During this unprecedented and challenging time in our community, Blackgarden Law knows that there are many questions surrounding the CARES Act. The two programs most small and medium-sized businesses will want to take advantage of include the Economic Injury Disaster Loan Program (EIDL) and the Paycheck Protection Program (PPP). It is important to note that while businesses can take advantage of both programs, applying for both has implications.
The EIDL is a very low-interest loan and can include an emergency $10,000 grant. You can check out the details in this handy guide to the EIDL from the US Chamber of Commerce. The application process is fairly simple and can be done directly from the SBA website. Here is the direct link.
The PPP is authorized for $350 billion in forgivable loans for the purpose of helping small businesses maintain their payrolls during the coronavirus pandemic. Unlike the EIDL, the loans will be made through an existing SBA lender or other approved institution. You can download an information sheet here and a sample application sheet here. Businesses have until June 30th to complete the application but we do not see any real advantage to waiting. Banks are supposed to be able to receive applications today (April 3rd), but it seems like most are scrambling to get up to speed on these programs and are understandably slammed with requests. You should note that the actual policy documentation and regulation around this program have not been released to the banks yet. Once it is available your banker should have more information.
In terms of interactions, you can apply for both the EIDL and the PPP, but you cannot use funds from both programs for the same purposes. For example, you could use the PPP loan for payroll and the EIDL loan for utilities, but you cannot use funds from both programs for rent (or payroll). Additionally, if you take advantage of the $10,000 grant from the EIDL, that amount will be subtracted from the forgiveness amount you receive via the PPP.
In addition, we know CARES has sick and FMLA requirements for businesses under 500. You can read about the FMLA provisions here.
We have spoken to many of you who are deciding between keeping employees on the payroll and applying for PPP to cover the costs, or laying people off who could actually make more money collecting unemployment. These are difficult decisions and we hope we can provide some help to you through these complex issues. Blackgarden Law wishes all of our clients and partners safety, health and prosperity. Our firm is also navigating this new normal while we all work together for the common goal of rebuilding a strong economy.
