updated March 2021
What is the CARES Act?
In response to the Coronavirus (COVID-19) pandemic, the U.S. Small Business Administration currently provides financial assistance to small businesses through the Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP).
Economic Injury Disaster Loans (EIDL)
A low-interest long-term loan
EIDLs are loans of up to $2 million with a 3.75% interest rate for businesses and a 2.75% interest rate for nonprofits with terms of up to 30 years.
Paycheck Protection Program (PPP)
A loan program that provides loan forgiveness for retaining employees
The PPP is a 100% federally guaranteed loan to help small businesses keep workers on payroll for a period of 8 to 24 weeks during this crisis. The loans can be up to $2 million with a 1.0% interest rate with a term of five years. It will be fully forgiven if at least 60% of the entire loan is allocated towards payroll, remaining funds are used for eligible uses, and employment and compensation levels are maintained.
NOTE: Borrowers may apply for both loan options as long as there is no duplication in the uses of funds
|LOAN TERMS||ECONOMIC INJURY DISASTER LOAN (EIDL)||PAYCHECK PROTECTION PROGRAM (PPP)|
|Program Type||Loan||Forgivable Loan|
|Who is Eligible||
* Businesses in certain industries may have more than 500 employees if they meet the SBA’s Size Standards
* Either the industry based sized standard or the alternative size standard of 500 or less employees
|Eligible Uses||fixed debts (rent, etc.), payroll, accounts payable, and other operating expenses||Payroll costs including benefits as well as mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.|
|Interest Rate||3.75% for small businesses and 2.75% for nonprofits||1%|
|Loan Size||up to $2 million||up to 2.5 x average monthly payroll cost for up to $2 million
up to 3.5 x average monthly payroll for Accommodation and Food Services sector
|Loan Term||up to 30 years||2 years (loans issued prior to June 5) - 5 years (loans issued after June 5)|
|Repayment Deferral||12 months||Deferred for borrowers who apply for loan forgiveness until SBA remits the borrower's loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness (either 8 weeks or 24 weeks).|
|Collateral||no collateral is required for loans of $25,000 or less||none|
|Personal Guarantees||up to $200,000 can be approved without a personal guarantee||none|
|Forgivable portion||up to $10,000 grant if used for authorized reasons
(advance funds have been fully allocated and are not currently available)
|all IF at least 60% is used on payroll and remainder on eligible uses
(also based on employer maintaining/rehiring employees and maintaining salary levels)
|Expiration Date||Rolling||June 30, 2021|
Ready to Apply?
APPLY for EIDL
APPLY for PPP
Start preparing a PPP Borrower Application Form and find a Participating Lender.
Apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) are helping eligible borrowers in underserved and disadvantaged communities, particularly those with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low- or moderate-income neighborhoods. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.
Need Help Applying for SBA Loans?
Contact the LA County Business and Worker Disaster Help Center
For assistance applying for a City or State loan, please contact a BusinessSource Center for phone and email support.
return to COVID-19 Resources