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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.

Latest Update on the PPP

The Paycheck Protection Program, in case you haven’t heard, is a federal relief program for small business owners, their employees and independent contractors. (For more information on it, go to this page on this site SBA Paycheck Protection Program Details

Even though it was scheduled to start on April 3rd, as of today, it program has not begun. The banks and the SBA are still working out the details of how they will deal with each other after the loans have been done.

Apparently, some banks are not accepting any more applications. My guess is that they have decided they can only handle a certain amount and they are probably giving their existing customers priority.

The lender that I am approved with is ready as soon as the details are handled and the program is given the green light. They have moved their tellers over to be loan processors to handle a large volume of applications.

This forward planning is very smart and superior to the other banks who won’t accept any more applications (which they can’t even do anything with until they have the green light anyway).

If this is a program you are interested in, go ahead and fill out your application, gather your payroll information and be ready for the roll out. If you need help with it or have questions, please call or fill out a contact form.

 

SBA EIDL Loans

There has been a lot of talk about the new SBA loans but I think it is important to make sure you have the truth about these programs.

There has been $349 Billion approved for these loans. It is not known how long these funds will last or if any additional funds are added to that amount.

The PPP (Paycheck Protection Program) is already covered pretty well on this site although we still don’t know when the SBA and the banks will have the details worked out so they can start processing applications. It was supposed to happen on April 3rd but they are still haggling over the details.

Right now, I want to give you some information about the EIDL (Economic Injury Disaster Loan). This program, like the PPP, is for businesses and includes sole proprietors with and without employees, as well as independent contractors.

It is intended to be used as working capital for businesses. The money can be spent on fixed expenses, payroll, accounts payable and other bills that could have been paid if the disaster had not happened. It cannot be used to pay down long-term debt, such as mortgages or equipment loans or leases.

The maximum loan amount is $2 Million with the funds intended to be used for working capital, including payroll and fixed expenses. The interest rate is 3.75% for businesses and 2.75% for non-profits. The term can be up to 30 years. The first payment is not due for one year but interest will accrue during that time.

This loan also has up to a $10,000 advance opportunity built into it. When you fill out the application, you can apply for the advance which can be given even if you do not get approved for the loan. If you get the advance and the loan, the $10,000 (or whatever amount you receive) will be deducted from the loan amount.

The $10,000 has been well publicized but the regulations state that you can get up to that amount. There is no guarantee of any specific amount. Regardless of whether you get the loan or not, the advance does not have to be paid back.

One difference between the EIDL and the PPP is that the EIDL can be based on a credit score while the PPP is not. Amounts above $200,000 require a personal guarantee with the EIDL.

You can apply for both loans but the money cannot be used for the same thing. In other words, you can’t double dip. To do so would be to invite trouble with the government and you don’t want that.

The only way to apply for this loan is by going directly to the SBA (Small Business Administration). The link for applying is here: SBA EIDL Application