Can You Get Both The EIDL And The PPP?

The short answer is yes but if you get both of them, there are some guidelines you should know about.

EIDL is short for Emergency Injury Disaster Loan and PPP is short for the Paycheck Protection Program. The EIDL is intended to supply working capital, including payroll and fixed expenses, including accounts payable and other bills that could have been paid if the disaster had not happened.

The PPP is mainly intended to cover payroll expenses but also is intended to cover rents, mortgage interest, utilities, continuation of health benefits and interest payments on debts incurred prior to February 15, 2020. (For more information on the PPP, click here.

Both of these programs are designed to help small businesses that have experienced a temporary loss of revenue due to the effects of COVID-19 on the economy. And while you can apply for both loans, the money cannot be used for the same thing. In other words, if you get the PPP loan to cover your payroll for the next 8 weeks, then get the EIDL, you cannot then use the EIDL for that same payroll.

The PPP is a short term loan and the money is intended to be used over the next 8 weeks after the date of your loan. Anything that is used according to the guidelines can be 100% forgiven. (See the link 2 paragraphs up for the details on this.)

The EIDL can be as long as a 30-year term and has an interest rate of 3.75% for businesses and 2.75% for non-profits. Its rate is higher than the PPP which has a term of 2 years with a 1% interest rate but with the longer term, it can be repaid with lower payments.

Maximum loan amounts are also very different between these two programs. The maximum under the EIDL is $2 Million while the maximum under the PPP is $10 Million.

Another very important point that concerns both of these loans is that if you have received a loan under the EIDL between January 31, 2020 and April 3, 2020, that amount will be added to the loan amount you qualify for under the PPP and that loan will be paid off, leaving you with only the PPP loan.

As an example, let’s say you received an EIDL loan of $100,000 on March 15th, 2020. Since the loan date falls within the specified time period, it would need to be paid off when you get a PPP loan. To further explain, let’s say your payroll expenses qualify you for a PPP loan of $100,000.

These two amounts would be added to give you a maximum loan amount of $200,000 under the PPP. However, any amounts that are not spent according to the guidelines within 8 weeks of the date of your PPP loan would need to be repaid within 2 years at the 1% interest rate.

Keeping in mind the delayed payments for each of these programs may also assist you in deciding which one works best for you and your business.

You do not have to make any payments for the first 6 months of the PPP loan. Under the EIDL, you don’t have to make any payments for the first 12 months. Interest still accrues during these time periods for both programs.

If you need help figuring out what direction to go with these programs, we are available to answer your questions.

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