PPP and EIDL Loan

President Trump signed H.R.748 – CARES Act into law Friday, March 27, 2020.

Interpretation is subject to change based on guidance issued by SBA. As always we suggest you talk with your CPA about how the CARES Act applies to you. Please contact us if you would like to set up a consultation.

UPDATED Portion in red below.


  • EIDL Grant/Loan
    • You can apply for an EIDL loan for a term of 30 years at a max rate of 3.75%.
    • Allows businesses that apply for an EIDL expedited access to capital through an Emergency Grant.
    • An advance of $10,000 is available within three days. $1,000 per employee.
    • No requirement to repay any advance payments, even if you are later denied an EIDL.
    • The advance may only be used for (1) providing sick leave to employees unable to work due to the direct effect of COVID-19, (2) maintaining payroll to retain employees, (3) meeting increased costs to obtain materials unavailable from the applicant’s original source due to the interrupted supply, (4) making rent or mortgage payments, and (5) repaying obligation that cannot be met due to revenue losses.
    • To qualify, you must have been in business by February 15, 2020 with less than 500 employees.  This applies to sole proprietors, independent contractors, cooperatives, esops, tribal small businesses and private non-profits.
  • Payroll Protection Program (PPP) Loan
    • Guidelines for PPP loan will be coming out in the next 5-10 business days.
    • You will have to go to a SBA approved bank to get this loan.
    • PPP loan amount will be the average of monthly payroll costs for the last 12 months times 2.5 with a cap of $10 million for larger businesses.
    • PPP loans qualify for section 1106 loan forgiveness.
    • Eligible expenses for loan forgiveness are payroll costs (salaries, wages, vacation, sick leave, commissions, group health insurance, retirement costs, and state and local payroll taxes), mortgage interest (not principal), rent, and utilities.  These expenses have to be in place prior to February 15, 2020.
    • As of March 31, 2020 there is a 2 year Max Maturity with a .5% rate and payments are only deferred for 6 months.


  1. Go to SBA website at https://covid19relief.sba.gov/#/
  2. Apply for a loan and be sure to check the box to get the $10,000 grant within 3 business days.
  3. In 5-10  business days go to an approved SBA bank and apply for the PPP loan and refinance the EIDL loan you applied for online into it.
  4. You will have to provide specific records in order to have the PPP loan forgiven.  This required information is subject to SBA’s requirements.
  5. It is advisable for you to reach out to your bank to see if they are going to be offering the PPP Loans. 


  • EIDL loan will have to be paid back.
  • PPP loan may be forgiven.
  • PPP loan forgiveness is reduced or eliminated for borrower’s who reduce their workforce during the 8 week period from the date of the loan or 24 weeks.
  • PPP loan forgiveness will not be treated as a cancellation of debt therefore it will not be included in gross income. 
  • The SBA approved banking list for last quarter did not include any credit unions. Update: Credit unions are available to offer PPP Loans.

Kirsten Burton, CPA


Guide to Accessing Small Business Loans
Department of Labor- FAQ