The two main Coronavirus (COVID-19) loan programs for restaurants are the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL) program. These programs are available to help your restaurant survive these difficult times.
Keeping track of the ever changing information is hard, and figuring out how to act on the information is even harder.
To make things simple, we’ve created a short and sweet summary of the programs specifically for restaurants.
Disclaimer: This is just a very brief summary of information as of April 2, 2020. This is NOT legal advice. If you want more detailed reading, check out the COVID-19 SBA page.
The Programs: Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL)
|Paycheck Protection Program (PPP) Loans||Economic Injury Disaster Loans (EIDL)|
|Covered Period for Loan Program||February 15, 2020 to June 30, 2020||February 15, 2020 to December 31, 2020.|
|General Eligibility||Be a restaurant organization with less than 500 employees per location.||Be a restaurant organization with less than 500 employees per location.|
|Loan Amount||The lesser of $10,000,000 or 2.5x total monthly payroll costs.||Up to $2,000,000|
|Loan Advances||N/A||Up to $10,000. This amount does NOT have to be repaid. Said to be available in 3 days, though actual experience may vary with backlogged applications.|
|Interest Rate||4% or less||3.75% or less|
|Loan Forgiveness||Yes (conditions below)||No. Except the advance portion|
|Loan Forgiveness Conditions||Portions of the loan used for the following purposes will be forgiven: Qualified payroll costs, interest on covered mortgage obligations, covered rent obligations, and covered utility payments. At least 75% of the loan amount must be used to pay employees.||N/A|
|Loan Forgiveness Notes||Generally, “covered” means in effect before February 15, 2020. Forgiveness amounts will be REDUCED if you lay off employees or reduce wages.||N/A|
|Personal Guarantees?||No.||No, unless loan amount is over $200,000|
|Credit Check?||Does not look like it. Must make various “good-faith” certifications.||Maybe. Is not clear.|
|Repayment Deferrals?||Yes. Between 6-12 months.||Yes. Up to 12 months.|
How to Take Action
There are options available to help your restaurant! If you play by the government’s rules, you will NOT have to pay back large portions, if not the entire amount of your loan.
If a PPP loan look like a good option, applications are available now. Here is a link to the application. As of now, these loans will be distributed through normal SBA lenders (banks, credit unions, etc). If you don’t have a relationship with an SBA lender, it’s time to make a phone call to your bank to set one up.
If an EIDL loans look like a good option, you can apply for those TODAY. Up to $10,000 is available as an advance you DO NOT have to pay back. You can apply here.
Coronavirus Loan Programs FAQ
Can I apply for both PPP and EIDL loans?
Yes! But you NEED to use these funds for DIFFERENT purposes. You will not be eligible for a PPP loan if use EIDL funds for payroll purposes.
Do I have to pay back my PPP loan?
If at least 75% of the loan is used for payroll, and the rest for approved purposes (mortgage interest, rent, and utilities payments), you will not have to pay the loan back.
Do I have to pay back my EIDL loan?
Yes. Though you may qualify for up to $10,000 in emergency advance money that does NOT have to be repaid.
How can I apply for an EIDL loan?
Here is a link to the application page on the SBA website: https://covid19relief.sba.gov/#/
Hope this helps simplify a complex and ever changing situation. We will keep this page as up to date as possible, so feel free to share with others who could use this information.
If there’s anything we at Budget Branders can help with, we are here for you!