SBA Loans (EIDL’s and PPP’s)- 3/31/20

Congress Passes CARES Act
March 27, 2020
DOL Provides Guidance on the Families First Act
April 1, 2020

SBA Loans (EIDL’s and PPP’s)- 3/31/20

Our COVID-19 Task Force has been hard at work educating clients on all of the latest legislation.  We want to share with you additional information about the SBA loans we are discussing.  While we are still waiting on guidance on some of particulars, we thought it would be best to go ahead and share what we know, and what our thinking is, now.  We will send out new information as we receive and verify it.

SBA Economic Injury Disaster Loans (EIDL’s)

Commonly referred to as SBA Disaster Loans, these loans provide long-term, low interest dollars to help companies in declared disaster areas.  We provide a brief overview of these loan in our SBA EIDL overview doc.  Of note, the CARES Act added an Emergency advance loan option to the EIDL for up to $10,000, received within three days of a successful application, which will not have to repaid.

Our thoughts:  We continue to recommend to our clients with businesses hurt by the coronavirus pandemic to start the application process for an SBA EIDL.  It is our current understanding that applying for an EIDL will not affect your ability to qualify for other current programs avaiable.  There is no fee to apply and, if you are approved for a loan but at the time of approval don’t believe you still need or want it, you can turn it down.  SBA estimates the current turnaround time for these loans is 30 days.

Resources:  Apply online on the SBA website:  https://www.sba.gov/page/disaster-loan-applications.  The application is online only but here are two documents that include the information you will need to fill out the online form:   SBA Loan App (Form 5)  &  SBA Loan Supporting Information.  If you need help pulling together information or completing your application, let us know.  We are here to help.

Paycheck Protection Program (PPP)

The PPP was the most discussed item with clients by our COVID-19 Task Force on Monday.  The obvious appeal to this program is the “forgiveness” feature where loan dollars spent on qualified expenses over an eight week period are forgiven.  The US Chamber of Commerce put out a very good overview of this progam:   US Chamber of Commerce PPP overview.  It is important to note that the SBA guidelines for this program have not yet come out.  It isn’t until these are released that we will know all of the specifics on how applications will be processed.

Our thoughts:  This is the program in which most business will try to participate.  One difference between this and the EIDL’s (other than the “forgiveness” feature) is that these loans are made through an SBA qualified lender.  Another difference is that the scope of qualified expenses is narrower (payroll, mortgage interest, utilities, rent, interest on other debt obligations).  Many of the banks serving our clients are qualified SBA lenders, but you need to check with your banker.  While the SBA guidelines for these loans are not out yet, we recommend our clients go ahead and begin the conversation with your SBA approved lenders in preparation for them to be ready. Banks will likely provide a list of items and information you can begin pulling together.  What we are hearing is that banks anticipate receiving the SBA guidance by the end of the week and, if that happens, they want to start processing loans next week.

Resources:  We’ve created a document of items you can start collecting in preparation for your PPP application:  Items for PPP Application.  As you begin working with your banker on this loan application, we are here to help if needed.

WR COVID-19 Task Force