Important Updates On Paycheck Protection Program And Economic Injury Disaster Loan Funds

Updated 12/07/20

While applications for Paycheck Protection Program loans are no longer being taken, borrowers who had been approved for a PPP loan are now able to submit their application for loan forgiveness to their lender.

Another program, for Economic Injury Disaster Loans, is still processing applications for loans to small businesses, nonprofits, agricultural businesses and independent contractors. However, the Small Business Administration announced that it is no longer granting advances as part of that loan program.

The government, which had enacted legislation modifying several key aspects of the Paycheck Protection Program, had extended accepting borrower applications but that window closed on Aug. 8. The PPP Flexibility Act, which was passed in June, gave small businesses that qualified for these forgivable loans longer coverage periods and wider leeway on how those funds could be used.

Under the Flexibility Act, businesses that qualified for a PPP loan were allowed up to 24 weeks, or no later than Dec. 31., to use the money to qualify for loan forgiveness, which is an increase from the previous eight-week period. 

Applications for EIDLs were reopened to all eligible small businesses - including relief to U.S. agricultural businesses - in mid-June. 

Applications for EIDL funds are made directly through the SBA at covid19relief.sba.gov, while applications for PPP loans were made through SBA-approved lenders.

Here’s a brief overview of the two lending programs:

Paycheck Protection Program:

  • Loan forgiveness is based on how the funds are used over a 24-week covered period from the time the loan is funded, but no later than Dec. 31, 2020. 
  • To qualify for forgiveness, at least 60% of the funds must be used to cover payroll costs for eligible employees, with no reductions in staff unless the business can document some specific exceptions, and compensation levels must follow certain guidelines. Up to 40% can be used for mortgage interest, rent and utility costs over the 24-week covered period.
  • When the original PPP legislation was passed, the payroll/expenses split was 75%/25% and the coverage period to use the loan funds was 8 weeks. The new 60%/40% split and the 24-week coverage period gives small businesses new flexibility.
  • If you have any questions about your PPP loan and the forgiveness application, it is recommended that you contact your lender, as well as your accountant or attorney if you have been working with them. 

Economic Injury Disaster Loan:

  • Application for these loans is made directly through the SBA at covid19relief.sba.gov.
  • All SBA qualified small businesses, private nonprofit organizations, farms and other agricultural businesses, ESOPs, independent contractors, sole proprietorship and tribal business are eligible to apply.
  • These loans can be used to cover payroll, debts, accounts payable and other bills that can’t be paid because of the pandemic’s impact, and that are not already covered by a PPP loan.

Visit these sites for important information and guidance about the programs: