Two Important Relief Programs for Small Businesses
Assistant Vice President, 1st Source Bank
Many small businesses have needed help during this COVID-19 pandemic, and they’ve received it from two relief programs managed by the Small Business Administration (SBA). The Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) were first made available through the CARES Act on March 27, 2020. While both programs were created to assist businesses through the pandemic, it is important to understand each program.
|Maximum Loan Amount||$10 Million (1st draw),
$2 Million (2nd draw)
|Term||5 years||30 years|
|Interest Rate||1.00%||2.75% Nonprofits
3.75% For profit
|Is it Forgivable?||Yes||No|
|Is Collateral Required?||No||Yes, for loans over $25,000|
|Approved Uses||Payroll, rent, utilities, mortgage interest, covered operations, property damage, supplier, worker protection expenditures||Working capital and normal operating expenditures|
|Where to Apply?||1st Source Bank, other approved lenders||Small Business Administration website|
President Biden recently signed the PPP Extension Act of 2021, extending the deadline for businesses to apply for PPP until May 31. The new deadline does provide more time for applications, but according to the SBA, the money likely won’t last that long. It says that if the loans continue at the current rate, the PPP money could run out prior to May 31. The deadline to apply for EIDL is Dec. 31, 2021, but the funds may not last until that deadline date. At 1st Source, we can help with PPP applications, but EIDL must go through the SBA.
We hope this information is helpful to businesses that are making difficult decisions about whether PPP, EIDL, or both are beneficial to them.