apply: You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. The application form is available here.
- Who is eligible: Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries. For more information about eligiblity, please see section 1 in this guide from the U.S. Chamber of Commerce.
Businesses will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program is retroactive to February 15, 2020 in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020.
- Conditions of loans: The Paycheck Protection Program can offer loans up to $10 million and with 100 percent loan forgiveness if a business sustains its pre-COVID-19 payroll levels through June 30, 2020. Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll).
- Other things to know:
- No collateral or personal guarantees are required.
- Neither the government nor lenders will charge small businesses any fees
- FAQ: If I get an Economic Injury Disaster Loan and/or an Emergency Economic Injury Grant, can I get a PPP loan? Yes. Note that if you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April. For more FAQs, please refer to pp. 2-7 of Monument Advocacy’s summary.
- Resources from the U.S. Chamber of Commerce
- Resources from the U.S. Department of the Treasury: