Disclaimer: This article is intended to be helpful and informative, but should not be taken as legal counsel. If you have specific legal or tax questions, you should consult your attorney or tax advisor, as appropriate. Xometry is not affiliated with the United States Small Business Administration (“SBA”) and does not act as a lender or referral agent for SBA lenders. SBA loan programs are subject to eligibility. Please consult with a counselor for the SBA or a licensed SBA lender for additional information.
CARES (or Coronavirus Aid Relief, & Economic Security) Act is a stimulus bill designed to address the economic impact caused by the COVID-19 health crisis. One of the major components of the CARES Act relief package is the Paycheck Protection Program (PPP). The PPP is being administered by the Small Business Administration (SBA), which provides for loans of up to $10 million per small business applicant to be used on payroll, benefits, rent, and other authorized costs from February 15, 2020, through June 30, 2020.
The initial $349 billion in funding has already been allocated and the Federal government recently injected another $310 billion in additional funding last week. Here’s what you need to know about the newly allocated funds:
This loan has a maturity of 2 years, an interest rate of 1.00%, and loan payments will be deferred for 6 months. You can learn more about these loans and eligible lenders on the SBA website. PPP loans can be eligible for forgiveness if they are used on payroll costs, to pay rent or utilities, or to cover the interest on a mortgage (excluding principal payments ). You can also use PPP funds to pay interest on any other debt obligations incurred before February 15, 2020.
Economic Injury Disaster Loans are low-interest loans available to any small businesses experiencing economic hardship due to a disaster or pandemics like COVID-19.
Through the CARES Act small businesses that apply for an EIDL between January 31, 2020, and December 31, 2020 (subject to the program maximum of $10B) can simultaneously request a grant of up to $10K. If you meet the eligibility requirements of the EIDL, you will receive your grant in up to 3 days. Your business will not need to repay the grant, even if the EIDL application is later denied. The grant funding can be used to cover most expenses caused by COVID-19 related economic hardships, including:
A small business that received an EIDL between January 31, 2020, and April 3, 2020 can refinance their EIDL into a PPP. Small businesses may also apply for an EIDL right now, and for a PPP later, as long as they’re used for different purposes.
See the SBA website for more info about EIDLs.
Not only can you apply for either of these CARES Act loans through your bank, or credit union, you may also utilize approved nonbank lenders such as Intuit/QuickBooks Capital, Paypal, and Square Capital. Check out Forbes’ full list of nonbank lenders and how to vet them.