Administrator of the U.S. Small Business Administration Jovita Carranza and U.S. Treasury Secretary Steven T. Mnuchin issued a statement on April 24 that the Small Business Administration will resume accepting PPP loan applications on Monday, April 27 at 7:30 a.m. Pacific
. The additional $310B that is being made available in PPP is expected to run out swiftly again, so businesses are urged to apply promptly.
For more information on the Paycheck Protection Program, visit: sba.gov/paycheckprotection.
SBA Administrator Jovita Carranza issued this joint statement with Treasury Secretary Steven Mnuchin to “urge Congress to appropriate additional funds for the Paycheck Protection Program.”
As of approximately 10 a.m. ET on April 16, the SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding. This info is on the PPP page of the SBA website.
SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis. This info is on the Disaster Loans Applications page of the SBA website.
It’s important to note that through work with its partners, the SBA has processed more than 14 years’ worth of loans in less than 14 days. The Paycheck Protection Program is saving millions of jobs and helping America’s small businesses make it through this challenging time. The EIDL program is also providing much-needed relief to sustain businesses and their employees.
For now, we’re connecting local businesses to the following resources:
We continue to closely track the economic impacts of the novel coronavirus, and know that for many of you, immediate relief is essential. For an economic shock of this scale, the federal government is best able to provide resources at a scale to match.
Our consultant, Monument Advocacy, put together a helpful overview and FAQ on April1 about how the latest stimulus package passed by Congress expands small business grants and loans available. These include two major programs for small businesses: Economic Injury Disaster Loans, which include access to an emergency advance and to bridge loans, and the Paycheck Protection Program.
The SBA announced additional guidance on these programs on April 2, and has an overview of all of its coronavirus relief options here. The SBA site is your best resource for up-to-date information about the following:
Here is a snapshot of what we know so far about the two major programs for small businesses:
- Economic Injury and Disaster Loans (EIDLs). As Monument notes, the CARES Act temporarily expands eligibility for SBA Economic Injury Disaster Loans (EIDLs).
• 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 501 (c)(3) 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
- If I am applying for / received an Economic Injury Disaster Loan(EIDL), is my small business eligible to participate in the Paycheck Protection Program (PPP)?
Borrowers can apply for both an SBA Economic Injury Disaster Loan and the Paycheck Protection Program loan. However, the Paycheck Protection Program loan funds and the Economic Injury Disaster Loan funds cannot be used for the same purpose. The Paycheck Protection Program loan must be used for payroll (minimum of 75% of the funds received) for it to be eligible for a forgivable loan and the remaining is used for different purposes. Borrowers who accept both loan funds should document the uses of the funds appropriately.
- I received an EIDL – Can I still apply for PPP?
Yes, you are still eligible to apply for the Paycheck Protection Program even if you applied for or received an SBA Economic Injury Disaster Loan.
If your Economic Injury Disaster Loan was not used for payroll costs, it does not affect your eligibility for a Paycheck Protection Program loan.
If your Economic Injury Disaster Loan was used for payroll costs, your Paycheck Protection Program loan must be used to refinance your Economic Injury Disaster Loan. The Paycheck Protection Program’s maximum loan amount is $10 million with a fixed 1% interest rate and maturity of two years. Economic Injury Disaster Loan assistance provides up to $2 million loan per business and are long-term, low-interest rate at 3.75% for businesses and 2.75% for non-profits and a maturity of up to 30 years
Any advance up to $10,000 on the Economic Injury Disaster Loan will be deducted from the loan forgiveness amount of the Paycheck Protection Program loan.
For example, a borrower may obtain a loan from the Paycheck Protection Program and use those funds to pay for 8 weeks of payroll or employee retention. They may wish to then dedicate their entire EIDL funds towards working capital, notes payable and accounts payable that do not duplicate the funds provided through the Paycheck Protection Program. If the EIDL loan was used for payroll expenses, the borrower must refinance the EIDL loan with the PPP loan which carries a lower interest rate as well as a shorter maturity period.
- Do I have to choose one or the other?
Select the loan program that best meets your individual business needs; however, you are not permitted to hold funds from both programs for the same purpose.
The PPP loan has different terms from the EIDL loan. The Paycheck Protection Program’s maximum loan amount is $10 million with a fixed 1% interest rate and maturity of two years.
Economic Injury Disaster Loan assistance provides up to $2 million loan per business and are long-term, low-interest rate at 3.75% for businesses and 2.75% for non-profits and a maturity of up to 30 years
The application period for PPP loans runs through June 30, 2020, but the EIDL application period runs through December 2020. If you have working capital need beyond what is provided by PPP, you can apply for additional assistance through the EIDL program.
If you are applying for both, you can accept PPP first – then decide whether to close on your EIDL approved loan. An EIDL approved loan may be closed within 60 days, and the borrower can choose whether to close on the loan. The EIDL application period runs through Dec. 2020.
- Resources from the Small Business Administration:
- Recording available from the Seattle Metro Chamber webinar on managing business expenses, and resources available, including the Paycheck Protection Program
- Recording available from the OneRedmond webinar with SBA representatives to review funding opportunities available, including the Paycheck Protection Program (PPP) Loans, the SBA Debt Relief and Express Bridge Loans, and the Economic Injury Disaster Loans (EIDL) and Emergency Economic Injury Grants.
- Resources from the U.S. Chamber of Commerce
- Resources from the U.S. Department of the Treasury: