Many small and medium-sized businesses are in a need of financial aid as the COVID-19 crisis has severely affected almost every single industry. The purchasing capacity of people has decreased due to job loss. Two of the best options for such businesses are PPP (Paycheck Protection Program) and EIDLs (Economic Injury Disaster Loans). The Small Business Administration makes these loans available under the CARES Act.

small business loan

If you Google how to apply for small business loan , you will get complete guides to Economic Injury Disaster Loans and Paycheck Protection Program. In this article, you will learn about the difference between Economic Injury Disaster Loans and Paycheck Protection Program.

EIDL (Economic Injury Disaster Loans)

How do Economic Injury Disaster Loans work?

After submitting an application for an EIDL loan, the Small Business Administration can approve your application within days. If your small business or non-profit is experiencing temporary revenue loss, you can take advantage of Economic Injury Disaster Loans. You can get up to $2 million. And, through the end of the year, for EIDLs up to $200,000, a personal guarantee is waived. No collateral is required if you borrow less than $25,000. If your business needs quick help, you can get an emergency grant advance for up to $10,000. If approved, you will get the advance in three days. If you are using the advance to cover certain business expenses, it will not have to be repaid. The advance is $1000 per employee.

EIDL Qualification

If your business meets the following conditions, you can apply for an EIDL loan:

  • You are a business with 500 or fewer employees.

  • You have 500+ employees and you meet the industry size standards of the SBA for the pandemic.

  • You are a private non-profit organization.

  • You operate in the US or your business significantly contributes to the US economy. This contribution can be through taxes or by using US labor, materials or products.

  • You own and operate the business independently.

  • Yours is not a dominant business in the field.

  • Yours is a 501(c)(19) veteran organization.

Applying for an EIDL

Visit the website of SBA to apply for an EIDL. Applications are approved on the basis of first come first served. It takes less than 30 minutes to apply for an EIDL. When you apply for an EIDL online, the website shows a disclosure providing details of the loan. You need to provide the following information:

  • SSN

  • Birthplace

  • Birthdate

  • Citizenship

  • street address

Recheck all the information and submit your application. If you spend the advance on lease or mortgage payments, maintaining payroll or paid leave, it will be forgiven.

PPP Loans (Payment Protection Program Loans)

The SBA offers this loan to cover payroll. The amount you receive can be up to 2.5 times your monthly payroll. If you use the borrowed amount for payroll, utilities, mortgage interest or rent, and your employees stay with you for eight weeks, the loan will be forgiven.

PPP Loan Qualification

Apply for this loan if your business meets the following conditions:

  • Your business was operating as of Feb 15, 2020.

  • You have 500 or fewer employees.

  • You are a sole proprietorship, self-employed individual or you do independent contracting.

  • You are a non-profit entity under Section 501(c)(3).

  • Yours is a tribal business that meets the size requirements of the SBA.

Applying for a PPP Loan

You can apply for a Payment Protection Program loan through the following:

  • Farm Credit System institution

  • Federally insured credit union

  • Federally insured depository institution,

  • SBA 7(a) lender

Search how to apply for small business loan to learn about other options for you.

Author's Bio: 

I am Eric Desuza a pro-level blogger with 5 years of experience in writing for multiple industries. I have extensive knowledge of Food, Fitness, Healthcare, business, fashion, and many other popular niches. I have post graduated in arts and have a keen interest in traveling.