ARTICLES
Loan Program Comparison Chart
April 13, 2020
| Paycheck Protection Program (PPP) SBA 7(a)(36) | Economic Injury Disaster loan (EIDL) SBA 7(b)(2) | Main Street New Loan Facility/ Main Street Expanded Loan Facility | Traditional Loan SBA 7(a) |
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|---|---|---|---|---|
| Eligibility | Any of the following entities that have 500 or fewer employees and were in operation as of 2/15/2020. Small businesses 501(c)(3) non-profit organizations Veterans organizations 31(b)(2)(C) Tribal businesses Sole Proprietors (with or without employees), the self-employed, and independent contractors who will file a Schedule C with their Form 1040 for 2019. Note. Partners in a partnership may not submit a separate PPP loan application. | Any of the following entities that have 500 or fewer employees. Small businesses and Cooperatives ESOP’s 501(c)(3) non-profit organizations 31(b)(2)(C) Tribal businesses Sole Proprietors (with or without employees), the self-employed and independent contractors | Businesses and nonprofits created or organized in the United States or under the laws of the United states with significant operations in and a majority of its employees based in the United States, with up to 10,000 employees, or up to $2.5 billion in 2019 annual revenues. Businesses in bankruptcy proceedings not eligible. Main Street New Loan Facility: Eligible loans originate on or after April 8, 2020. Main Street Expanded Loan Facility: Eligible loans originated before April 8, 2020 and has been subsequently upsized. | Eligible businesses must: Operate for profit (Non-profit entities are not eligible) Be engaged in, or propose to do business in the U.S. or its territories Have reasonable owner equity to invest Use alternative financial resources, including personal assets, before seeking financial assistance. See link, for ineligible businesses: https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility |
| Personal Guarantee | None. Guaranteed 100% by the government. | Loans over $200,000 require a personal guarantee | Unsecured. | Personally Guaranteed 15% for loans up to $150,000 25% for loans over $150,000 |
| Collateral Required? | No | Collateral required on loans over $25,000. | Uncertain | No for loans up to $25,000. Yes for loans over $25,000 |
| Term | 2-year term | Up to 30 years. | 4-year term Principal and Interest payments can be deferred for 1 year. | 10 years for: Equipment, Working Capital, Inventory 25 years for: Real estate |
| Rates | 1% | 3.75% For profit entities 2.75% Non-profit entities | Up to 2% | 1-2.75% |
| Prepayment Penalty | No | No | No | Yes |
| Loan Fees | No | No | Lender Fees | Some (Minimal) |
| Duplicate Loans Ok? | No if taken out for the same qualifying expenses. But can qualify for all three loans as long as there is no overlap in the qualifying expenses. | Yes | Participants in either loan Facility may NOT also participate in the Main Street Expanded Loan Facility. Participation in other loan programs is ok. | Yes, but qualifying expenses can’t overlap with |
| Maximum Loan Amount | $10 million Limited to 2.5 times certain average monthly payroll costs for the preceding 12 months. | $2 million | Minimum loan size $1 million Main Street New Loan Facility: Maximum loan amount is the lesser of $25 million, or an amount when added to the borrower’s existing outstanding and committed by undrawn debt, does not exceed four times the borrower’s 2019 earnings (before interest, taxes, depreciation and amortization) Main Street Expanded Loan Facility: Maximum loan amount is the lesser of $150 million, or 30% of the borrower’s existing outstanding committed but undrawn bank debt, or an amount when added to the borrower’s existing outstanding and committed by undrawn debt, does not exceed six times the borrower’s 2019 earnings (before interest, taxes, depreciation and amortization) | $5 million |
| Limitations | Calculation includes only certain payroll costs. E.g. Payroll costs includes only salaries up to $100,000 (annualized) and doesn’t include federal payroll taxes. | None | The recipient must: -not outsource or offshore jobs until two years after the loan is repaid. -not seek to cancel or reduce any outstanding line of credit with any lenders. | None |
| Use of Proceeds | Must be used for: Certain qualified payroll costs, Mortgage interest for real or personal property, Rent, Utilities. | Can be used for: Fixed debts, Payroll, Accounts Payable, Other bills that can’t be paid due to the disaster’s impact. | Proceeds must be used to: -make a reasonable effort to retain at least 90% of the recipient’s workforce at full compensation and benefits until September 30, 2020. -restore not less than 90% of its workforce in place on February 1, 2020 and all compensation and benefits to its workers not later than 4-months after the end of the public health emergency related to COVID-19. Proceeds CANNOT be used: -to repay other loan balances. -to pay other debts of equal or lower priority until this loan is repaid in full. -to pay dividends or capital distributions, or buy back shares during the course of the loan or for 12 months after the loan has been paid off. -to increase officers or executives pay for any employee whose compensation exceeds $425,000. | Wide variety of uses. |
| Loan Forgiveness | Yes, but limited to the amount paid for eligible expenses during an 8-week period after the loan’s origination date. This is subject to limitations and possible reduction in the amount forgivable, if less than 75% of the loan proceeds are not used to pay qualifying payroll costs, or the number of employees or their hours are reduced, or the amount of salaries are reduced by more than 25%. Amount forgiven is tax-free. | No. Repayment is required. Except the $10,000 advance is not required to be repaid. | No | No |
| Lender | Banks approved by SBA | SBA | U.S. insured banks | SBA |
| Where to Apply | https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf | https://www.sba.gov/funding-programs/disaster-assistance/coronavirus-covid-19/ | Pending Release | https://www.sba.gov/funding-programs/loans |