• Lance Baker

How your small business can get part of the $2 trillion stimulus

Small Business Administration (SBA) Loans for the Coronavirus Pandemic

The Small Business Administration has two separate programs that apply to small businesses affected by the COVID-19 pandemic.

  • Available Now: Economic Injury Disaster Loans (EIDL) are available immediately by applying directly to the SBA.

  • Available Soon: Paycheck Protection Program (PPP) loans will be available in the coming weeks as part of the CARES Act, the $2 trillion stimulus package from the federal government.

Economic Injury Disaster Loans (EIDL)

The SBA is offering federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus. These loans are available now. EID Loans will be disbursed directly from the SBA.

Details & Terms

  • Available to small businesses and most private non-profit organizations

  • Loans up to $2 million

  • Can be used to pay existing loans, payroll, accounts payable and other bills that can’t be paid because of the impact of the Coronavirus

  • Interest rate for businesses without credit available elsewhere: 3.75% APR

  • Interest rate for nonprofit organizations: 2.75% APR

  • Long-term repayments, up to 30 years for some borrowers

Criteria for Approval

  • Credit History – Applicant must have a credit history acceptable to SBA.

  • Repayment – SBA must determine that the applicant business has the ability to repay the SBA loan.

  • Collateral: Loans over $25,000 require collateral; below $25,000 do not; loans will not be declined because of a lack of collateral but will require borrowers to pledge what is available


  • Size (must be a small business), type of business and financial resources requirements

  • Must have suffered working capital losses due to the declared disaster, not due to an unrelated downturn in the economy or other reasons

Forms and Documents Needed to Apply

  • Application using SBA Form 5; IRS Form 4506-T for your business and each 20% or greater owner to verify your tax returns; Personal Financial Statement for each owner on SBA Form 413

  • Schedule of Liabilities SBA Form 2202; monthly sales SBA Form 1368

  • Complete copies including all schedule of most current business and personal tax returns (for each ≥ 20% owner). Provide 2018 tax returns if 2019 is not yet filed.

  • 2019 year-end profit and loss statement, and balance sheet

  • 2020 year-to-date profit and loss statement

How to Apply The EIDL program comes directly through the SBA. Application can be made online at https://disasterloan.sba.gov/ela.

Filing electronically is easier, faster and more accurate. However, the volume of applications is currently overwhelming the SBA system, and the online experience is slow and becoming more unreliable. If you have trouble applying online, you can print a paper application and required forms from the link above and fax them to 202-481-1505, or email the completed forms to ELA.doc@SBA.gov.

Paycheck Protection Program (PPP)

The federal CARES Act is a $2 trillion economic stimulus package that includes $350 billion in SBA 7(a) and SBA Express loans designated to keep workers employed and small businesses from going under. As long as employers maintain their payroll, the portions of the loan used for payroll costs, mortgage interest and utilities would be forgiven. The program is retroactive to February 15, 2020, allowing companies to rehire workers who have already been laid off and pay them for the time they missed. The PPP is expected to be available in late April. If you have immediate needs, you can apply for and receive the Economic Injury Disaster Loan and then refinance it into a PPP loan when it becomes available. Unlike the EIDL, PPP loans will be made through SBA authorized banks.

Details & Terms

  • Available to small businesses, sole proprietors, independent contractors, and most private non-profit organizations

  • Must have 500 employees or fewer or meet current SBA size standards

  • SBA 7(a) loans up to $10 million or 250% of an employer’s average monthly payroll costs

  • SBA Express loan limits increased from $350,000 to $1 million

  • Can be used for employee salaries, mortgage payments, rent (including rent under a lease agreement), utilities and any other debt obligations that were incurred before the covered period

  • Covered payroll costs include: Salary, wages and payment of cash tips (up to an annual salary of $100,000); employee group healthcare benefits, including insurance premiums, retirement contributions and covered leave; Vacation, parental, family, medical, or sick leave; allowance for dismissal or separation; payment of state or local tax assessed on the compensation of employees

  • If employers maintain payroll, the portions of the loan used for up to 8 weeks of payroll costs, mortgage interest, rent and utilities would be forgiven. Forgiveness amounts are reduced for decreases in monthly average headcount and salary/wage reductions.

  • The remaining loan balance will have a maturity of not more than 10 years, and the guarantee for that portion of the loan will remain intact.

  • The program is retroactive to February 15, 2020, allowing companies to bring back workers who have already been laid off and pay them for the time they missed.

  • Fee waivers are available.

  • Payments are automatically deferred for one year, with no prepayment penalties


  • Small businesses and non-profits with not more than 500 employees, or the applicable size standard for the industry as provided by SBA, if higher.

  • Also includes sole-proprietors, independent contractors and other self-employed individuals

The Small Business Administration has two separate programs that apply to small businesses affected by the COVID-19 pandemic. had employees or independent contractors on payroll.

Both loans can be used to keep your business open and your employees on payroll, but there are important differences between them, including how you apply. Though the PPP loans won’t be available until possibly late April, you can apply for an EIDL loan immediately to cover the expenses you have now. Then, when the PPP loans are online, you will be able to refinance and convert your EIDL loan into a PPP loan. Regardless, the best advice is to get started gathering your information and filling out paperwork now. No matter which loan you want to apply for—or if you want to apply for both—you will want to take action now and re-evaluate if necessary when the PPP program is available.


NexTier Solutions, Inc.

PO Box 847 Morrisville, NC 27560