|Updates on information we are receiving and answers to some frequently asked questions about the two loan programs.
As you know the first loan made available was the EIDL. This loan allowed businesses to receive a $10,000 emergency grant to cover expenses during the application process. Since it takes approximately 45 days to get loans approved, we have not seen loan awards at this time. If you have received the $10,000 grant money, then this amount will be reduced from the portion of the PPP loan forgiven. For example, if you receive a $50,000 PPP loan, meet the requirements for forgiveness, then $40,000 will be forgiven since you have received the $10,000 grant money under the EIDL program.
Since then, the PPP program came out and now with the forgiveness portion, we are recommending businesses consider taking advantage of this loan first. Since the look back period is 8 weeks and ends June 30, 2020, it is important to apply for the PPP program as soon as it is available at your bank so that the loan is in place by May 1st. This is under the assumption that some businesses do not want to rehire or restore wages until they have the funds available to pay workers over the next eight weeks due to capital constraints.
Also, if you have a business that is closed due to state mandates, the PPP loan program is still available to you. Businesses will pay their employees to stay home during this eight week period of time.
If you are a new business with less than 12 months of payroll, for purposes of average monthly payroll calculation, it will be the average monthly payroll for January and February of 2020.
Businesses can take out both loans, BUT the proceeds cannot be used for the same purpose. The EIDL loan can be used to pay accounts payable which the PPP loan cannot. Businesses can apply for both loans and then decide not to take the EIDL loan based on their individual circumstances.
If you have any questions regarding the two loan programs or I can be of assistance in any way, please let me know.