The table below compares the terms of the EIDL 7(b) and PPP 7(a) SBA loans:
| EIDL (Economic Injury Disaster Loan) | PPP (Paycheck Protection Program) |
|---|---|
| How Do you Apply? | |
| Directly from the SBA website See streamlined application here | Participating Banking Institutions. Check with your bank to see if they will be participating. Most banking institutions will be accepting applications starting April 3, 2020. See the application here (current as of April 3rd), along with the official loan factsheet. If your lender is not participating, check the SBA website for a list of SBA-approved lenders. |
| Who can apply? | |
| Eligible applicants include businesses with not more than 500 employees, sole proprietors, and independent contractors. Businesses should have been in operations by at least January 30, 2020. | Eligible applicants include businesses with not more than 500 employees, sole proprietors, and independent contractors. Businesses should have been in operations by at least February 15, 2020. |
| Special Features of the Loans | |
| When applying for this loan, you can request an advance of up to $10,000 that is payable within approximately 3 days of submitting the application. This advance does NOT need to be repaid, even if your application for the loan is ultimately denied. | All or a portion of this loan may be forgiven, if conditions are met. See below for further discussion on conditions to be met for loan forgiveness. |
| What is the maximum amount of the loan? | |
| The maximum loan size is $2 million. | Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee. |
| What is the annual interest rate? | |
| 3.75% for businesses, 2.75% for non-profits | 1% (SBA recently changed from 0.5%) |
| What is the term of the loan? | |
| Up to 30 years | 2 years |
| What can the loan be used for? | |
| EIDL can be used more broadly for various working capital needs (payment of fixed debts, payroll, accounts payable, employee sick leave and other bills that cannot be paid due to a disaster’s impact). | You should use the proceeds from these loans on your: Payroll costs, including benefits, commissions, tips, contractors and sick leave, up to $100k per employee; Interest on mortgage obligations, incurred before February 15, 2020; Rent, under lease agreements in force before February 15, 2020; and Utilities, for which service began before February 15, 2020. |
| What reduces the amount of loan forgiven? | |
| N/A – $10k advance does not need to be repaid. No further conditions for forgiveness as long as used for the purposes above. | You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll. |
| What are the payroll conditions? | |
| None. | Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount. Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019. Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. |
| Are the Forgiven Amounts taxable? | |
| Currently unclear. It is assumed that the $10k will not be taxed as income, but no official guidance has been found yet. | No. |
| Is a personal guarantee required? | |
| Yes, for loans > $200,000 | No. |
| Do I need to have filed my 2019 Taxes to apply? | |
| No, 2019 Taxes do not have to be filed prior to applying for the loan. | No. |
| How long will the loan application take? | |
| 3 days for advance. Unknown for funding. Expected at least a few weeks. | Unknown at this stage. Expected at least a few weeks. |
| Can I apply for both loans? | |
| Yes, you can apply for both. If you have already applied for an EIDL loan and $10k advance, it does NOT preclude you from being able to apply for PPP. That said, if you are approved for both loans, you can choose which one you want to take OR take an EIDL loan first and then re-finance it into a PPP loan. | Yes, you can apply for both. If you have already applied for an EIDL loan and $10k advance, it does NOT preclude you from being able to apply for PPP. That said, if you are approved for both loans, you can choose which one you want to take OR take an EIDL loan first and then re-finance it into a PPP loan. |
For further information about these and other programs available to small business owners and self-employed individuals under the Stimulus (CARES ACT), see here.
Still have questions about the Stimulus? Check out these FAQs here.
For more information and a community where you can ask questions and connect with others, please join the Facebook community Financial Literacy for Women Business Owners.