Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) updates
|The U.S. Small Business Administration (SBA) has posted a significant quantity of new information over the past several days. In this article we will provide a basic overview of this new information with links to primary sources with more details and applications.
We will begin with a review of the purpose of the SBA followed by updates on their two biggest stimulus programs for small businesses: the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP). Updates to these programs include reopening the EIDL and EIDL Advance portal, new PPP Interim Final Rules (IFRs), and the new EZ and revised full forgiveness PPP loan forgiveness applications.
Please take a moment to review the information that is relevant to you and your business.
U.S. Small Business Administration
|The U.S. Small Business Administration is a resource for small businesses backed by the federal government. The SBA empowers small business owners and entrepreneurs by providing the support and resources they need to start, grow, maintain, or expand their businesses, or recover from a disaster. The SBA delivers services through a network of field offices and partnerships. To learn more about the SBA, visit www.sba.gov.
The two biggest stimulus programs for small businesses are the SBA’s Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP).
Economic Injury Disaster Loan (EIDL) and EIDL Advance During COVID-19
To meet the needs of small businesses and non-profits, the U.S. Small Business Administration (SBA) recently reopened the Economic Injury Disaster Loan (EIDL) and EIDL Advance program portal to all eligible small businesses and nonprofits impacted by COVID-19.
SBA’s EIDL program provides low interest, long-term assistance for small businesses and non-profit organizations. These loans help alleviate temporary loss of revenue and can be used to fund expenses, pay debt, and cover payroll and inventory. The EIDL Advance offers up to $10,000 ($1,000 per employee) of emergency relief to businesses experiencing temporary difficulties, and these emergency funds do not need to be repaid.
Overview of the EIDL and EIDL Advance Program:
- The SBA is providing working capital in the form of low interest federal disaster loans. The loans are available to small businesses and non-profit organizations that have suffered substantial economic injury from the COVID-19 pandemic.
- These SBA loans may be used for payroll, debts, accounts payable and other bills that are not already covered by a Paycheck Protection Program loan. The interest rate is 3.75% for small businesses and 2.75% for non-profits.
- The first payment is deferred for one year and the loans have repayment terms extending to a maximum of 30 years.
- As part of the loan application, small businesses and non-profits may request an EIDL Advance of up to $10,000. The EIDL Advance offers emergency relief to businesses currently experiencing a loss of revenue. Small businesses may receive an advance even if not approved for a loan and the advance does not have to be repaid.
- The SBA is also offering the Paycheck Protection Program (the federal forgivable loan program described below) which is still accepting applications through June 30, 2020.
For more information about disaster assistance, please visit the SBA website using the link below.
Paycheck Protection Program (PPP) Loan Information
|On April 2, 2020, the U.S. Small Business Administration (SBA) announced an interim final rule (IFR) relating to the implementation of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act added a new program titled the “Paycheck Protection Program,” to the SBA’s Loan Program. SBA Paycheck Protection Program Loans are loans that support businesses during the Coronavirus (COVID-19) crisis and help to keep their workforce employed. PPP loans are 100 percent guaranteed by SBA, and the full principal loan amount is eligible for loan forgiveness. PPP Loan information can be accessed on the SBA website at the link below.
New Interim Final Rules and Forms
|PPP Interim Final Rule Revisions to First PPP Interim Final Rule
On June 5, 2020, the PPP Flexibility Act, which amended the CARES Act (see above), was signed into law. This IFR changed key provisions in the CARES Act such as deferral of loan payments, loan maturity, and forgiveness provisions. The provisions related deferral periods and loan forgiveness for PPP loans are effective March 27, 2020. The provision relating to the maturity date of PPP loans is effective June 5, 2020.
|PPP Interim Final Rule on Additional Revisions to First Interim Final Rule
The purpose of this revision is to modify the IFR posted on SBA’s website on April 2, 2020 to amend the PPP eligibility requirements regarding certain felony charges. Previously applicants with a felony conviction within the past 5 years were not eligible for PPP loans. With this IFR, the time period has been reduced to 1 year unless the applicant or 20% owner is currently subject to an indictment, arraignment, criminal information, or other formal criminal charge, or on probation, parole, or presently incarcerated.
Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules
On June 16th, the SBA made revisions to the third and sixth IFRs, mainly to conform language to agree with changes made in the Paycheck Protection Program Flexibility Act. The purpose of the third interim final rule is to update the IFR on additional eligibility criteria and requirements for certain loan pledges. The purpose of the sixth interim final rule is to update the IFR on disbursements in light of the amendments under the Flexibility Act. The frequently asked questions (FAQs) regarding the PPP that are posted on SBA’s website and the other IFRs will help with the understanding of these and all IFRs.
New EZ and Revised Full Forgiveness Applications for PPP Loans
The U.S. Small Business Administration (SBA) and the Department of the Treasury posted a revised Paycheck Protection Program (PPP) loan forgiveness application that is more borrower-friendly. The SBA, in addition to revising the full forgiveness application, has also published a new EZ version of the forgiveness application.
The EZ version applies to borrowers that:
- Are self-employed with no employees; OR
- Did not reduce the wages or salaries of their employees by more than 25%, and did not reduce the hours of their employees; OR
- Experienced reductions in business activity due to COVID-19 health directives and did not reduce the wages or salaries of their employees by more than 25%.
The EZ application requires less documentation and fewer calculations for eligible borrowers. More information regarding these provisions are detailed in the instructions of the EZ application form, which can be accessed using the link below.
Both applications allow borrowers to use the original 8-week covered period (for loans made before June 5, 2020) or an extended 24-week covered period. The applications are more efficient and will make it easier for businesses with PPP loans to realize full forgiveness.
|Revised Paycheck Protection Program Loan Forgiveness Application (06-16-2020)(English Version)
PPP Loan Forgiveness Application (6/16/2020)
|Solicitud de Perdón de Préstamos del Programa de Protección de Cheques (16-06-2020) (Versión en Español)
PPP Solicitud de Perdón de Préstamos (Versión en Español)
|PPP EZ Loan Forgiveness Application and Instructions
PPP EZ Loan Forgiveness Application and Instructions (6/16/2020)
Additional Guidance for Reopening Businesses
- https://www.health.pa.gov/topics/disease/coronavirus/Pages/Coronavirus.aspx Order Directing Building Safety Measures (Issued April 5, 2020)
- Order Directing Public Health Safety Measures (Issued April 15, 2020)
- CDC guidance for businesses and workplaces
- The latest guidance from the DOH
- For current information from the Commonwealth of PA directed to businesses in the yellow or green phase, visit Responding to COVID-19 in Pennsylvania for Businesses
|For detailed explanations of issued federal or PA guidance, please follow the link below to visit CGA’s COVID-19 Business Resource Page.
If you have a specific question about how this or any other legislation affects your business, please contact a CGA Business Law attorney.
If you have a question about reopening your business, please contact a CGA Labor and Employment Law attorney.
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