Lately, we’ve heard a number of questions from folks wondering if they’re able to apply for BOTH the Economic Injury Disaster Loan (EIDL) AND the Paycheck Protection Program (PPP).
Short answer: Absolutely.
Slightly longer answer… These two programs are very different in their intent, structure, and process even though they both happen to be administered by the SBA.
Is the EIDL a grant?
Not really. The EIDL had an “advance” component to it that would have been the initial amount you received via direct deposit after applying. For a long time, we were all walking around talking about $10k per business and then after seeing how many businesses applied, the SBA finally clarified and said it would be “$1000 per employee up to $10k.” So you received that money as an advance of your eventual loan.
Is that all I’m going to get from the EIDL?
No way! Or at least, not necessarily. The EIDL is a loan after all. The determination of how much you’re allowed to borrow will come later, and once they’ve figured it out you’ll be able to
Do I have to repay the grant if I don’t qualify for the loan?
No. That money is yours to keep no matter what—even if you’re ultimately not approved for the “loan” portion of the EIDL.
What’s the difference between these programs?
The PPP was about replacing paychecks. So it’s based on W2 wages earned (not contractor pay) and is meant to cover 2.5 months of payroll. As long as the funds are used for very specific purposes (mainly payroll costs) you’re not going to have to pay it back. Anything that isn’t forgiven becomes part of a loan with a 24 month repayment, 6 months of no payment initially, and 1% interest rate.
The EIDL is about injecting small businesses with short term cash flow and then creating a slow and easy repayment process. So this loan has no payments for 12 months, then has a 30 year term and 3.75% interest. Any advance does not need to be repaid, only the amount of the actual loan proceeds you would receive later. You can pay it back at any point, no early repayment penalty.
If you still have questions, please feel free to reach out and ask for some guidance. It’s important to us that you feel supported through this process.