Types of Small Business Loans Available for COVID Relief
Since the signing of the CARES Act, there’s been a constant flow of updates on the stimulus package and loan programs offered to small businesses. We understand it can be frustrating to process all the information coming in on top of everything else. Thus, find all the crucial information consolidated in the following quick breakdown.
To start off, what are the loans available to small businesses?
There are two types of loans available:
Paycheck Protection Program (PPP) loans aim to provide the liquidity that small businesses need to support employees throughout the coronavirus crisis and not have to resort to lay-offs.
Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL) $10 Billion was approved for the SBA EIDL which only apply once all “reasonably available” funds have been exhausted and only if “you are unable to obtain credit elsewhere. The CARES Act fixed an error in the Tax Cuts and Jobs Acts, providing businesses, especially in the hospitality industry, to immediately write off costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of the building. Moreover, the change is applied retroactively to qualified improvements beginning in 2018.
Here’s a quick breakdown of each loan program:
| Paycheck Protection Program (PPP) | Economic Injury Disaster Loan (EIDL) | |
| Loan Period | February 15, 2020 to June 30, 2020 | January 31, 2020 to December 31, 2020 |
| Maximum Loan Amount | $10 million | $2 million |
| Eligible Borrowers | -Any small business, private or non-profit, veterans service group, or food and hospitality businesses with less than 500 employees or meets SBA size standards -Businesses in operation as of Feburary 15, 2020 -Self-employed individuals -Independent contractors -Sole proprietorships |
-Any small business, private or non-profit with less than 500 employees or meets SBA size standards -Self-employed individuals -Independent contractors -Sole proprietorships |
| Debt Forgiveness | Loan forgiveness may be applied to 8 weeks’ worth of funds allocated for payroll cost, mortgage interest, rent, and utility expenses incurred after receiving funding. | Loan forgiveness may only be applied to the $10,000 emergency cash grant. The cash grants will also be credited towards the maximum forgivable amount under any PPP loan. |
Information was derived from the following article posted and written by 48hourprint.