On Friday, March 27, the CARES Act was signed into law providing $349 billion in small business stimulus funding by way of the Paycheck Protection Program (PPP) with a goal of preventing business failures and job loss resulting from the COVID-19 crisis. The CARES Act also expanded the Economic Injury Disaster Loan (EIDL) program. The PPP helps businesses cover overhead such as payroll, rent, utilities, and health care premiums to name a few.
Over the past week, Terrace Finance has been helping many businesses like yours apply for EIDLs.
Here are some Frequently Asked Questions from this past week:
Q. I heard there is a $10,000 advance available, is that true?
A. Yes it is, and this advance is essentially a grant and is not required to be repaid.
Q. Can you apply for both an EIDL & PPP?
A. Yes. However, it is important you do not duplicate the uses of these funds.
Q: Can part of the loans be forgiven?
A: Yes, In the PPP Program, a portion can. The forgiveness is focused around payroll, rent, and utilities. If you apply for more than one program, you must be careful that you classify the forgiveness expenses only once.
Q: When do you have to start paying back an EIDL?
A: Fees, principle, and interest may be deferred for 6 months or more depending on the lender.
Q: How long do I have to pay back an EIDL?
A: Depending on the lender and your situation, the loan term can extend to 10 years or more.
Q. Are there any prepayment penalties?
A. No. This is another great feature of these loans.
Q: What is the most I can borrow?
A: EIDL offers up to $2 million in assistance; With the PPP loan the amount available is equal to 2.5 x the business’s average total monthly payroll costs up to $10 million.
Q: What kind of interest rate are we talking?
A: A maximum of 4%.
Q: Do I have to personally guarantee the loans?
A. PPP loans require no personal guarantee nor any collateral. EIDLs under $200K may not require a personal guarantee but may require collateral. Your application will need to be processed to find out the loan terms and requirements.
More details from the US Chamber of Commerce can be found here, but if you prefer to be walked through, Terrace Finance can help you with the entire process. We can answer your questions, help you complete the application and compile the necessary documents to submit your application.
At Terrace Finance, part of our full-spectrum philosophy is serving the needs of business owners as well as providing payment solutions for their customers.
You can call, e-mail or text us to start the conversation. Please reach out to John Papadopoulos at 954-636-8571.