Economic Injury Disaster Loan (EIDL) & Paycheck Protection Program (PPP) FAQ

By April 7, 2020 April 10th, 2020 Current events

What is the CARES ACT?

The CARES act, also known as the Coronavirus Aid, Relief and Economic Security Act, is designed to provide direct relief to American workers and small businesses who are suffering financially as a result of the Coronavirus. President Trump has signed the act on March 27 which provides $376 billion in funding.

The U.S. Small Business Administration (SBA) already provides loans and bonds, finds investors and helps small businesses grow. Now, under the CARES act there are several new temporary programs that have been created under the SBA to help small business directly. There are four main funding options:

  • Paycheck Protection Pogram – “This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program.”
  • EIDL Loan Advance – “This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.”
  • SBA Express Bridge Loan – “Enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.”
  • SBA Debt Relief – “The SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic.”

The main components of the CARES act that will be covered in this overview, and the most relevant to small business owners, will be the Paycheck Protection Program and the EIDL Loan Advance.

Paycheck Protection Program

The Paycheck Protection Program is a direct incentive for small businesses to keep their employees on the payroll, up to $100,000 per employee. The program provides a loan which will be forgiven if all of the employees are kept on the payroll for 8 weeks, among other requirements. Businesses and non-profits must have been operational on February 15, 2020 and demonstrate losses or fallout from the impact of Coronavirus.  The money must be used for:

  • Payroll
  • Rent
  • Mortgage interest
  • Utilities

Who Can Apply: Sole proprietors, independent contractors, and self-employed persons. Any business,  non-profit organization, veterans organization, or Tribal business with less than 500 employees, or that meets the SBA industry size standard if more than 500. Restaurants, hotels, or other businesses categorized under “Accommodation or Food Services” that have 500 or fewer employees at each independent location. Read more here.

Loan Details: Loans used to cover payroll costs over the 8 week period are forgivable. For everything past that there is a  1% interest rate, 2 year maturity. A business can request up to 2.5 times their monthly payroll costs for this loan, up to $10 million per organization.

Program Availability Dates: April 3, 2020 – June 30, 2020

How to Apply: Fill out the the Paycheck Protection Program Borrower Application Form. Or call your bank or lender.

EIDL Loan Advance

The Economic Injury Disaster Loan Emergency Advance was designed to immediately fill the loss of revenue experienced by business owners due to the Coronavirus. The loan advance will supply up to $10,000 of economic assistance to businesses that were impacted by Coronavirus. The $10,000 loan advance will not have to be repaid if accepted. The rest of the loan, going beyond $10,000, is not forgivable.

Who Can Apply: Small businesses including those with less than 500 employees including sole proprietorships, independent contractors and self-employed persons.

Loan Details: $10,000 grant is forgivable. The rest of the loan will have a 3.75% interest rate for small businesses and a 2.75% for non-profits. The maximum term of repayment is 30 years. The loan amount that organizations can request will be based on the amount of “economic injury” that they have sustained because of the coronavirus. The loan caps out at $2 million per organization.

How to Apply:  Apply online for disaster loan assistance at your own convenience through SBA’s secure Disaster Loan Assistance website. For application information, please call 1-800-659-2955 or email For more information about this program, please visit the Economic Injury Disaster Loan page.

Which loan is right for your business?

The Paycheck Protection Program (PPP) loan is primarily aimed at covering payroll costs and keeping employees paid through their employer. Businesses can also use the money to address other expenses including utilities, rent and interest on mortgage loans. Other expenses are not included under PPP and will not be forgiven. The PPP is just now beginning to accept applications and it’s unclear how long it will take before applications are approved.

The Economic Injury Disaster Loan Emergency Advance (EIDL) is designed for immediate relief for a broader range of expenses. A good first step for businesses needing quick cash to cover operational costs would be to apply for the EIDL loan. That would provide a quick approval for a forgivable loan up to $10,000 and access to additional assistance at a low interest rate.

The biggest difference between the two loans is that the PPP is completely forgivable if the business meet the specific requirements, the EIDL is not except for the $10,000 grant. PPP also provides up to $10 million of relief per organization while the EIDL provides $2 million.

*Information contained herein is subject to verification by the applicant(s) and may change. This article is for information purposes solely and Matt Anderson Properties and its affiliates do not guarantee its accuracy. Matt Anderson Properties recommends that all applicant(s) consult with their financial advisor, CPA, banking representative or the SBA regarding any questions they may have relating to the CARES ACT, EIDL or PPP.