Understanding Government Loan Options


In the video above, Robyn goes through the current options available for small business owners.

Note: None of the content of the video is intended as business or legal advice.  We recommend that you do your own due diligence and if needed contact a licensed professional for more information.  The details around all of these programs are changing rapidly.


Economic impact disaster loan (IDL)

This is a low-interest loan, when it was first introduced you had to fill out the paperwork packet and send it in, from what I’m hearing anecdotally, those are not being processed very quickly. So you’re better off going back to the website and reapplying at covid19relief.sba.gov.

When you apply for the loan you are also able to request consideration for a grant.  Grant money does not have be paid back.  This grant is for $1,000 per employee, maxing out at 10 employees.  It is possible that receiving the grant could potentially reduce the amount forgiven through the PPP Program.

Loans through EIDL can be up to 2 million dollars at an interest rate for businesses at 3.75%.   These loans have a 30-year payback and payments are deferred for a year.

Payroll Protection Program (PPP)

This loan is specifically designed for payroll purposes. Business with fewer than 500 employees can receive 2.5 times their monthly payroll for this. loan.  If  75% of what you are awarded are used for payroll and you keep the same number of full-time employees, you can apply for the loan to be forgiven. So the loan becomes a grant. Now you have to be really careful because if you don’t use this in the way they explicitly are saying, you will have to pay it back.

PPP is only available for companies that have under 500 employees. If you’ve been paying yourself as an employee, then and then you can include your own payroll in here as well as the payroll of all your direct employees.

The loan amount is based off of your previous payroll. So you can apply from January to December 31st of 2019 or say you’re applying April 7th, you can do April 7th of 2019 to April six of 2020.

Each bank has a quota of the number of loans, so many banks are choosing to prioritize their own customers first, but you don’t have to go through your own bank, you can apply with other banks or financial institutions like PayPal, just make sure you only go through the full application with one entity.

If you haven’t been paying yourself as an employee you can still get the PPP and the way that that loan is going to be determined for you is 2.5 times your average 10-99 for the past 12 months. So whatever you filed for your 10-99 for last year or your net income for self-employment for the past 12 months will determine your maximum loan.

In both scenarios of the PPP, if your loan is not forgiven, then you have a fixed interest rate at 1%, but the loan term is only two years.

Can I take unemployment?

If you’ve been paying yourself as an employee and you are part of your company’s payroll, yes, you can take unemployment. Make sure to consider what additional income you have and how removing yourself from payroll would affect any benefits you have for yourself or other employees.

If you’re thinking about doing unemployment, I would highly recommend that talk to an unemployment lawyer in your state to make sure you’re not violating any laws.

If you haven’t been paying yourself as an employee of your business, normally you’re not able to take unemployment insurance, however the cares act has made some changes around that. So again, I would talk to an unemployment attorney before you move forward.

Tax favored withdrawals from your IRA

You can withdraw up to one hundred thousand dollars out of your personal IRA, but you have to pay it back within 3 years. The taxes that normally go with early withdrawal would be waived.

Deferrals with your current lenders

Most States have done a 90 day, no eviction no payment option, but all of that money is still going to be due at the end. So unless you really, really need that deferral, it’s not a good move.

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