What Loans Are Available to SMBs Seeking Coronavirus Relief?

LAST REVIEWED Apr 12 2021 8 MIN READ

By The Human Interest Team

The government recently passed the CARES Act, which gives SMBs two options for loans to help them through the crisis. Here are some key differences between these two loan programs, including where to apply, who is eligible, and what is forgivable. There is no fee to apply to either loan program and both types of loans are available for businesses in all 50 states as well as U.S. territories. You can apply to both programs.

Both the EIDL and PPP are anticipated to be replenished with additional funds with the Senate having passed a vote that outlines an additional $60 billion for EIDL and $310 billion for PPP.

Economic Injury Disaster Loan (EIDL)Paycheck Protection Program (PPP)
Where do I apply?https://covid19relief.sba.gov/#/https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp#section-header-6
What businesses are eligible? Business has <500 employees Business has <500 employees* Includes: SMBs, 501(c)(3) nonprofits, 501(c)(19) veterans organizations, and tribal businesses Note: Sole proprietors, independent contractors, including artists, are eligible to apply starting 4/10.
How much can I get?$2 million A $10,000 advance is available within 3 days (applicants are not required to pay if they are denied a loan)Depends on the size of your business, but: 2.5x the average monthly payroll costs of the last 12 months (subject to a $10 million cap)
What can the loan be used for?Expenses that could have been handled had the disaster (coronavirus) not occurred, e.g. working capital, equipment leases, etc.Payroll** (including compensation, tips, state and local taxes, etc.), healthcare and insurance premiums, paid sick leave, mortgage payments and rent, utilities, and other debt
When do I start paying back?1 year after origination date6 months after origination date
Is it forgivable?Up to $10,000Yes, and you can borrow more than is eligible to be forgiven There’s a formula for what portion is forgivable that includes payroll costs, mortgage interest payments and covered utility payments
TermsUp to 30 years Annual interest rate: 3.75% for business and 2.75% for nonprofits The SBA places a UCC lien against assets of the business2 years Annual interest rate: 1% No collateral is required
AvailabilityFirst-come, first-served First-come, first-served

*New or seasonal businesses will use different reference time periods.

**Payroll costs will be capped at $100,000 annualized for each employee. UPDATE 4/13/20: The Treasury released a clarification statement indicating that the $100,000 maximum applies to cash compensation but does not apply to employee benefits of monetary value, including employer contributions to a defined-contribution retirement plan, such as a 401(k), as well as state and local taxes assessed on employee compensation and group health care coverage (including insurance premiums). Have more questions about the PPP? See our FAQ article here.

Where should I look for a PPP loan?

  1. Check with your local bank to see if they are participating in PPP. Many are prioritizing clients with whom they have an existing relationship. 

  2. If you don’t have a local banking relationship, here is SBA’s website to find an approved lender

  3. The U.S. Small Business Association has approved Paypal, Intuit, and Square as non-bank lenders for the PPP program. 

Where can I find out about the status of my EIDL loan?

Email [email protected] including your business name, application number, your name, and phone number. 

I thought the $10,000 from EIDL was supposed to be available within 3 days?

Yes, you’re right it was supposed to take just three days because so many businesses need funds fast. And, it was supposed to be $10,000, however, that amount has been adjusted for some SMBs — we hear they’re getting $1,000 per employee.

There are more problems: While the policy was issued to help give fast relief, overwhelming demand and a loan application system crash have slowed the distribution of funds.

When will funds be available? There’s nothing official yet so stay tuned. In Massachusetts, the funds are starting to trickle out — albeit slower and smaller than expected.

How are these different than the SBA Express Bridge Loans?

In order to qualify for an Express Bridge Loan, which qualifies you for up to $25,000, you must already have a business relationship with an SBA Express Lender. These are repaid in full (or part) by proceeds from an EIDL loan.

What debt relief options are available?

See more information here. You must meet qualifications for an SBA 7(a) loan, which may require specific levels in terms of credit history, revenue, and time in operation.

How do you submit loan forgiveness requests?

For PPP, submit your request directly to the lender servicing the loan. The lender must make a decision within 60 days. No more than 25% of the forgiven amount can be for non-payroll costs (i.e., mortgage interest, rent, and utilities). You’ll need to show documents verifying payments (on mortgage interest, rent, and utilities) and payroll (number of employees, pay rates, including IRS payroll tax filings and state income, payroll, and unemployment insurance filings).

What if I laid off staff?

You have until June 30, 2020, to restore your full-time employment and salary levels for any changes made between February 15, 2020, and April 26, 2020. If you’ve laid off staff, it may affect the amount of your PPP loan that is forgivable.

Do you need any further support during these times?

Check out our resource page for 401(k) plan administrators for information answering some of the most common questions we’re getting from business owners. 

Please don’t hesitate to call us at 877 475 0179.

We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment advising, and integration with leading payroll providers.

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