The latest round of Paycheck Protection Program(PPP) funding opened one month ago and already the new Administration has succeeded in making major improvements to the program’s implementation for businesses with fewer than 1-10 employees(including the owner), the share of funding is up nearly 60%. Which just means more financial support available to sole proprietors, independent contractors, and self-employed individuals.

Q.1 What is PPP and Forgiveness?

Paycheck Protection Program (PPP) allowed for eligible businesses throughout the country to apply and receive loans from essential qualifier lenders to continue to pay employees, even if those businesses reduced hours or were closed. The rate of interest for PPP loans is 1% and you can even apply for forgiveness later, once you get the loan approved. Forgiveness means you do not owe any money and nothing needs to be paid back to the Government.

Q.2. What is EIDL?

On the other hand, Economic Injury Disaster Loan(EIDL) is a long-term direct loan program to meet the financial obligations and operating expenses that could have been met had the disaster not occurred. The rate of interest for the EIDL is 3.75% APR fixed for businesses and 2.75% fixed APR for non-profits.

 Q.3. Is my business eligible for either PPP or EIDL?

Examples of eligible industries include but are not limited to the following:

• Owners of Rental property, Restaurants, Food Trucks, Truck operators, Manufacturers, Gym owners & Recreational facilities, Sports vendors, Travel agencies, Hotels, charter boats, wholesalers, realtors, all independent contractors, gig workers such as Uber, Lyft drivers etc.
• All businesses who are sole proprietors( with or without employees), LLCs    (with or without owners), Partnerships( with or without employees), Corporations.
• Companies having employees less than 300 employees.
• Non-citizen small business owners who are lawful U.S. residents may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.
• Small business owners with prior non-financial fraud felony convictions are also eligible to apply.
• Small business owners who have struggled to make federal student loan payments and are termed delinquent from the federal student loan debt perspective too can apply.

Q.4 How much can I borrow?

For the PPP: up to $10 million

For the EIDL:  Eligible entities may qualify for loans up to $2 million.

– Interest rates are 3.75% for small businesses.

– No collateral required up to $25,000. The loan will not be declined for lack of collateral but the SBA requires borrowers to pledge what is available.

– SBA takes real estate as collateral when it is available.

Q.5. How can I use the funds once the loans are approved?

• For PPP- funds can be used to pay debts, pay rents, mortgages, utilities, accounts payable and also pay for payroll.
• For EIDL- funds can be used to take care of working capital issues and normal operating expenses such as continuation of health care benefits, rent, utilities, fixed debt payments.

Q.6 What documentation do I need?

• Copy of valid Driver’s License( back and front) or any State approved identity card
• Tax return 2019
• Bank statements 2020 to begin with

Additional documentation may be requested:

• Profit & Loss Statement and Balance Sheet in case the most recent Federal Income Tax Return has not been filed.
• A current year to date profit and loss statement

In addition, this is neither an exhaustive list nor will all SBA-approved lenders require all items listed, as each lender appears to have their own due diligence requirements.

Q.7 What if I am denied a loan?

If the loan request is denied, the applicant will be given up to 6 months in which to provide new information and submit a written request for reconsideration.

Q.8 Can I apply for both EIDL and PPP?

Yes. Borrowers can apply for both the PPP and EIDL, although funds from both cannot be used for the same purpose.

Q.9 I received the loan; how do I make payments?

Set up online payments at pay.gov or mail payments to the following address:

U.S Small Business Administration

721 19^th Street

Denver, CO 80202

All minority businesses, women owned, non-US citizens though lawfully residing and veteran owned businesses are strongly encouraged to apply. The SBA has established a 14-day, exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employee that ends on March 9, 2021.

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