Small Business Administration Loans Available Through the CARES Act: PPP & EIDL

Since the publishing of this article, the initial $350 billion in funding allocated for small business relief has been exhausted. Congress is currently working to address the shortage and, according to an article by Politico, House Speaker Nancy Pelosi says lawmakers are very close to an agreement on more coronavirus aid, which includes replenishing a recently exhausted small business relief fund.

If you were planning to apply, it is wise to gather all of your information and be poised to submit your application for an EIDL and/or PPP loan as soon as new funding is available.

A few weeks ago, we talked about the CARES Act and the various aspects and programs it included. Today, we want to offer more information about the two types of Small Business Administration loans (SBA) available that may offer financial respite for small businesses, nonprofits, independent contractors, solopreneurs and others.

There are two major Small Business Administration loans currently available: The Payroll Protection Program (PPP) loan and the Economic Injury Disaster Loan (EIDL). Each loan has distinctly different purposes for which the funds can be used, and a qualifying small business can apply for one or both. Applications are now available and should be submitted sooner versus later. It is important to note that for the PPP loan, applicants should apply with a bank with whom they have an established relationship. Do not apply more than once as all loans ultimately end up with the SBA and having multiple applications could result in your loan request hitting a snag.

Below are outlined some of the loan specifics.

Payroll Protection Program (PPP) Loans

  • PPP loans must be applied for through an SBA-approved bank or federally insured credit union (FCU)
  • $10 million maximum loan amount
  • Low interest (1%) to no interest loans
  • Two-year loan with payments deferred for six months; interest does accrue during deferment period
  • No collateral needed to apply
  • The applicant must have been in business as of February 15, 2020
  • Funds must be used between February 15 and June 30, 2020 or within eight weeks after loan funds
  • These loans are to be used specifically for payroll up to $100,000 per employee. Up to 25% of the loan may be used for rent, utilities and some interest payments. Payroll is considered salary, commission, tips, the portion of health insurance paid by the employer, employer-paid state taxes and certain retirement benefits. Foreign employees are excluded. Utilities include landline and cell phones used for business, Internet, PG&E, water, garbage and sewer. Check with your financial advisor on what interest payments qualify.
  • Some or all of the loan may be forgiven. It is crucial to stay within the 25% earmarked for utilities, rent etc. as this has an impact on loan forgiveness. If 26% is used to pay for these expenses, that completely negates the loan from being eligible for forgiveness.
  • It is recommended to create a separate bank account for PPP funds to avoid comingling and ensure proper tracking of expenses. Funds can then be transferred into the main account for payroll distribution.
  • Find a local PPP lender by clicking here.

EIDL Loans

  • Apply directly through the Small Business Administration
  • $2 million maximum loan
  • Applicants can request a $10,000 advance within three days of application; does not need to be repaid if loan is denied.
  • There is no cost to apply and no obligation to accept an approved loan
  • Low interest rates: 2.75% for nonprofits, 3.75% for all others
  • Companies with under 500 employees and less than $35 million in revenues are eligible
  • Up to 30-year repayment terms, payments deferred for one year, interest accrues during deferment period.
  • Collateral is required
  • EIDL funds are to be used as working capital for any purpose
  • EIDL loans can be refinanced into PPP
  • EIDL loans are not forgivable other than the $10,000 advance if the loan is denied.
  • To apply for an EIDL loan, click here.

If you own a small business or non-profit, are an independent contractor or are self-employed and may benefit from one or both of these SBA loans, we encourage you to get more information and reach out to your CPA or financial advisor for assistance and guidance. Another option is utilizing a local Small Business Development Center counselor—to find one, click here.

When filling out your application, be sure to ask for what you need as your loan cannot be adjusted after submission. Although these Small Business Administration loans are supposed to be simple and require limited documentation, that isn’t the reality. Applicants should be detailed, straightforward and provide as much documentation and information as possible to ensure funding.

If you have already applied, you can check the status of your loan application or EIDL advance by calling SBA’s Customer Service Center at (800) 659-2955 or emailing

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