![]() As mentioned above, the goal is business continuity that allows businesses to stay open and avoid layoffs. Perhaps the easiest way to quickly understand how you can and cannot use EIDL loans for your business is to understand the intent of the loans in the first place. You may have to provide personal assets for collateral, and you will need to check with SBA before making any major asset transactions (e.g., selling or buying a home) You may have to provide personal assets for collateral, and you will need to check with SBA before making any major asset transactions (e.g., selling or buying a home) PPPĢ.5x average monthly payroll up to $10 million N/A Yes Payroll Expenses Local banks, backed by SBA At least 75% needs to be used for payroll for forgiveness eligibility and you can’t layoff employees Cannot receive PPP loan or forgiveness of PPP loan if you use EIDL for payroll Express Monthly payments might be lower, but expect a lump sum payment at the end of 30 year term In addition, a lack of immediately available funds from the CARES Act means that some loans have been temporarily restricted to agricultural businesses only. As of writing this overview, both PPP and EIDL loans are available, but there have been a slew of technical and administrative issues that have delayed or disqualified many businesses. The EIDL is provided specifically with the goal of keeping businesses open and employees on the payroll (the alternative being an even larger hit to the already stressed unemployment system).Īny US business with fewer than 500 employees that was operational as of January 31st, 2020 is now eligible to apply for relief loans. The fact is, with numerous consumers out of work, quarantined in their homes, and restricted in their shopping habits, many small businesses lack the necessary capital to remain operational without an immediate revenue boost. The CARES Act, however, expanded the scope of what the SBA and EIDL programs support, and is by far the largest endeavor undertaken by the SBA. The EIDL, in particular, has existed for years and is designed to support any small businesses affected by a natural disaster (like earthquakes, tornadoes, or hurricanes). ![]() The CARES Act provided $367 billion in funding to the Small Business Administration (SBA) to be administered to small businesses through the Payment Protection Program and the Economic Injury Disaster Loan Program. The law is designed to protect the US and US businesses from the economic ramifications of COVID-19. In response to the COVID-19 crisis, the US government has passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Though it’s important to know the details surrounding the loan, and the rules governing how it’s used to support your business before you spend the money. ![]() Here is where Small Business Administration’s (SBA) relief loans come into play.įortunately, for US-based small businesses, the government has provided access to low-rate (and in some cases, forgivable) business loans for the sake of business continuity. This is undoubtedly stressful-more so if you have employees on payroll to support. ![]() Beyond just damaging earnings, it could be putting your business at risk altogether. Like most small business owners across the globe, COVID-19, and its resulting economic lockdown, may be hurting your business.
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