What are the relative merits of the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) options? This question comes up a lot lately amidst the whirlwind of new information about business relief programs. The infographic below, by Live Oak Bank, provides a helpful and concise comparison.
Steve Mariani, President and Founder of Diamond Financial Services, shared some additional insights in a webinar hosted by the International Business Brokers Association. Key takeaways from Mariani’s talk include the following:
- The EIDLs are available now if you need funds to keep your business afloat.
- 75% of PPP funding must be used to cover payroll. Only 25% can be used for other expenses like rent, utilities, etc.
- Be careful calculating payroll. If you ask your payroll company for a report, it might not include things like simple IRA employee expenses and health insurance reimbursements. Be thorough!
- If you receive $10 thousand dollars or less from an EIDL, there is an option to roll that amount into a PPP loan.
- If you plan to apply for PPP support, Mariani suggests you do so quickly and through a lender with whom you have a current relationship. He says lenders are prioritizing current clients.
Lenders are working to interpret and implement the approximately 1,000 pages of information released in the last week. Updates will become available soon as procedures are put in place to process applications. Stay tuned!
Note: This is a summary of aggregated information from other parties and does not express the direct advice of Sam Goldenberg & Associates.