Business owners have two major loan choices for economic relief during the pandemic, the Paycheck Protection Program (PPP) or the economic injury loan (EIL). Which is right for you?
Businesses are eligible for the EIL if they are unable to pay ordinary and necessary operating expenses during a disaster period until normal operations can resume and there is no physical damage to the business, per FOX News. To qualify for the PPP, businesses must have fewer than 500 employees and be under economic strain due to the coronavirus.
In terms of lending limits, you can borrow only $2 million with an EIL, but up to $10 million with the PPP. The EIL has an interest rate of 3.75 percent and will not exceed 4 percent, while the initial interest rate for the PPP loan is 0.5 percent, but could also go as high as 4 percent.
The EIL cannot be forgiven, while the PPP allows for forgiveness for the first eight weeks if employers pay their expenses and keep salary levels constant. Three-quarters of the loan must go toward payroll.
Business owners can apply for the EIL at SBA.gov. The PPP can be accessed via any existing SBA lender.