As of 4/6/2020
Below is a list of my bullet points. There’s a ton of info out there and this is my best effort to clarify it.
And I apologize for all of the “to the best of my knowledge” disclaimers below. A lot of the information out there has changed recently and continues to be fluid.
Here is the most current link for the SBA Loans for Coronavirus Relief.
ECONOMIC INJURY DISASTER LOAN FOR COVID-19 (EIDL)
- This loan has a possible advance up to $10k that is based on the number of employees you have ($1k/employee) and the SBA is currently saying you will not have to repay the advance.
- To the best of my knowledge this is a 30-year term, 3.75% rate, with up to a year deferred loan. That information is no longer on the SBA website though, so I’m not sure if they are changing it.
- There is not a way to request the amount of money that you want to borrow and to the best of my knowledge, nobody has received funding from this loan yet.
As far as I understand, whatever portion of the EIDL advance that you accept, it will be deducted from the non-repayment portion of the PPP loan, if you get the PPP loan.
PAYCHECK PROTECTION PROGRAM (PPP)
- You can apply for PPP through a bank (start with your bank first). You may soon be able to apply through Intuit as well - https://quickbooks.intuit.com/small-business/coronavirus/paycheck-protection-program/
- The loan is the equivalent to 2.5 times your average monthly payroll for 2019. If your business started in 2020, the average for January and February. To the best of my knowledge this includes yourself and it doesn’t include independent contractors since they can apply for the loan too.
- Funds are provided in the form of loans that can be fully forgiven for an 8 week period (from when the loan is first disbursed) when employees are kept on the payroll and funds are 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.) You will have to provide the proper paperwork when the time comes to have the loan forgiven.
- Whatever is not forgiven will be converted into a 2-year loan with a 1% rate.
It looks like you can get possibly get both of the two loan options EIDL and PPP, but only PPP can be used for payroll if you do that.
There is also a line on the PPP application asking about the “Refinance of Eligible Economic Injury Disaster Loan, net of Advance (if Applicable; see Paycheck Protection Program Rule)”. I’m not sure if that means when you get the EIDL if you have to refinance it or if you have the option to do it.
Feel free to email with any questions and I’ll help the best that I can.
Charles Alexander
Director
Tennessee Small Business Development Center
Volunteer State Community College
1480 Nashville Pike
300 Building Office 103C
Gallatin, TN 37066
Ph: (615) 230-4780
Fax: (615) 230-3362
charles.alexander@volstate.edu
www.tsbdc.org
