Economic Injury Disaster Loans v. Paycheck Protection Program Loans


Where to applyDirectly with the SBAWith an existing SBA lender, using an application similar to this sample
When to applyNowFrom April 3 (for small businesses and sole proprietorships) and April 10 (for independent contractors and self-employed individuals) until June 30, 2020
Who can applyBusinesses with no more than 500 employees in operation as of February 15, 2020, including nonprofits, self-employed, individuals, and independent contractorsBusinesses with no more than 500 employees, including sole proprietorships, independent contractors, certain nonprofits, and limited businesses with more than 500 employees, based on applicable SBA size standards, that have been in operation since February 15, 2020 or earlier
Loan amountUp to $2MM ($10k may be made as an Emergency Economic Injury Grant, with no repayment obligation), based on borrower’s actual economic injuryUp to 2.5 months of average monthly payroll costs (with payroll costs capped at $100k annualized per employee), up to a cap of $10MM

This reflects coverage of 8 weeks of payroll, plus 25% of that amount for other uses

Permitted usesFixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster’s impactPayroll costs, including benefits

Interest on mortgage obligations incurred before 2/15/20

Rent under leases in force before 2/15/20

Utilities, for services beginning before 2/15/20

Interest rate3.75% fixed rate, for for-profit businesses

2.75% fixed rate, for nonprofits

1.00% fixed rate
MaturityUp to 30 years, determined on a case by case basis2 years (all payments deferred during first 6 months)
Prepayment penaltyNoneNone
Collateral requiredFor loans over $25k, if availableNone
Personal guarantee requiredNone for loans of up to $200k

Personal guarantees by owners of more the 20% of the borrower for loans in excess of that amount

Loan forgivenessNone (though EIDLs may be refinanced into PPP loans)

No repayment of the emergency grant if proceeds are used for permitted uses

Repayment is forgiven for the amount of the loan proceeds used for permitted uses in the 8-week period after origination, subject to reduction of the forgiven amount if full-time employee headcount is reduced (compared to head count in certain prior periods) or if salary for any employee who made less than $100k annualized in 2019 is reduced by more than 25%
Coordination with other SBA loans Recipients of EIDLs and Emergency Economic Injury Grants may also apply for a PPP loan. Recipients of an EIDL from 1/31 to 4/3 who used the EIDL for payroll, and applied or plan to apply for a PPP loan must use the PPP loan to refinance the EIDLBorrowers can apply for PPP loans and for other SBA assistance, including EIDLs, but cannot use the PPP loans for the same purposes as other SBA loans (e.g., a borrower cannot use an EIDL to cover payroll costs and also use a PPP loan to cover payroll costs)

*Please note that updates and new guidance on these loans are being issued almost daily by the SBA and Treasury Department. Requirements and application processes may also differ from lender to lender. Businesses should reach out directly to their specific lending institutions in order to obtain the application and requirements of their specific lender as soon as possible.