A Few Updates On The Small Business Grant & Loan Programs (PPP, EIDL Funding Round 2)

[Update 4/26/20: PPP loan applications will officially resume on Monday, April 27, at 10:30 a.m. ET. New EIDL applications will resume at some later date.]

After passing a $2 trillion stimulus bill a few weeks ago, the US government has passed a new $500B bill, mostly for additional funding to the PPP loan/grant program for small businesses. EIDL gets additional funding as well.

Contents

1 Background
2 PPP
3 EIDL
4 Wrap-Up

Background

There are numerous government programs which were introduced in the massive CARES Act – the bill which sends $1,200 checks to most Americans – including various grant and loan initiates for small businesses of under 500 employees. We gave a run-down of the basic details in this article. These programs are available for a sole-proprietorship or gig worker as well; think: an Uber driver, Amazon reseller, contractor, etc.

Aside from loans, many of the programs have grants. Here’s an over-simplified version:

Payroll Protection Program (PPP) gives a loan which can be forgiven if you use the loan toward payroll costs.
Economic Injury Loan & Grant (EIDL) gives a grant of up to $10,000 for those who apply for the loan, regardless if you get approved.
Employee Retention Credit (ERC) gives some businesses a refundable tax credit on 50% of their payroll, up to $5,000 per employee.

The most substantial program is the PPP which could benefit businesses the most by far. Aside from the favorable loan terms, businesses can get a huge amount of money from the payroll forgiveness, albeit only a couple of months worth of payroll; even smaller businesses like sole proprietors or partnerships can potentially get thousands of dollars in loan forgiveness. The EIDL is a much simpler process, and is mainly useful for the immediate grant of up to $10,000, as well as for smaller loans. The ERC isn’t a loan application at all, just a tax credit. We wrote more details on which business can gain the most from each program in our original post.

PPP

The new bill would give an additional $310B to the PPP to fund additional loans. The first round of PPP funding got used up in under two weeks. Many businesses have already submitted applications or were in the middle of the process, and were able to get funding through the program. Hence the new round of funding.

This new round won’t be enough for all businesses either, and it’s vital to apply as soon as you can. I’d guess that all those who have already applied with the bank are ‘queued up’ and will go before new applications, but worth contacting your banker to verify. If you have not yet applied, do it as soon as you can. Sources are saying it’s far from clear that there will ever be a third round of PPP funding.

Many large banks have been accused of prioritizing loan requests from large customers which earns them bigger fees instead of processing loan request from smaller businesses. Now that this is in the news, I’d guess they’ll make an effort to be more on the straight, so hopefully more of the little guys will get in on this round.

This second round of funding designates $60 billion of the funding specifically for smaller lending institutions like credit unions and community banks. That should also help the smaller businesses as these banks tend to service that base.

It’s also been in the news about some very large businesses who somehow procured a PPP (I haven’t looked at it, but I assume that based on the company structure they are technically eligible) who received public blowback. So it’s likely that the very large businesses won’t apply anymore, even if they are technically eligible, for fear of public backlash.

Further, in an FAQ about the PPP added today (question 31), the SBA specifically reiterated that it’s unlikely a publicly held company would get PPP funding.

For all those reasons, it’s likely this round will see a lot of the smaller businesses getting funding. To be clear, many very small businesses did get in on the first round PPP, and have already received the fund. Hopefully even more will be able to get in on this second round.

EIDL

Separately, the new bill gives an additional $60B to the EIDL: $50B for loans and $10B for grants. Presumably, the Small Business Administration will use the same grant formula which is $1,000 per employee, up to $10,000 for a business with 10 employees.

Again, I’d assume that they’ll just continue processing these in order in which they are received. So if already applied, you probably don’t have to apply again – let us know if you learn otherwise.

If you have not yet applied, it’s an easy application and worth applying as soon as you can with the hopes that there’ll be enough funding to get to you or that there’ll be another round of funding in the future.

Two other notes:

Those who applied for EIDL all the way at the beginning had their applications automatically voided; only the “streamlined application” with 3x series # went through. Hopefully you already knew this, if not, apply now.
Some mention having issues with getting EIDL processed if their credit report is frozen. Good idea to unfreeze those when you apply until it’s processed.

Wrap-Up

To me it would make more sense to lower the grant/forgiveness/loan amounts per business and have it more equitably distributed to all businesses, but I suppose that’s quite hard to do. Hopefully a lot of our readers are able to get the loans and grants which are available to you. Best of luck!

Previous Articles:

Background

PPP

EIDL

Wrap-Up

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