April 02, 2020
Director of Practice Growth, Angela Venti, offered advice in the FastCasual.com article “How Your Restaurant Can Tap Into The SBA Funding” about the SBA loan process.
“According to a summary from Alloy Silverstein, a Cherry Hill, New Jersey, accounting and advisory firm, PPP loan applicants will need to provide documentation verifying the number of employees and pay rates, unemployment insurance, IRS and state tax filings.”
Which loan(s) is best for my business?
Up until Tuesday’s Treasury Department announcement, potential borrowers could easily confuse the PPP loans with other SBA loans designed to provide COVID-19 relief, such as Economic Injury Disaster Loans. Those launched in January and have a $2 million limit.
Business owners could easily be misled by a section of the SBA website under the heading, “Disaster Loan Assistance” containing the subhead, “COVID-19 Economic Injury Disaster Loan Application.”
Although both the disaster loans and the paycheck protection program are SBA mechanisms to help companies weather the COVID-19 outbreak, the EIDLs are better for businesses that have discontinued operations, said Angela Venti, director of practice growth at Alloy Silverstein.
No payment is due on the low-interest loans for 12 months from the time they originate, and companies are eligible if they have been in operation since Jan. 31, 2020.
In addition, borrowers cannot use a PPP loan for the same purpose as other SBA loans.
What is an Emergency Economic Injury grant?
The SBA is also offering COVID-19 relief through Emergency Economic Injury grants, which provide an emergency advance of up to $10,000, Venti said.
To get the emergency economic industry grant, the borrower must first apply for the EIDL and request the advance, which does not need to be repaid and can be used to cover payroll cost, expenses caused by supply chain disruptions, debts, rents and mortgage payments. The emergency grants are available through Dec. 31, 2020. Those who have already applied for EIDLs are eligible for the grants, which are backdated to Jan. 31, 2020.
Borrowers who have already taken SBA loans are being notified the SBA is waiving six months’ worth of principal and interest, Venti said.
“If you already have a loan with them (the SBA), they will make six months’ (worth) as a grant,” she said. “It’s literally six months of a breather.”
It is also possible to take the emergency grant and apply for a loan, Venti said.
“The SBA will know that you received the $10,000 (emergency grant), but it does not exclude you then applying for the economic injury (disaster loan),” she said. “That (grant) will be an immediate relief.”
The grants will process faster than the loans because there’s been such a large number of loan applications, according to Venti.
Businesses that took out an Economic Injury Disaster Loan between Feb. 15 and June 30 can also refinance the EIDL loan into a PPP loan, she said.
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https://www.fastcasual.com/articles/how-your-restaurant-can-tap-into-the-sba-funding/
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