EIDL Grant or PPP For Self Employed?
EIDL Grant or PPP For Sole Proprietor?
EIDL or PPP For Independent Contractor 1099?
Paycheck Protection or EIDL Grant for small businesses
list of PPP lenders that don’t require an existing bank account- download link: https://mailchi.mp/26ef0b5a86af/ppp-lenders
See how large of a forgivable loan you are eligible for! Download the Paycheck Protection Program PPP here:
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Should I Choose PPP Paycheck Protection Program or EIDL Loan?
Below is a summary of both stimulus programs:
What is the Paycheck Protection Program PPP
– Establishes $350 Billion for the provision of loans to small business
– For loans made between February 20, 2020 and June 30, 2020
– Only available to qualifying “small” employers
– Up to 100% of the loan amount is eligible for forgiveness
Who can apply for the Paycheck Protection Program PPP
-Anyone who meets the SBA’s definition of a “small business concern”
-Has no more than 500 employees per location
Paycheck Protection Loan Details
– Maximum loan amount is lesser of (a) 2.5 times the average monthly payroll (based on 12-month lookback) or (b) $10 million
– Loans will be 100% guaranteed by the SBA
– Availability of credit from other sources does not disqualify eligibility
– No application fees or closing costs
– Nonrecourse; no collateral or personal guarantees imposed
– Maximum interest rate is 1%
– Maximum loan term of 2 years
What Are Payroll Costs in PPP?
-compensation to employees in the form of salary/wage/commission/earnings or
-for an independent contractor, sole proprietor, or self-employed individual, their own
wages, commissions, income, net-earnings or similar compensation;
-vacation, parental, family, medical, or sick leave;
-allowance for dismissal/separation;
-payment required for provision of health benefits including insurance premiums;
-state and local payroll taxes (not FICA or federal unemployment taxes).
What Isn’t a Payroll Cost in a PPP Loan:
-Any salary/wage/commission or similar above $100,000/year for any individual
employee or independent contractor.
-Any salary/wage/commission or similar for any employee whose principal place of
residence is outside the United States.
-Sick leave or family leave wages for which a credit is allowed under the Families First Coronavirus Response Act.
-Federal employment taxes imposed or withheld between February 15, 2020 and
June 30, 2020
Businesses That Can’t Apply For Paycheck Protection:
-Businesses engaged in lending
-Multi-level marketing companies
-Businesses engaged in legal gambling activities
-A few select others
What is the Maximum Loan From the Paycheck Protection Program
– 2.5 times average total monthly payments of “payroll costs” during the 1-year period
before date the loan is made.
EIDL Advance for Self Employed
While called an “advance”, this money is essentially a grant. Whether or not you are approved for a loan, you have no obligation to repay your EIDL grant any of the money so long as it is spent on:
-providing sick leave to employees
-maintaining payroll to retain employees during business disruptions or substantial shutdowns
-meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains
-making rent of mortgage payments
-repaying obligations that cannot be met due to revenue losses.
There are many factors to weigh when considering the EIDL Grant through the SBA and the PPP loan. In most cases it seems that the Paycheck Protection Program is a better bet however there are some cases where a combination of both programs will yield the greatest net benefit.
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This presentation does not constitute legal or tax advice. It is provided solely for informational and educational
purposes and does not fully address the complexity of the issues or all the steps businesses must take under
applicable laws. You should consult your professional advisers regarding your individual situation. Max Maher
undertakes no obligation to update the information in this presentation, and no representations are made that
the content is error-free.