UPDATE: PPP AND EIDL APPLICATIONS RELATED TO COVID-19 RELIEF ARE NO LONGER BEING ACCEPTED AS OF 04/17/2020.
If you are confused about the Payroll Protection Program or the Economic Injury Disaster Loan Advance, we have put together this information to help you figure out what might be best for you.
Keep in mind that you can apply for both programs, although you may be required to show documentation as proof that each program's awarded amount to you was used in different ways. For example, you might use the PPP to keep your staff employed with benefits and the EIDL to pay for the business operating costs like rent, utilities, office supplies, and stock. Another example is if your PPP funding dries up, then you can use the EIDL funds to continue paying your employees. As long as you can show that each program's funds were used for separate uses that still fell within the qualifying , you'll be fine.
See the chart HERE.
OVERVIEW
In general, the PPP is technically a loan, but it is a forgivable loan. It requires business owners to maintain their staff and employee benefits. If you are an independent contractor, that is you and only you. If your business depends upon independent contractors, they do not count as employees. Your employees might just be you and your spouse. The PPP will not have to be repaid unless there is insufficient evidence that the funds were used for purposes other than payroll, employee benefits, and certain business expenses. The purpose of the PPP is to help businesses keep their employees employed, not to keep the business afloat. That is where the EIDL comes in!
The Economic Injury Disaster Loan is available for any categorized disaster, and for COVID-19 there is a special offer - you can receive up to $1,000 per employee, for a maximum of $10,000, as an advance on the loan. This advance is FORGIVABLE (which is why you might see it called a "grant"), but if you are awarded additional funds through the loan then those funds must be repaid. You may be required to submit documentation supporting the legitimate use of funds - and the advance may not be forgivable if you cannot show proof that the funds were used for business purposes.
You can request that the EIDL can be rolled into the PPP loan for the lower interest rate. Discuss this option with your lender or local Small Business Association office.
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