Generally, a business can apply for loans under both the Paycheck Protection Program and the EIDL program but must use the EIDL for a purpose other than covering payroll costs.
To determine whether to apply for a Paycheck Protection Program loan or EIDL, businesses should consider the following:
- Eligibility: As described in detail in this Advisory, the eligibility requirements are somewhat different for each program.
- Maximum Loan Amounts: Paycheck Protection Program loans are capped at $10 million, with an applicant’s limit determined by a formula tied to payroll costs; EIDLs are capped at $2 million.
- Loan Forgiveness: Paycheck Protection Program loans may be eligible for loan forgiveness; EIDLs have no such feature. However, EIDL applicants may receive an emergency grant of up to $10,000 that does not have to be repaid.
- Maximum Maturity: Paycheck Protection Program loans can have maturities of up to 10 years, with no obligation to make payments under the loan for up to the first 12 months. EIDLs can have maturities up to 30 years. EIDL payments can also be deferred for up to a year; however, interest accrues during deferment periods.
- Interest Rates: Paycheck Protection Program loan interest rates are capped at 4%. The EIDL interest rates for COVID-19 are 3.75% for businesses and 2.75% for nonprofit organizations.