08 Jul Understanding PPP and EIDL Stimulus Programs
Navigating the various programs enacted in the wake of the COVID-19 pandemic can be daunting. We want to make sure you have access to the most relevant and easy-to-understand resources available.
Also, the SBA recently released the PPP loan forgiveness application. The application clarifies and simplifies the CARES Act guidelines and eases the burden on small businesses. In general, the loan should be forgivable if used within an 8-week period in the following manner:
- 75% of loan proceeds used for payroll and benefits
- Remaining 25% generally used for rent, utilities and interest on debt obligations
The chart below highlights the key differences between the two programs available: Additional information can be found on the SBAs COVID-19 small business guidance page.
| Paycheck Protection Program | Full EIDL Loan | ||
| PURPOSE | To be used for payroll, employee benefits and certain operating expenses during the 8 week period beginning when the loan is funded | To meet financial obligations and operating expenses that could have been met had the disaster not occurred | |
| AMOUNT | Calculated as 2.5x average monthly payroll expense (Up to $10 million) | Up to $2 million | |
| FORGIVABLE | YES – The debt will be forgiven if a minimum of 75% of the funds received are expended on eligible payroll obligations and the remainder is expended for eligible operating expenses (generally rent, utilities and debt interest) | NO – with the exception of the $10,000 EIDL loan advance | |
| TERMS | 1% interest rate (for portion not meeting forgiveness criteria) | 3.75% interest rate for businesses | |
| 2.75% interest rate for non-profit entities | |||
| 1st PAYMENT DUE | Deferred 6 months(for portion not meeting forgiveness criteria) | Deferred 1 year |
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