You have probably seen a lot of information on the CARES Act. This short post is only meant to summarize the most important aspects of the Paycheck Protection Program Loans (PPPL) and the Economic Injury Disaster Loan (EIDL) programs. Both loans feature the possibility of forgiveness.
Paycheck Protection Program Loans (PPPL)
- Employee Count: 500 or fewer
- Dollar Amount: Lesser of $10 million or 2.5 times the average monthly payroll costs
- Loan Processor: your local financial institution (start here)
- Loan Use: payroll costs, rent, utilities, mortgage interest, interest on prior debt paid during the 8-week period after loan origination
- Loan Terms: 4% interest rate; deferred payments for first 6 months; 10-year maximum term
- Forgiveness: full or partial forgiveness for maintaining employment for the 8 weeks after loan origination or rehiring employees by 30 June (see Section 1106)
- Next Steps: further guidance expected from the SBA by 11 April 2020
Economic Injury Disaster Loan (EIDL)
- Employee Count: 500 or fewer
- Dollar Amount: up to $2 million with $10,000 emergency advances due paid within 3 days
- Loan Processor: Small Business Administration (start here)
- Loan Use: fixed debts, payroll, accounts payable and other costs, but are not intended to replace lost sales or profits
- Loan Terms: 3.75% interest rate; 30-year maximum term
- Forgiveness: $10,000 advance forgiven even if EIDL application denied
- Next Steps: online application available now at the SBA’s website
Needless to remark, all of the nuances of an 880-page federal bill cannot be put in a one page summary. Please check with your local banker and the Small Business Administration’s website for details applicable to your situation.