With the Corona Virus disaster, so many questions have been asked regarding getting financial aids that can help people survive this difficult time. Business owners have also asked what the bailout funds mean and how they can be accessed and put to good use. We will take a look at some of these questions that were asked by participants of a webcast that held on the 6th of April, 2020.
Answer: The applications for the Paycheck Protection Program (PPP) is done online or via calls to the non-ban lenders or small business owner’s banks. The small Business Administration in the U.S does not run the PPP loan fund; this responsibility has been handed over to banks across the country. They are in charge of managing the applications and lenders both large scale and commercial banks are involved in the process.
Answer: the repayment for the PPP loans has been scheduled to commence not later than six months after the loan is active. The loan comes at an interest rate of 1 percent and payment has been spread over a period of two years.
Answer: the way the PPP has been organized allows businesses with employees less than 500 and has been in operation before February 15, 2020, to get up to $10 million. Borrowers must be able to show that they will use the loan for eligible costs such as payroll, rent payments, mortgage payments, and utility bill payments among others.
Answer: third party agents are not allowed to apply for the PPP loans. Hence, the owners who need to apply for these loans are encouraged to do so themselves. However, it is recommended that business owners should not apply online by using third-parties because the applications are approved on the basis of first-come, first-served. As a result of this, any slight delay in applying can lead to delay in getting approval.
Answer: EIDLE stands for Economic Injury Disaster Loan. This is a program that has existed before the SBA initiative that was designed to offer bailout loans for small businesses adversely affected by the economic or environmental disasters in the country. What makes the EIDL program different from the PPP is that EIDL does not use banks and non-bank lenders to verify, underwrite, and distribute the loans. The EIDL is entirely managed by the SBA. However, as a result of the coronavirus pandemic that has led to the shutdown of businesses, the EIDL program had to cap its loans between $25,000 and $35,000, and the grant was changed to $1,000 for different small business employees with a number of workers not more than 10. Another thing that distinguishes PPP from EIDL is that loans obtained under the EIDL program cannot be forgiven, they have to be repaid.
Answer: if this is the case, then you will have to register with another bank that is approved by the SBA.
Answer: For the first eight weeks, you can apply for forgiveness once the funds are allocated. You can go back to your lender to have the funds forgiven but it is not clear what happens after the eight weeks.
Answer: Yes!! you can use it to pay for rent. One-quarter of the PPP loan and used for rent or mortgages can be forgiven it was signed before February 15, 2020.
Answer: Yes, nonprofits are eligible to get the Paycheck Protection Program (PPP)
Answer: This varies and has no definite pattern. It depends on the small business owner’s relationship with the banks, and the competency of the applicant in case of individuals.
Answer: Yes, you qualify to get the PPP. Those who usually file their tax form as S corporation qualify.
Answer: Absolutely Yes! Both PPP and EIDL can be used together provided they do not go for the same purpose or cost. For example, a small business owner could use the EIDL for capital investments and fixed costs, while PPP can be used to pay rent and salaries.
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