Four Questions about the Paycheck Protection Program
According to a new bill passed by the House, and a similar one proposed by the Senate, the Paycheck Protection Program is going to be extended until December 31st. In the meantime, there are still plenty of questions New Jersey small business owners need answers to.
Do I have to apply through one lender?
No. Once your application is processed and your loan approved, the lender will receive an SBA approval number called a PLP. These numbers are applied one per Tax ID, so that no one is accidentally approved for more than one loan. This means you can apply to as many as lenders as you like, to increase your chances of getting processed.
Can I still apply for an Economic Injury Disaster Loan (EIDL)?
Yes. You cannot, however, apply for the same purpose as the Paycheck Protection Program. The two loans are similar, but separate.
Is the EIDL like the PPP loan?
Yes. The EIDL, also known as the SBA disaster loan, might require personal or business collateral for loan amounts over $25,000, but the PPP loan does not. You cannot have any other source of credit to receive an SBA disaster loan, but with a PPP loan, it is fine to access other sources. The SBA disaster loan must be repaid, while the PPP loan can be forgiven.
In both cases, business owners need to make a case for economic hardship based on this time of uncertainty. Repayment has been deferred by 6-12 months, depending on the lender. Both loans are free to apply to.
Can I still apply if I had to reduce my workforce?
Yes. You cannot rehire them or restore their pay for their typical work hours. If you can prove by August 8th that you have maintained your employees’ salary and wages, and that their pay has not dropped below 25% of the stated monthly average, you are probably fine.
Questions continue to arise with every news cycle. Business owners cannot let up, as long as their livelihoods remain on the line. As a business law attorney, I will continue to seek the answers you need.
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