Update on Limited Availability of PPP and EIDL loans as of April 14, 2020
It is unfathomable that most of our tenants remain closed due to the COVID-19 crisis. As part of our continuing effort to keep you up to date on the status of government assistance programs available to small business owners, we are providing new information released by the SBA.
1. Payroll Protection Program (PPP) loans continue to be hard to secure and are fast running out of funding. These loans are particularly hard to secure unless you enjoyed an existing relationship with a larger bank. The few banks that offered loans to non-customers long since oversubscribed in these programs. Today, SBA approved additional non-traditional lenders like Square, PayPay and Inuit (QuikBooks) to participate in the $350 billion dollar PPP program. These loans offer some opportunities for loan forgiveness based on 8 weeks of payroll. It is anticipated that many of these non-traditional lenders will give first priority to existing customers. If you have not secured a PPP loan, consider contacting Square, Credibly, Intuit, PayPal or Quick loans direct immediately for a PPP loan.
2. Based on correspondence we received today, the EIDL program will limit the maximum $10,000 loan forgiveness to $1,000 per employee who was on your payroll prior to January 31, 2020. This means that business with fewer than 10 employees can still apply for the EIDL program but will not be able to take advantage of the full $10,000 grant. According to the SBA letter, “On March 29, 2020, the SBA provided small business owners and non-profits impacted by COVID-19 with the opportunity to obtain up to a $10,000 Advance on their Economic Injury Disaster Loan (EIDL). The Advance is available as part of the full EIDL application and will be transferred into the account you provide shortly after your application is submitted. To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.” Apply for the EIDL program here.
3 The SBA provided the following chart to compare the advantages of PPP versus EIDL loans:
Paycheck Protection Program Full EIDL LoanPURPOSEForgivable if used for payroll (minimum of 75% of the funds received) and the remaining for certain operating expenses (amount of any EIDL advance is not forgivable)To meet financial obligations and operating expenses that could have been met had the disaster not occurred (amount of any EIDL advance is forgiven)TERMSUp to $10 million 1% interest rateUp to $2 million 3.75% for businesses 2.75% for non-profitsFORGIVABLEYESNO – EIDL Loan YES – EIDL AdvanceMATURITY2 years30 yearsFIRST PAYMENT DUEDeferred 6 monthsDeferred 1 year
Despite assurances that the government loan programs for small businesses are running perfectly, there continue to be gaps in the program for many small business owners.
Please stay safe and healthy.
Best Regards, Michael Habif