Most frequent questions and answers regarding the Economic injury disaster loan (EIDL) and the paycheck protection program (PPP)

What is the difference between a PPP loan and the EIDL?

PPP – The Paycheck Protection Program offers loans of up to $10 million for businesses to maintain payroll and related benefits, interest on mortgages and other debts, leases and utility payments.

EIDL – The Economic Injury Disaster Loan program can provide up to $2 million of financial assistance (actual loan amounts are based on amount of economic injury) to small businesses or private, non-profit organizations that suffer substantial economic injury.

Does having a EIDL loan effect the forgiveness provision of the Paycheck Protection Program?

Having an EIDL loan does not appear to have any effect on forgiveness, as long as two conditions are met: 1) PPP loan funds are not used to fund payments on the EIDL loan as this may not qualify as a covered cost, and 2) the EIDL loan cannot have been for the purpose of funding payroll. The funding of payroll through an EIDL loan constitutes duplicative benefits and voids the forgiveness provision of the PPP loan.

For purposes of calculating the average monthly payroll for a PPP loan, can I include Continuing Medical Education and/or uniforms that we provide for our staff?

No to both expenses.

If the same owners have multiple dealerships, can each dealership apply for the loan? If so, on the certifications you have to certify that the applicant has not and will not receive another loan under this program, since the applicant is the dealership, we're ok to go ahead and certify that we won't be receiving another loan, correct?

Each entity could apply for a loan. If each dealership is held in a separate entity that files its own corporate tax return and has its own employees and has its own application for the PPP loan, then our understanding is that there is no duplication.

If you have just applied for the EIDL and checked the box for the emergency $10,000 fund, can you still apply for the PPP? Or do you have to wait until you hear from the EIDL loan?

Our understanding is that you can still apply, as long as you are not applying for an EIDL program loan for payroll support. The funding of payroll through an EIDL loan constitutes duplicative benefits and voids the forgiveness provision of the PPP loan. We understand that the $10,000 grant will be netted against the forgiveness portion of the PPP loan.

If a business is forced to close after taking out an SBA loan, can that business continue to pay its employees and receive total forgiveness (or must you stay open)?

The forgiveness provisions do not appear to address whether a business is open or closed due to a governmental mandate. As long as employment is continued as well as compensation, based on the language in the Act, even if the employees are not working, there could still be forgiveness of the loan.

Should we apply to multiple banks or just one?

You cannot have duplicative applications.

When can I apply for the PPP loan?

Small businesses and sole proprietorships can apply for loans starting on Friday, April 3. Starting April 10, independent contractors and self-employed individuals can apply, according to the Treasury guidelines.

When can I apply for the EIDL?

You can apply now.

Disclaimer

These FAQs and the related materials are provided for general information purposes only and do not constitute legal or professional advice. No user should act on the basis of any material contained in the FAQs without obtaining proper legal or other professional advice specific to their situation.