The CARES act provides two loans available for businesses. The Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP).
Part of the EIDL is a special provision for an immediate $10,000 grant that will not need to be paid back. This can be applied for with the modified application now available via the SBA website: https://covid19relief.sba.gov/#/ Should you receive this $10,000 and then apply for the PPP, your PPP amount will be reduced by $10,000.
Here is a breakdown of the differences:
Paycheck Protection Program (PPP)
Lender: A bank that does SBA 7(a) Loans
Maximum Amount of the Loan: Roughly the lesser of 2.5 times the average monthly payroll costs or $10 million.
Loan Forgiveness: Yes - as long as used for eligible costs and do not lay off workers. There is a formula for calculating the amount of forgiveness
What Can Loan be used for?: Payroll costs, group healthcare benefits, insurance premiums, and interest on mortgages and other debt incurred prior to February 15, 2020, and rent in force prior to February 15, 2020.
Personal Guaranteed Required? No
Annual Interest Rate: 1%
Term of the Loan: 2 years
First Loan Payment Due: At least six months after loan origination
Economic Injury Disaster Loan (EIDL)
Maximum Amount of the Loan: $2 million
Loan Forgiveness: No
What Can Loan be used for?: Financial obligations and operating expenses that could have been met if the virus had not occurred
Personal Guaranteed Required? Yes for most loans
Annual Interest Rate: 3.75% for businesses, 2.75% for not for profits
Term of the Loan: Up to 30 years
First Loan Payment Due: One year after loan origination