In recent webinars BRAC has hosted on the new CARES Act, BRAC and its panelists have received many questions from business owners trying to decide whether to apply for either an SBA Economic Injury Disaster Loan (EIDL), an SBA 7a loan under the Paycheck Protection Act, or both. Each loan offers its own advantages and choosing between them (or choosing both of them) should be based in the specific needs and circumstances of your small business.
Nonetheless, BRAC and one of our partners in supporting small businesses, NexusLA, developed a side-by-side comparison that is (hopefully!) helpful in equating the pros and cons of each option. In considering the information, you’ll find a few important highlights:
| PPP | EIDL | |
| Amount | Lesser of: a) $10 million or b) 2.5 times the average monthly payroll for the previous 12 month | Up to $2 million |
| Term | Legislation reads “Maximum of 10 years” for amounts not forgiven. Recent guidance indicates 2 years. | Up to 30 years |
| Rate | 1.00% | 3.75% |
| Forgivability | 100% if used on eligible expenses in defined time period | The first $10,000 is a grant; remainder forgivable if the refinanced into a PPP |
| Loan provider | Local lenders | SBA |
These and other details about the loans may help you determine which option(s) is right for your business. Businesses may apply for and receive both loans, as long as they are not used for the same purpose. The full table can be accessed below.
Liz Smith
As BRAC’s senior vice president of economic competitiveness, Liz leads the organization’s public policy advocacy, strategy, research, and reform activities aimed at advancing the quality of life and economic competitiveness of the Baton Rouge Region.