Changes to the PPP Loan and EDIL programs

Question of the Week

What is happening with the PPP Loan and EDIL programs?

Happy Five-Minute Friday, all!

Time to check in for the week before you jet off for the holiday weekend. A lot has happened this past week with what one person has lovingly referred to as the “rat’s nest” of small business stimulus programs.

Last Friday, the SBA release a sample version of the Paycheck Protection Program (PPP) Loan Forgiveness Application and started processing the Economic Disaster Injury Loans (EDILs). I wanted to provide an overview and some guidance on both changes so you can make the most of what we have to work with.


PPP Loan Forgiveness Application Guidance For the Self-Employed, Freelancers And Contractors

If you’ve been wondering how to get loan forgiveness through the Paycheck Protection Program Loan Forgiveness application, your wait is over. The sample application for loan forgiveness came out Friday May 15th, and while it’s not as clear as we’d all like it provides more guidance than before. Let’s walk through this application with the information that we have now and adjust as more guidance comes out.

I’ve split this guidance to address business owners without employees (i.e., self-employed, freelancers and independent contractors) for a couple of reasons. First, the application gets much more complicated when employees are involved. And there’s no need to bog you down with information that doesn’t apply to you. Second, the calculations for businesses with employees are so convoluted that we will need additional guidance before it becomes effective. If you’re a business owner with employees who would like to take a deep dive. Check out this post from Forbes Contributor Tony Nitti.

It’s no surprise that this application is complicated. Just opening up the 11-page pdf document gave me acute anxiety.  It includes the application, instructions, an additional schedule for the application, instructions for that schedule, a worksheet for the schedule that is for the application and instructions for that.

Let’s break it down into bite-sized pieces.

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SBA Approving Economic Injury Disaster Loans (EIDLs): What You Need To Know

Small businesses applied Economic Injury Disaster Loans (EIDL) in droves when they became available on March 30.  Normally, these loans only provide assistance after natural disasters like tornadoes, wildfires or floods, but when President Trump declared Covid-19 a nationwide emergency on March 13th, the door opened for small businesses across the country to seek emergency financing. With uncertain prospects ahead, business owners saw the program’s maximum $10,000 advance as a way to tide their companies over until the effects of Covid-19 were under control.

Unfortunately, the roll out of the program was much rougher than anticipated. A flood of applications overwhelmed the system and the SBA stopped processing the first round of EIDLs after about two weeks.  With the second round of funding, the money lasted just about a week before the SBA limited applications to agricultural businesses.

Additionally, the SBA was completely silent for weeks on the status of the applications that were submitted. The advances, which were supposed to be sent within three days of applying, were delayed for weeks and adjusted to $1,000/employee or a $1,000 for sole proprietors.

But the advances began mysteriously showing up in applicants’ bank accounts a few weeks ago, and as of last week the SBA started processing and approving applications. As such, it seems like a good time to revisit the EIDL program and how its loans work.

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Quote of the Week

“The mind should be allowed some relaxation, that it may return to its work all the better for the rest.” – Seneca


Task of the Week

Take a break! I know a lot of us are still quarantining, but that doesn’t mean you can’t enjoy your long weekend. Find some time to rest, relax and reflect.