April 29, 2020
Director of Practice Growth, Angela Venti, explained the second chance small businesses are getting with the second round of PPP and EIDL loans in the article, “Small businesses prepare for second chance at SBA loans.”
She discusses which small businesses could be eligible, the difference between the loan programs, and how the funding has been spread out between banks on retailcustomerexperience.com.
The SBA will resume accepting applications today as President Donald Trump signed the legislation Friday.
The funding covers the Paycheck Protection Program and the Economic Injury Disaster Loan after the first $349 billion ran dry earlier this month.
“These are people who didn’t make it the first time,” Angela Venti, director of practice growth at Alloy Silverstein, a Cherry Hill, New Jersey-based accounting firm, said Monday morning.
Venti said many companies that never got approved for the first round of funds are now in line for funding, as well as companies that haven’t yet applied.
Some of the funding for the second round — $60 billion — has been specifically allocated to smaller banks to process loans, Venti said. “They were saying they had a hard time on the last round,” she said. “That has to be separated from the Chases, the Bank of Americas, the big banks.”
Two key loan programs
Borrowers can apply for either the PPP, which is for companies with fewer than 500 employees, or the EIDL, which is for mid-size and large companies.
Under the PPP, the applicant asks for a certain amount up to $10 million based on 2019 or payroll costs or 2018 costs if 2019 data is not available. The PPP loans can be used for payroll, mortgage interest, rent or utilities, and carry a 1% interest rate for two years and are potentially 100% forgivable.
Under the EIDL loan, the SBA determines the amount of the loan up to $2 million.
“You just submit your losses; they determine the loan amount,” Venti said.
The EIDL loans above $10,000 carry a 3.75% interest rate for profit organizations and 2.75% for non-profit organizations over a 30-year term.
The first $10,000 of the EIDL loan is a grant that does not have to be repaid.
“It’s much more flexible (than PPP) on what you can use it for,” Venti said.
The EIDL is not as well-suited for businesses that don’t have a lot of employees, such as independent contractors and entrepreneurs, Venti said.
“That whole group of people can’t do the PPP loan, or it’s a really small amount not reflective of what they really make, and they’re very good candidates for the EIDL,” she said.
“The only trouble you could run into is if you got the PPP and the EIDL and you double-dipped,” she said.
Second round expected to run out soon
“Every single person that I’ve talked to is absolutely anticipating that it’s going to run out again,” Venti said. She said her company was encouraging clients last week to be ready to apply.
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For more information about SBA loans and business updates regarding the Coronavirus pandemic, go to our COVID-19 Resource Center for up to date, timely resources.
