There’s a ton of info out there on the SBA Loans available and this is my best effort to clarify it as of April 13, (this means by the time you read this, some of the info may have changed).
And I apologize for all of the “to the best of my knowledge” disclaimers below. A lot of the information out there has changed recently and continues to be fluid.
Here is the most current link for the SBA Loans for Coronavirus Relief.
There are two loans that are available to small business owners and non-profits for Coronavirus Relief.
And let me address this on the front end. Even though there is a panic, because this is on a “first come, first serve” basis, I personally (just my opinion and not that of the TSBDC) that Congress may pass another round or two of funding, because they will want everyone to get a chance to obtain these loans that are partially forgivable.
ECONOMIC INJURY DISASTER LOAN FOR COVID-19 (EIDL)
You can apply for the EIDL loan with this link - https://covid19relief.sba.gov/#/
This loan is designed to help you pay for fixed expenses.
This loan has a possible advance up to $10k that is based on the number of employees you have ($1k/employee) and the SBA is currently saying you will not have to repay the advance.
To the best of my knowledge this is a 30-year term, 3.75 percent rate, with up to a year deferred loan.
There is not a way to request the amount of money that you want to borrow.
As far as I understand, whatever portion of the EIDL advance that you accept, it will be deducted from the non-repayment portion of the PPP loan, if you get the PPP loan.
PAYCHECK PROTECTION PROGRAM (PPP)
Paycheck Protection Program info (application form included, but has to be turned into your bank or a participating SBA lender bank) - https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp
This loan is designed for your payroll and keeping your employees.
You can apply for PPP through a bank (start with your bank first). If your bank is not participating, you can find a list of SBA lenders here (starting on page 31) - https://www.sba.gov/sites/default/files/files/resourceguide_3147.pdf. You may soon be able to apply through Intuit as well - https://quickbooks.intuit.com/small-business/coronavirus/paycheck-protection-program/
The loan is the equivalent to 2.5 times your average monthly payroll for 2019. If your business started in 2020, the average for January and February. To the best of my knowledge this includes yourself and it doesn’t include independent contractors since they can apply for the loan too.
Funds are provided in the form of loans that can be fully forgiven for an 8 week period (from when the loan is first disbursed) when employees are kept on the payroll and funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75 percent of the forgiven amount must have been used for payroll.) You will have to provide the proper paperwork when the time comes to have the loan forgiven.
Whatever is not forgiven will be converted into a 2-year loan with a 1 percent rate.
If you obtain this loan, keep meticulous records of how it spent, to make the forgivable process as simple as possible.
And as of this writing, there may be a few of these loans trickling into Tennessee.
It looks like you can get possibly get both of the two loan options EIDL and PPP, but only PPP can be used for payroll if you do that.
There is also a line on the PPP application asking about the “Refinance of Eligible Economic Injury Disaster Loan, net of Advance (if Applicable; see Paycheck Protection Program Rule)”. I’m not sure if that means when you get the EIDL if you have to refinance it or if you have the option to do it.
Lastly, here is the Interim Final Rule for PPP - https://www.sba.gov/sites/default/files/2020-04/PPP--IFRN%20FINAL_0.pdf
SBA customer service disaster assistance number - 1-800-659-2955
For small business counseling, disaster related or not, visit www.tsbdc.org and Request Free Advising.
Charles Alexander is the director of the Small Business Development Center at Vol State.