Paycheck Protection Program
What you can spend your money on
The Paycheck Protection Program is a valuable resource for businesses to keep employees on-board and maintain a steady cashflow to your workers. It can allow for funding that doesn't need to be repaid if handled correctly, and the funds from this program can be spent in the following ways.
Payroll Costs
Business Mortage Interest Payments
Business Rent or Lease Payments
Business Utility Payments
Covered Operations Expenditures
Covered Property Damage Costs
Covered Supplier Costs
Covered Worker Protection Expenditures
COVID-19 Relief Bill Funds
A breakdown of funds applying to small businesses
$7.25 Billion
Additional PPP Funding
It authorizes another $7.25 billion for the Paycheck Protection Program, which offers forgivable loans to small businesses and other organizations hurt by the pandemic. The loans will only be forgiven, however, if at least 60% of the money is used to support payroll expenses and the remainder goes to mortgage interest, rent, utilities, personal protective equipment or certain other business expenses.
$10 Billion
State Government funding for small businesses
Through the State Small Business Credit Initiative, the legislation allocates $10 billion for state governments to help leverage private capital and make low-interest loans and other investments to help their small business economies recover.
$15 Billion
Economic Injury Disaster Loan grants program
The legislation earmarks $15 billion to the Economic Injury Disaster Loan grants program to be given to small businesses in underserved areas, especially those that are minority-owned.
$29 Billion
New restaurant relief grant
The American Rescue Plan includes nearly $29 billion to create a grant program that provides direct relief to restaurants.
$15 Billion
Shuttered Venue Operators Grants program
Another $15 billion will be added to the Shuttered Venue Operators Grants program, created by the previous economic aid package. The grants are intended to help those who run museum, theater, concert and other venues that had to shut down due to Covid restrictions. The bill also allows such operators to apply for PPP loans in addition to these grants.
$1.325 Billion
Small Business Administration funding
To help the SBA administer all the new programs that have fallen under its purview as a result of the pandemic, the bill allocates another $1.325 billion to its budget.
Economic Injury Disaster Loan
What can I spend my EIDL loan on?
The EIDL program is the least restrictive of the relief programs and allows you to use the loan as working capital. This means any day-to-day expenses are a permissible use of your EIDL funds, giving you the freedom to spend it on anything like:
Web hosting
Inventory
Office supplies
Accounts payable
Rent and utilities
Merchant fees
Bookkeeping and accounting services
If you have obtained an EIDL and a PPP loan, you cannot use the EIDL to cover the same expenses over the 8 or 24 week period. However, once you have used up the entirety of the PPP loan, you can use the EIDL to cover the payroll, rent, lease, mortgage interest, and utilities expenses you would have otherwise used the PPP loan to cover.
You can also use it to cover monthly financial obligations such as loan and credit card payments, however, you cannot pay the entirety of the balance of these debts as it would be considered refinancing which is not a permissible use of EIDL funds.
What can I spend my EIDL advance on?
The EIDL advance is a grant that you could apply for at the same time as the EIDL loan itself. The grant is based on $1,000 per employee up to a maximum of $10,000. As a grant, this can be used as working capital, essentially covering any day-to-day expenses your business needs.
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What can’t I spend my EIDL on?
While the most flexible of the relief programs, there are some important restrictions to keep in mind. When you signed your loan agreement, you certified that EIDL funds would not be used for any of the following:
Dividends and bonuses
Disbursements to owners (draws and distributions), except when directly related to performance of services
Repayment of stockholder/principal loans
Expansion of facilities or acquisition of fixed assets (e.g. purchasing equipment such as a new camera)
Repair or replacement of physical damages
Refinancing long term debt (e.g. paying off previous large credit card debt)
Paying down federal loans (from the SBA or other federal agencies)
Relocation
What if I have a PPP loan?
The PPP and the EIDL are designed to be used together so naturally there are some conditions regarding what the loans can be used on if you have both. In particular, the EIDL cannot be used on the same expenses that are covered by the PPP within the 8 to 24 week forgiveness period.
That being said, you can use your EIDL funds on the expenses listed in the section above if you won’t be claiming them under the PPP. Say for example you spend the whole PPP amount on payroll and rent—you could still use your EIDL funds on utilities expenses.
Useful informational links
Information regarding COVID-19 relief from SBA.gov
Economic Injury Disaster Loan
Paycheck Protection Program
Basic PPP Information
Loan Forgiveness Information
Loan Forgiveness Application
EZ Loan Forgiveness Application
Loan Forgiveness Form 3508S