EIDL (Economic Injury Disaster Loan) vs. PPP (Payroll / Paycheck Protection Program)
This table hopes to clarify the difference between the Economic Injury Disaster Loan (EIDL) and the Paycheck / Payroll Protection Program. This information is evolving and will be updated accordingly.
| EIDL (Economic Injury Disaster Loan) | PPP (Payroll / Paycheck Protection Program) | |
|---|---|---|
| How to apply | Through the SBA | Through an approved lender |
| When | Now | April 3, 2020 for small businesses and sole proprietorships April 10, 2020 for independent contractors and self-employed individuals |
| Size | Depending on the industry, this is determined based on average receipts during the preceding 3 years or average number of employees during the preceding 12 months | Business with fewer than 500 full or part time employees will be eligible (unless the covered industry’s SBA size standard allows more than 500 employees), with higher employee limits for hotels, restaurants and other industries approved by the SBA |
| Loan amount | Up to $2M and may request an advance of up to $10,000, distributed within 3 days. Repayment of the advance is not required. | 2.5x borrower’s average monthly payroll cost, based on the trailing 12 months preceding loan origination, up to $10 million. Capped at $100k/per employee. Seasonal employers may elect a different testing period. |
| Collateral | Collateral is required on all loans above $200k. The SBA prefers real estate but will consider other assets. The SBA states that is will not decline a loan for lack of collateral, but requires borrowers to pledge what is available. | No Collateral |
| Personal Guarantees | Yes, from all owners of 20% or more of company equity | No personal guarantee will be required. |
| Interest rate | 3.75% (For-Profit), 2.75% (Not-For-Profit) | 0.5% |
| Loan term | Not to exceed 30yrs | up to 2 years |
| Prepayment penalty | None | None |
| Deferral Period | Principal and interest payments are deferred 12 months. Interest accrues during this period. | Principal and interest are deferred for 6 months. Interest accrues during this period. |
| Loan Forgiveness | No | Yes** |
| Uses | payroll, fixed debt, accounts payable, other expenses that can’t be paid because of the disaster’s impact | payroll support including medical leave, costs related to health benefits, employee salaries, mortgage interest payments, rent, utilities, insurance, and any other debt payments incurred before 2/15/2020 |
| Existing loans | Applicants can have an existing SBA Disaster loan, or other loan and still qualify, but the loans cannot be consolidated | Applicants can have existing loans, but may not have any outstanding loan or pending application for a loan under Section 7(a) SBA loan for the same purpose and duplicative amounts. Check with your bank before applying for an EIDL in addition to the PPP on or after April 3, 2020. |
| States available | AL, AR, CA, CO, CT, DE, DC, FL, GA, ID, IL, IN, IA, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NH, NJ, NM, NY, NE, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, VA, WV, WA, WI, WY and UT |
**The loan can be forgiven up to a maximum of the total principal on the loan. The loan forgiveness amount can also be reduced.
Loan forgiveness is reduced if:
- more than 25% of the loan funds is used on approved non-payroll costs
- the average number of full-time equivalent employees per month is reduced during the covered period below the lesser of (a) the average number of full-time equivalent employees per month from February 15, 2019 to June 30, 2019 or (b) the average number of full-time equivalent employees per month from January 1, 2020 to February 29, 2020
- the salary or wages of any employee in excess of 25 percent of the total salary or wages of the employee is reduced during the most recent full quarter during which the employee was employed before the covered period. There may be no reduction if a borrower re-hires the employees who earlier were terminated by June 30, 2020. This exemption for re-hires is subject to further clarification pending the release of additional federal guidance.
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