Here’s the TLDR: You (probably) can and should apply for the SBA EIDL and PPP funding even as a one-person operation!
04 May 2020: We received our PPP loan. It took 31 days and no less than four revised applications - seemingly at no fault of our own.
28 Apr 2020: We received a $1,000 per employee EIDL Emergency Grant today. We applied on 2 April 2020.
Watch the Video on Youtube
This is a little off-topic for our normal content but after chatting with a few friends who do woodworking or have a small business I realized I could share a little info I’ve come across.
If you haven’t applied for the EIDL (Economic Injury Disaster Loan Program) or the PPP (Paycheck Protection Program), you should strongly consider doing that - and soon. If you didn’t think you could apply for the PPP because you don’t have employees or were unsure about the EIDL qualifications, I’d recommend looking at them more closely. I’ll go through a few thoughts and we’ve got a YouTube video to accompany this post.
My disclaimer: I’m not a lawyer, accountant, or expert in this field, and you should take my thoughts as opinion.
I am but just a friendly internet person hoping to help some people take these programs seriously and get the money they need to help them through a tight spot. Anyway, these two programs are part of the SBA and were just passed as part of the C.A.R.E.S act recently. It’s been in the news and I somewhat disregarded them at first.
After doing a bit more digging, I realized that these kinds of programs are meant to help sustain small businesses like mine and most likely yours too.
A place to start your own research, the SBA’s Coronavirus Relief Options website.
Update 7 Apr 2020: The SBA’s Massachusetts District Office says that money will start to be "distribuited this week" and be "$1,000 per employee." Source.
First, the EIDL (Economic Injury Disaster Loan) has an option to take a $10,000 grant that you can apply for and do not need to pay back. This is the simplest one that almost every small business should apply for.
It’s possible to apply for both the PPP and the EIDL - which we did. The EIDL is a very easy application and needs very little information to complete from you.
Grant / Forgiveness
Quoted from Nav.com (source):
“Includes a emergency [ sic ] grant of up to $10,000 to be made within three days of application. These grants do not have to be repaid as long as funds are used for:
providing paid sick leave to employees unable to work due to the direct effect of the COVID–19;
maintaining payroll to retain employees during business disruptions or substantial slowdowns;
meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains;
making rent or mortgage payments; and
repaying obligations that cannot be met due to revenue losses.
Apply for the EIDL $10,000 grant at the SBA’s website below:
No, not a rapper from the ’90s this is the Paycheck Protection Program. This one is a bit more complex and I’m definitely no expert - again I’m just urging you to look into this for yourself because it’s much more flexible to the types of applicants than I and others originally thought it was. I can speak to our situation a bit more clearly, we have employees and we want to support them with PPP funds for the next couple months as we all struggle through the COVID-19 scenario. We applied using some simple gross revenue, COGS (cost of goods), and average payroll amounts from our accounting (Xero) and payroll software (Gusto) which kicked out the exact report and numbers I needed to fill in the payroll questions on the PPP form.
Now here’s the kicker – my understanding is that even a sole practitioner, AKA, a solopreneur – EG: Woodworkers, makers, that have a proper business – can apply for the PPP. For your information, the PPP is live and taking applicants as of April 3, 2020.
On the 3rd it was a bit of a Black Friday of bank applications - many people wanting to apply and banks were literally just taking “interest inquiries.” All of the banks I approached were prioritizing their customers first which was a problem for us because we use a credit union. So my friend suggested going to the SBA’s website that lists their Top 100 lenders. There we went down the list and found a lender that was taking applications and you didn’t need to be their customer already. This worked for us.
All Good, No bad?
While the PPP is technically a really low-interest rate loan, typically you would need a significant amount of business financial reports as backup to get this kind of funding and the rates would be higher. The PPP application took me under 10 minutes and in our case should be 100% forgivable as long as we pay the appropriate amount of payroll, not lay anyone off, and only use 25% of the funds for things like rent and utilities.
Let me repeat, this is free money if done right.
As of right now – if we happen to have more than we need at the end of the period (this summer), we can take that as a really low-interest loan over 10 years or pay it back in full with no prepayment penalty (no penalty for paying back the loan early.)
We applied through the lender we found on the top 100 list, but it seems you can fill out this form and bring it to an approved lender as well.
PPP Loan Forgiveness
Quoted from Nav.com (source):
“If you get one of these loans, you can request forgiveness of the principal portion of the loan for the eight week period after you get the loan that covers:”
Interest on a mortgage
No more than 25% of the forgiven amounts may be for non-payroll costs. Your loan forgiveness will be reduced if you decrease your full-time employee headcount. It will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annually in 2019. You may also receive forgiveness for additional wages paid to tipped workers. There is a provision that allows you to rehire employees to qualify for forgiveness.
The US Government is giving out $349 billion mostly in two programs that you can most likely apply for at least the EIDL, if not also the PPP. In the case of the EIDL, if you get it, the money is a grant. You do need to use the money for issues related to the coronavirus.
I may offer one last piece of advice, you may not think you need this right now, but the coming months and potentially years are surely going to be strange and will almost surely include loss of revenue - for everyone. The longer we are doing this strange quarantine thing - for good, I might add - the bigger the issue will become economically. There’s a lag right now but more bankruptcies will come and with that lost jobs and lost revenue.
Prop yourself up while you can right now. Go look into this fast, these programs are first come first serve.