SALT LAKE CITY, Utah, April 2, 2020 (Gephardt Daily) — The federal government has set aside $350 billion dollars for small business loans, designed to help owners pay employees, as well as rent and utilities, during the COVID-19 crisis.
Now, the question is, how to take the guess work out of applying for these emergency loans.
There are two principle programs being offered via the Small Business Association working through local lenders: The Paycheck Protection Program and the Economic Injury Disaster Loans Advance.
The Paycheck Protection Program, also known as the PPP, is a longer term loan. It allows businesses to cover their payroll expenses and other costs, including rent, and utilities. While the PPP is technically a loan program, whatever you borrow will be forgiven as long as you retain your employees and use the cash for approved expenses.
While the SBA and the banks are hammering out final details, PPP application forms will be available Friday, April 3 and look like this: https://www.uschamber.com/co/small-business-coronavirus. (I suggest you prepare the application now so you can get in line early since 30-million American businesses can apply for the loans.)
Applications for the second loan program, called the Economic Injury Disaster Loans Advance, are available now. These provide businesses with quick emergency loans of $10,000 designed to cover businesses’ immediate payroll needs. It, too, can be used for rent and utilities. These loans, which can also be forgiven, are expected to be processed in the matter of few short days. Here’s a direct link to the application: https://covid19relief.sba.gov/#/ .
By the way, getting an Economic Injury Disaster Loans Advance will not prevent you from getting a PPP loan, but if you receive the fast-tracked $10,000, it will be rolled into your Paycheck Protection loan. In the end, however, all of the loans will be forgiven, meaning the cash infusion is, in essence, free money.
The very best overview I’ve found of the new COVID-19 business relief loans was just published by the U.S. Chamber of Commerce. Here’s a link to the summary: https://www.uschamber.com/co/small-business-coronavirus .
While the cash has been approved and is in the pipeline, the SBA and local banks and credit unions are still working on the fine print. Expect modifications in the days ahead.
Bill Gephardt is the owner of Gephardt Daily and its parent company Gephardt Approved.