A second round of funding for the PPP and EIDL loans has been approved by Congress. The Small Business Association is going to open applications soon, so small businesses are being advised to prepare their application.
“We are facing an uncertain future. We do not know how long it will take to eradicate coronavirus and return to normal. People and businesses who lost their income during the pandemic need help to survive. Now more than ever, politicians must work together to create a corona aid relief bill to ease the financial suffering of their people,” says Brad Nakase, who is one of the best employment lawyer in California and awarded the prestigious “American Institute of Trial Lawyer’s 2020 Litigator of the Year.”
Over $7 billion in payroll loans have been paid to small businesses, independent contractors, and nonprofits in Colorado alone. The EIDL has given low-interest loans to support local businesses throughout the shutdown. A second round of funding is necessary to support businesses with the continuing effects of Covid-19 as the pandemic has lasted longer than expected.
The second round of funding will provide $320 billion PPP fund, which allocates a specific amount for community credit unions and small financial institutions. These loans will be forgivable as long as they are used as per the program’s guidelines.
The second round of funding for the EIDL will prove an additional $60 billion in low-interest recovery loans. This program will help more than 600,000 businesses in Colorado state.
How To Apply For The Paycheck Protection Program
- Check if your business is eligible.
- Gather supporting documents requested in the application. This includes proof of lease, mortgage, and utility payments, and payroll tax filings.
- Contact the bank that handles your payroll. Find out if they are authorized to process your PPP loan.
- If your PPP is currently being processed, check with your lender that all your paperwork is in place and correct.
How To Apply For The EIDL Loan
- Check SBA’s online portal for their EIDL Application Guide. This will allow you to check eligibility and walk you through the application process.
- Gather the necessary accompanying evidence. They will require the most recent tax return, personal financial statement, and liability information.
- Apply through the SBA portal.
- If you have already submitted you EIDL application, you can check its status by contacting the SBA.
Other Things You Need To Consider in Your Funding Application
- If you are a sole proprietor, independent contractor, or self-employed, you should confirm that your bank is working with the SBA.
- If you do not have a bank account, set one up so you can receive the relief funds.
- Fill out your paperwork and calculate the average monthly payroll, including retirement and eligible health care contributions.
- Create a budget of how you plan to use the funds over eight weeks.
- Maximize your loan forgiveness by planning to spend the funds on approved expenses.
- Speak to your accountant for any questions or guidance.
Which Should I Apply For? PPP Or EIDL?
You can apply for both if you choose to. However, you cannot use PPP funds and EIDL funds for the same purpose.
If your EIDL loan was not used towards your payroll, then you are also eligible for a PPP loan.
If your EIDL loan was used towards your payroll, then you must use your PPP loan to refinance the EIDL loan.
A PPP loan is a maximum of $10 million. It has a fixed interest rate of 1% and a two-year maturity.
An EIDL loan is a maximum of $2 million. It has a fixed interest rate of 3.75% but only 2.75% if you are a nonprofit, and up to 30 years maturity.
If you decide to apply for both, you can accept a PPP loan before deciding to close on the approved EIDL loan. You have 60 days from the approval date to decide if you want to close the EIDL loan. If you do accept funds from both loans, document the uses of each fund.
- To be eligible for a forgivable loan, you must use at least 75% of the PPP loan towards payroll.
- The EIDL Advance program amount will be deducted from the forgivable portion of the PPP loan.
- The PPP loan has a deadline of the 8th of August. The EIDL has an application deadline of the 31st of December. If you need additional funding than the PPP provides, you can apply for an EIDL at a later date.
Second Round of Funding
A second round of funding has been approved, and business owners are waiting for applications to open. While you are waiting, it is recommended to prepare everything you will need so you can apply as soon as it opens. Follow these steps to prepare yourself for the application:
- Check on the status of your PPP loan application with your lender.
- If you have already submitted your EIDL application, you can check its status by contacting the SBA.
- If you are a sole proprietor, independent contractor, or self-employed, you should confirm that your bank is working with the SBA.
- If you do not have a bank account, set one up so you can receive the relief funds.
- Fill out your paperwork and calculate the average monthly payroll, including retirement and eligible health care contributions.
- Create a budget of how you plan to use the funds over eight weeks.
- Maximize your loan forgiveness by planning to spend the funds on approved expenses.
- Speak to your accountant for any questions or guidance.
