Understanding PPP and EIDL Stimulus Programs

Tax Withholding and Estimated

Understanding PPP and EIDL Stimulus Programs

Navigating the various programs enacted in the wake of the COVID-19 pandemic can be daunting. We want to make sure you have access to the most relevant and easy-to-understand resources available.

Also, the SBA recently released the PPP loan forgiveness application. The application clarifies and simplifies the CARES Act guidelines and eases the burden on small businesses. In general, the loan should be forgivable if used within an 8-week period in the following manner:

  1. 75% of loan proceeds used for payroll and benefits
  2. Remaining 25% generally used for rent, utilities and interest on debt obligations

The chart below highlights the key differences between the two programs available: Additional information can be found on the SBAs COVID-19 small business guidance page.

Paycheck Protection Program                   Full EIDL Loan
PURPOSE To be used for payroll, employee benefits and certain operating expenses during the 8 week period beginning when the loan is funded  To meet financial obligations and   operating expenses that could have   been met had the disaster not   occurred
AMOUNT Calculated as 2.5x average monthly payroll expense (Up to $10 million)  Up to $2 million
FORGIVABLE YES – The debt will be forgiven if a minimum of 75% of the funds received are expended on eligible payroll obligations and the remainder is expended for eligible operating expenses (generally rent, utilities and debt interest)  NO – with the exception of the $10,000 EIDL loan advance
TERMS 1% interest rate (for portion not meeting forgiveness criteria)  3.75% interest rate for businesses
 2.75% interest rate for non-profit   entities
1st PAYMENT DUE Deferred 6 months(for portion not meeting forgiveness criteria)  Deferred 1 year
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