As the coronavirus (COVID-19) pandemic continues to spread, the federal government has allocated resources to support small businesses through economic hardship and hopefully restore some of the jobs lost (now at 9.6 million people according to the latest jobs reports) as a result of mass stay-at-home orders and business closures.
Given how quickly the rollout has come—and how many changes have happened along the way—many small business owners have been left scratching their heads, saying, “Wait a second, how do these SBA coronavirus loans work, and will my business even qualify?”
So, what Are the SBA Coronavirus (COVID-19) Loan Options?
There are 2 types of SBA loans that you need to know about:
- Paycheck Protection Program (PPP) Loans : PPP loans were created under the CARES Act for small business payroll support. Up to 100% of the loan principal is forgivable.
- Economic Injury and Disaster Loans (EIDL) loans existed under the SBA for previous disaster relief, and funding for the loans was increased under the CARES Act. These loans usually only apply to designated areas—the good and bad news for small business owners is that all US states, Washington DC, and US territories have been designated as disaster areas eligible for EIDLs.
Can Apply for Both Programs?
Yes, You Can!!!!! Borrowers can apply for both a PPP and an EIDL, but there’s a rule: no double-dipping, i.e., you cannot request the funds for a duplicate use. So if you requested and received EIDLs to cover April rent and utilities, you couldn’t use your PPP for April rent and utilities. You would, however, be able to use the PPP funds for May rent and utilities.