Millions of business owners around the country have received both EIDL advances and PPP loans. Unfortunately, last week, the SBA confirmed that receiving both funds will impact the forgiveness of the PPP loan.
On August 11th, the SBA quietly updated the “Frequently Asked Questions” about the PPP to confirm that EIDL advances will be subtracted from the forgivable amount of a PPP loan. Here’s what you need to know to calculate the impact of your EIDL advance on your PPP.
How to Calculate Whether Your PPP will Be Fully Forgiven
The EIDL advance will be deducted from the forgivable amount of your PPP loan. EIDL advances are up to $10,000 ($1000 per employee). If you received the full $10,000, then you'll need to pay back at least $10,000 of your PPP loan. To make sure you won’t have to pay any more, make sure you follow the regulations in spending your loan. Remember, even if you can’t get full forgiveness, you should be able to get partial.
But what if your EIDL grant is more than your total PPP loan? Unfortunately, the new SBA guidance confirms that your PPP will not be forgivable. You’ll have to pay it back, but luckily, the interest rates are very favorable.
Here’s What you Need to Know if You Can’t Get Full Forgiveness
If you can’t get full or even partial PPP forgiveness, don’t panic. The PPP is still a much more favorable loan than traditional financing. PPP loans have an interest rate of just 1%.
If you got your PPP before June 5th, you have two years from the end of your spending period to pay back the loan, and if you got your loan after the 5th, the repayment term is extended to 5 years.
Here's What You Need to Know about PPP Round 2
Even as the SBA is making policies for the first round of PPP funding, lawmakers are working on the second round. If you can’t get your first PPP loan forgiven, you might still be able to get a forgivable second one.
Although Congress is struggling to come to an agreement about a second stimulus bill, both parties have agreed to a second round of PPP funding, and Republicans are also pushing for payroll tax cuts and other credits. We will keep you updated on the latest news on PPP round two, and in the meantime, thanks for following along with us to get your government services news.
More Resources
📌 Want to understand how PPP loans are distributed around the country? Check out our PPP loan recipient search tool.
📌 Have you applied for an EIDL advance or loan but not yet received it? Track your loan to see relative progress bassed on our self-reporting tracker.
📌 List your small business for free through our Support COVID Recovery Initiative.
