Applying for a SBA Loan
The $2T Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress includes multiple loan provisions to help small businesses.
While both are called loans, they include grant features designed to encourage small businesses to maintain their payrolls and avoid layoffs. The programs are timed to help businesses weather the critical next two months.
The EIDL program is tailored to meet the specific needs created by the COVID-19 pandemic and modeled after previous disaster relief programs. Its main feature is an immediate $10k grant and loan amounts up to $2m per business.
Both loans are administered through the Small Business Administration (SBA) and will be available through approved lenders. These lenders include the major banks that you already have a relationship with. Since the PPP loans are on a first-come-first-serve basis, we encourage you to reach out soon.
PPP Loan
In our conversations with members, a PPP loan is the more popular of the two, since there aren't any downsides for applying - provided you are determined to keep all of your employees onboard for the next couple of months.
PPP Loan Basics
- The loan will be forgiven if all employees are maintained on the payroll for eight weeks.
- The loan forgiveness amount will be reduced proportionately for payroll reductions compared to the base period.
- Loan proceeds can be used for payroll, rent, mortgage interest, or utilities.
- The formula for the maximum loan amount is 2.5 times monthly payroll, using a defined 2019 payroll base period.
- There is no collateral required.
- Lenders may begin processing PPP loan applications as soon as this Friday, April 3.
