ADVOCATING FOR YOU Continued from page 13
Financial Assistance to Small Businesses The PPP and EIDL programs, both administered by the SBA, are the two main options small businesses and nonprofits have to obtain financial support during the coronavirus outbreak. Organizations can receive loans from both programs, and an EIDL loan can be refinanced into a PPP loan. Visit
sba.gov to learn about other programs funded in the CARES Act that are available to small businesses.
Paycheck Protection Program (PPP) The main driver of
Figure 3. EIDL Program Terms EIDL
Eligibility Uses
Small businesses, co-ops, and ESOPs with up to 500 employees; self-employed individuals; private nonprofits
Fixed debts, payroll and related benefits, accounts payable, and other expenses that cannot be paid because of the disaster’s impact
Loan Administrator SBA Max Amount
Term Collateral
small-business stimulus in the CARES Act is contained in the PPP. The $349 billion provided under the SBA Business Loans Program Account will fund loans of up to $10 million that qualify- ing businesses can spend to cover payroll, mortgage interest, rent, and utilities. As noted earlier, Congress provided an additional $310 billion for the program in H.R. 266, the PPP and Health Care Enhancement Act, after the initial funding was exhausted in less than two weeks. The SBA temporarily stopped accepting new applications from participating lenders on Apr. 16 but resumed on Apr. 27. As of Jun. 6, the SBA reported the fol-
lowing statistics on PPP: ■ 4,531,883 million loans approved, total- ing roughly $511.3 billion
■ $113,000 is the average loan size ■ 64.9% of loans were approved at $50,000 and under
■ $130.6 billion in funding remains. No additional PPP funds have been appropriated by Congress since H.R. 266 was signed into law on Apr. 24, but several
14 ROTOR 2020 Q2
Credit Check Forgiveness
Interest Rate Deferral
Up to $2 million, based on actual economic injury determined by SBA
Up to 30 years Yes, for loans greater than $25,000
Personal Guarantee Required for loans more than $200,000, by owners of greater than 20%
Yes
No, but eligible applicants may receive a cash advance up to $10,000 that doesn’t need to be repaid
3.75%, or 2.75% for nonprofits 1 year (interest accrues)
significant changes were made to the pro- gram in H.R. 7010, the PPPFA, that would make it easier for current PPP borrowers to use the loans and receive forgiveness (see Figure 2).
Most notably, the PPPFA includes the
following PPP changes: ■ Extends the expense forgiveness period ■ Reduces the 75% payroll ratio requirement
■ Extends the loan repayment requirement for future borrowers
■ Allows payroll tax deferment for PPP recipients
■ Extends the rehiring deadline.
Economic Injury and Disaster Loans (EIDL) This long-standing SBA loan program pro- vides working-capital loans of up to $2 mil- lion to help small businesses overcome a
temporary loss of revenue (see Figure 3). Part of the EIDL program, created in the CARES Act, is the EIDL Emergency Advance, which provides companies that suc- cessfully submit an EIDL appli- cation a $10,000 loan advance that does not need to be repaid. However, recent guid- ance reduced this program from $10,000 per company to $1,000 per employee (up to 10 employees). The SBA’s web- site indicates only that the funds will only be made avail- able “within days following a successful application.” Similar to the temporary
freeze in PPP loan approvals, a lapse in appropriations pre- vented the SBA from process- ing new EIDL and EIDL Emergency Advance applica- tions from Apr. 16 to Apr. 27.
H.R. 266 increased the EIDL program account by $50 billion and added another $10 billion to the EIDL Emergency Advance program, allowing the agency to resume issuing loans under the program. H.R. 266 also modified eligibility for the EIDL pro- gram to include “agriculture enterprises.” As a result, the SBA has been accepting EIDL and EIDL Emergency Advance appli- cations on a limited basis only to provide relief to US agricultural businesses. As of Jun. 6, the SBA had approved
1,130,731 loans totaling $79.98 billion through the EIDL program, and by May 8, the agency had approved 3,009,934 advances totaling $9.88 billion through the EIDL Emergency Advance program. Many HAI members may still be eligible under the new and/or temporary require- ments and are encouraged to check
rotor.org/LAC for details.
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