What are the rules for the coronavirus small business loans

## Coronavirus Small Business Loans: Eligibility, Application, and Requirements

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, established the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program to provide financial assistance to businesses impacted by the COVID-19 pandemic.

### Paycheck Protection Program (PPP)

**Eligibility:**

* Businesses with fewer than 500 employees
* Sole proprietors, independent contractors, self-employed individuals, and tribal businesses
* Businesses that were operational on February 15, 2020
* Businesses that have experienced a loss of revenue due to the pandemic

**Loan Amount:**

* Up to 2.5 times the applicant’s average monthly payroll costs over the previous 12 months (capped at $10 million)

**Interest Rate:**

* 1%

**Maturity:**

* 2 years

**Forgiveness:**

* Up to 100% of the loan may be forgiven if used for eligible expenses, such as payroll, rent, and mortgage payments.
* The amount of forgiveness is reduced by any reduction in full-time equivalent employees or salaries during the 8-week period following the loan issuance.

**Application Process:**

* Businesses can apply for PPP loans through participating lenders.
* The online application form requires basic business information, financial data, and a certification of eligibility.

### Economic Injury Disaster Loan (EIDL)

**Eligibility:**

* Small businesses with fewer than 500 employees
* Agricultural businesses with fewer than 500 employees
* Cooperatives and employee-owned businesses
* Tribal businesses
* Businesses that have been in operation for at least one year
* Businesses that have suffered substantial economic injury due to the pandemic

**Loan Amount:**

* Up to $10,000 in advance, which does not need to be repaid
* Up to $2 million in total

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**Interest Rate:**

* 3.75% for small businesses
* 2.75% for non-profit organizations

**Maturity:**

* 30 years

**Forgiveness:**

* The advance of up to $10,000 does not need to be repaid.
* A portion of the loan used for eligible expenses, such as payroll, rent, and mortgage payments, may be forgiven.

**Application Process:**

* Businesses can apply for EIDL loans through the Small Business Administration (SBA) website.
* The online application form requires basic business information, financial data, and a description of the impact of the pandemic on the business.

## Key Differences Between PPP and EIDL Loans

| Feature | PPP Loan | EIDL Loan |
|—|—|—|
| Loan amount | Up to 2.5 times average monthly payroll costs (capped at $10 million) | Up to $2 million |
| Interest rate | 1% | 3.75% for small businesses, 2.75% for non-profit organizations |
| Maturity | 2 years | 30 years |
| Forgiveness | Up to 100% of the loan may be forgiven if used for eligible expenses | A portion of the loan may be forgiven if used for eligible expenses |
| Advance | None | Up to $10,000 advance (does not need to be repaid) |
| Application process | Through participating lenders | Through SBA website |

## Additional Resources

* [SBA website on PPP loans](https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program)
* [SBA website on EIDL loans](https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loans)
* [SBA coronavirus resources](https://www.sba.gov/coronavirus)

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