On April 24th, the President signed H.R.266, The Paycheck Protection Program and Health Care Enhancement Act, into law. This $484 billion package includes funds for the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL), which ran out of money earlier this month.

By the Numbers

$310 Billion for the Paycheck Protection Program

  • $250 billion available to be disbursed by all financial institutions;
  • $30 billion for Insured Depository Institutions and Credit Unions with assets between $10 billion and $50 billion to disburse; and
  • $30 billion for Community Development Financial Institutions, Small Insured Depository Institutions, and Credit Unions with assets less than $10 billion to disburse.

$60 Billion for the Economic Injury Disaster Loans

  • $50 billion for EIDL loan program
  • $10 billion for EIDL loan advance grant

Paycheck Protection Program

  • Lending institutions – like banks and credit unions – make PPP loans.
  • Eligible businesses must have been operating on February 15, 2020, and the borrower must provide a lender with a good faith certification of need.
  • The lender will waive collateral and personal guarantee requirements as well as the credit elsewhere test for funds.
  • PPP provides loan forgiveness based on employee retention and salary levels. Loan proceeds used over the 8 weeks after the loan is made for payroll support (employee salaries, paid sick or medical leave, insurance premiums), mortgage, rent, and utility payments, are eligible for forgiveness.
  • Non-forgiven portions of the loan have an interest rate of 1% and loan maturity in two years. The first payment will be deferred for six months.
  • Loans can be for up to two months of average monthly payroll costs from the last year plus an additional 25% of that amount. Maximum loan amount is $10 million.
  • Additional information is available on the Treasury Department PPP FAQ’s page.

Economic Injury Disaster Loan:

  • To apply, log onto the SBA Disaster Loan Assistance application page.
  • EIDL’s offer up to $2 million in assistance per small business.
  • EIDL’s may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.
  • The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible.
  • SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based on each borrower’s ability to repay.

Emergency Economic Injury Grants

Small businesses and private non-profits harmed by COVID-19 can receive up to a $10,000 advance when applying for an SBA Economic Injury Disaster Loan (EIDL).

The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.

To be eligible for the advance, the entity must also be eligible for an EIDL and in operation since January 31, 2020, when the public health crisis was announced. New EIDL applicants are automatically considered for the advance.