On April 3rd, banks and financial institutions across the United States began processing and disbursing cash to small businesses that qualify for two main programs: Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).
It’s expected the funds associated with these two programs, $359 billion, will be depleted within the next two to four weeks. So you have no time to waste! We strongly encourage you to first evaluate if you’re eligible for one of these programs and take immediate action to apply.
What are the PPP and the EIDL?
- PPP is a forgivable loan offered mainly by banks and credit unions. Your business is eligible to receive up to 250% of your monthly payroll costs during a specified period. Sole proprietors or independent contractors are also eligible but the calculation of loan amount is based on wage, commission, income or net earnings. The loan is forgivable up to 8 weeks of payroll and other costs, and remaining loan payments are deferred for up to 6 months.
- EIDL is a loan offered to businesses that can prove they’ve been materially affected by COVID-19. This loan is disbursed directly by the SBA. The loan includes a non-refundable cash advance of $10,000 funded within 3 days.
Who is eligible?
- Businesses and entities must have been in operation on February 15, 2020
- Less than 500 employees
- Eligible Parties
- Small Businesses, including sole proprietorships, with or without employees
- Independent contractors
- Cooperatives and employee owned businesses
- Private non-profits
- Tribal small businesses
- For PPP, banks, credit unions, and SBA lenders are applying additional restrictions. Most banks are limiting PPP eligibility to their existing clients.
Can I apply for both programs?
- Yes. However, you cannot use the funds of the loans for the same purpose.
- If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan.
- If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.
How can I apply?
Paycheck Protection Program (PPP)
- The best chance for you to get a loan is to act QUICKLY and contact your bank.
- If your bank hasn’t announced whether it’s offering PPP loans, expect to hear from them by early next week
- If you’re bank or credit union is not taking PPP apps, the best option is to contact a local community bank in your area
- Complete this PPP application form
- Documents you should start gathering:
- 2019 Payroll — total payroll for full year 2019, by employee, as reported to the IRS
- 2019 Independent Contractor Costs — Listing of 1099’s-MISC for 2019 independent contractors, by person
- 2020 YTD Payroll report as of February 15, 2020 or closest date after that date, by employee
Economic Injury Disaster Loans (EIDL)
- Complete this short application on the SBA website
You cannot submit multiple PPP applications at the same time and can only be funded for one PPP loan. Each application can be completed in a matter of minutes, and loans are “first come, first serve”. If you’re eligible, don’t waste any time and apply NOW.
The bottom line
We sincerely recommend that you apply for any government assistance immediately. But if you don’t qualify, for whatever reason, we recommend you look for other forms of aid so that your small business can survive this economic downturn.
An option is a small business loan. At Camino Financial, our motto is “No business left behind,” we work every day, and especially now, with this in mind. If we can help you, we will.
We can help your business weather this storm. Let us be your partner during this difficult time.
Read more articles and find some more helpful resources to help you during this crisis: