Payments to anyone who is not on employee payroll, whether theyâre called independent contractors, subcontractors, or 1099 contractors, are all ineligible payroll expenses. You also can’t use an SBA disaster loan to refinance current debts you have. Whatever happens next, weâre right there with you. Get started on a free trial today. The only exception is when the funds were disbursed on an interim basis because of the disaster. to us. SBA loan and SBA Express loans target small businesses. Credit: Cue378 an avid supporter of small businesses. Then hit. You can use the funds to pay off debt or cover coronavirus-related losses. Weâll do one month of your bookkeeping and prepare a set of financial statements for you to keep. From making a business plan and getting insurance to marketing and setting your prices — here’s how to start your own cleaning business. Weâll go through all of the categories below. There’s no obligation to accept the loan if offered, no cost to apply, and no closing fees. Thanks to the Coronavirus Aid, Relief and Economic Security (CARES) Act, business owners could previously apply for an advance of up to $10,000 in the form of a grant, but funds have since run out as of July 11, 2020. Yes, back pay fits within the definition of payroll that is incurred and paid within the 24-week forgiveness period. Bench assumes no liability for actions taken in reliance upon the information contained herein. What exactly is included in "payroll expenses"? This includes equipment or machinery, inventory, real estate and property damage and improvements that your business made on a lease. It must also be shown that the non-payment of the loan would result in undue hardship on the stockholder or principal. But due to high demand, has made several changes to the grant program. The Restaurant Revitalization Grant offers grants of up to $10 million to make up for revenue lost during COVID-19. Can I use all the PPP funds to pay myself? SBA loans might be available as soon as disaster hits, but research all of your options before you submit your application. But it can take a few weeks to get funding. Have the following information on hand before you get started: FEMA might refer you to the SBA after you register if it can’t provide grants itself. This 10-digit number is in the Loan Authorization and Agreement (LA&A) you electronically signed with the SBA. A connection service for all types of businesses — even startups. Enter your personal and contact information before checking the box allowing the SBA to give your information to third parties to verify your identity. How long this takes varies widely, depending on your unique situation. To ensure you have the most up to date information, you should verify relevant information When such options are available, the lender can make a claim to the SBA. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. Under the program, the SBA can loan any qualifying small business that’s been affected by COVID-19 up to $2 million at a 3.75% interest rate. Confirm details with the provider you're interested in before making a decision. Share this article. Great for new business owners with at least fair credit. Do you qualify? The SBA previously offered Express Bridge Loans of up to $25,000 for businesses that already have an existing SBA relationship in lieu of a grant. In order to receive the PPP loan you need to make following certification: The funds will be used to retain workers and maintain payroll; or make payments for mortgage interest, rent, utilities, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures as specified under the Paycheck Protection Program Rules; I understand that if the funds are knowingly used for unauthorized purposes, the federal government may hold me legally liable, such as for charges of fraud. Unlike other SBA loans, BPDLs are available to both for-profit and non-profit businesses of all sizes. Want to learn more about your business financing options? The rules clearly state that it’s only intended to restore things to the way they were before the disaster. Smallest businesses finally get a fair crack at a PPP loan. The EIDL program is the least restrictive of the relief programs and allows you to use the loan as working capital. All of our services are eligible expenses for PPP forgiveness, and weâll even provide support in applying for the PPP (or getting that loan forgiven). Can my business apply for both an economic injury and physical disaster loan? We’ll update this page as new details emerge in the world’s response to COVID-19. Previously, you had to be located in a state where the government has declared an economic disaster. What can I spend my EIDL loan on? Get flat rate, short-term financing based on the financial health of your business, not your credit score. Keeping your employees laid off and increasing your own pay goes against the purpose of the program. Businesses have two more months to get applications in for first- and second-round programs. 6+ months in business, $12,000+ monthly revenue, no open bankruptcies. The following types of businesses qualify for an EIDL during the coronavirus outbreak: EIDL disaster loans are now open to businesses in all states and territories. New York, NY, 10016. Submit one simple application to potentially get offers from a network of over 300 legit business lenders. This is where the SBA determines how much you can borrow. Here’s what to watch out for: If you come across a disaster loan scam, report it by calling 800-767-0385 or filling out a form on the SBA’s Office of Inspector General website. That doesn’t mean that you spend the money on expenses you had before that time, but rather that you can only spend your PPP money on the types of business expenses you had up to that … So maybe not as vague as the title, but I'd really like to know what I can spend the money on without getting in trouble. Your PPP loan funds can be used for any legitimate business expense of the type your business incurred prior to February 15, 2020. Many of the early loans were based on an eight-week period, but there was a change in June that allowed the period to be extended to 24-weeks and allowed early borrowers the option to select the covered period of eight or 24 weeks. Since most SBA loans are funded through a third-party lender, the Small Business Administration doesn’t have the authority to forgive any current debt. Yes, although it can still only qualify for a total of $2 million in funds between the two loans. These might include salaries, inventory, rent, utilities, and short-term debt or long-term debt payments, for example. We update our data regularly, but information can change between updates. Here are 3 examples of how you can spend your SBA Disaster Loan: Real Estate or Fixed Debts Paying rent, mortgage interest, property expenses, utilities, and interests on other debt obligations, but it doesn't apply to a property such as secondary homes, recreational vehicles, boats, or airplanes. MREIDLs are long-term loans for businesses that suffer an economic loss because one or more employees has been called up for active duty. Further reading: PPP Rules on Rehiring Employees. If you have excess funds, or believe you received more funds than you were qualified for, it is best to avoid spending it. They’re meant to help pay for damages that your insurance doesn’t cover. And SBA home and property disaster loans can only be used to repair your home — the only upgrades allowed are those that might help prevent property damage in the future. If you’re approved, the loan officer will bring you your closing documents. Flexible Usage of Funds The SBA’s disaster loans can help you pay for just about anything you need to afford after a disaster. The application is not nearly as complicated as a typical SBA loan, and the SBA caps interest rates at 4% if you can’t get credit elsewhere. However, bonus pay is considered one part of total compensation, which cannot exceed an annualized rate of $100,000 (or $15,385 for an 8-week period, $46,154 for a 24-week period). We may also receive compensation if you click on certain links posted on our site. If you want to get your PPP loan forgiven, youâll need to spend your funds in very specific ways. These low-interest loans are available based on the impact the disaster had on your business. The loan can be used to buy real estate or land, treated like working capital, or spent on equipment costs. It’s not much, however, it is still available and it really is free money. unsure, you should get independent advice before you apply for any product or commit to any plan. The SBA is automatically deferring repayments on all current disaster loans until 2022. After you’ve received your funds, the SBA assigns you a case worker to help you meet all of the conditions of your loan and schedule the rest of your funds to be disbursed. 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