Factors in deciding between PPP and EIDL loans for COVID-19 relief

Prior posts described two government backed loan programs that can assist you in dealing with the COVID-19 crisis.  These are the EIDL (Economic Injury Disaster Loan) and PPP (Paycheck Protection Program). Both programs offer the potential for a certain amount of grants or debt forgiveness.  As you consider these programs with your financial advisor, the attached pdf from the US Chamber of Commerce may provide helpful information in making the decision to pursue either or both programs. Also included in the attachment is the US Chamber’s summary of the EIDL program.

EIDL – If you have less than $65,000 in annual payroll, EIDL with a cash advance grant of $10,000, may offer more than the potential loan forgiveness available from the Paycheck Protection Program. The cash advance of up to $10,000 does not have to be paid back and will be provided within 3 days of loan application.  This grant can cover immediate expenses like rent and payroll. EIDL may require personal guarantees and collateral.

PPP – Consider PPP if you have over $65,000 in annual payroll (including certain benefit costs). Costs for these items incurred within 8 weeks of loan origination may be forgivable if you continue paying employees at normal levels.

Use this chart to see the key differences between EIDL and PPD.

According to the US Chamber of Commerce small businesses can receive both EIDL and PPP loans, as long as they aren’t used to pay the same expenses.  If you apply for both loan programs, $10,000 in grants that come with EIDL will be reduced from the amount of debt forgiveness allowed by PPP.  This means you cannot double dip on the grant forgiveness element of the two programs.  For a summary of the two programs provided by the US Chamber of Commerce, see this link.

Best Regards,
Michael Habif