Quote:
Originally Posted by Buehler445
FWIW I got my banker up pretty hard since I can apply tomorrow.
I asked him if I apply for the PPP through him if it kicks me out of an EIDL loan. My business a couple months payroll is pretty immaterial in terms of expenses. And depending on how this shakes out payroll might be the easiest check for me to cut. What he told me is you can still apply for the EIDL you just can’t use those expenses.
He also said their guidance is that they don’t need any “packagers” whatever that means and you should apply through the website.
Take that for what it’s worth. There is nothing saying my banker is any sort of right here but that’s what he told me.
I’ll probably take a look at the EIDL application first. If it looks more promising I may forego the PPP loan.
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First and foremost: APPLY FOR ALL OF IT!
Second: As I understand it, as long as you don't use PPP and EIDL for same purpose, you still may qualify for both. for instance, if you use PPP for payrolls (as intended), you may be able to EIDL for other expenses. The banks I'm talking to are very vague on this, so don't take this verbatim
Third: You can roll EIDL into your PPP amount. So that alone doesn't eliminate you from PPP if you receive EIDL funds
Fourth: EIDL you apply directly through the SBA. There are diligence requirements, but not during the initial application. PPP, you apply through a participating bank, and the loan is backed by the SBA. The bank is responsible for the "underwriting", but basically other than validating payroll amounts and that the business was in existence, there really isn't any underwriting requirements.
Fifth: Even the banks don't have good answers on specific details. for instance: the SBA is backing the loan for one year, but terms are two years. So, banks are concerned that they are taking on risk without the benefit of underwriting....and they have no idea how to mitigate at this point. Of course, they are paid a processing fee from the SBA, so my best guess is the money they receive for processing is meant to mitigate any risk. I anticipate 75 - 80% of the loan value to be forgiven, which means there could be upwards of $70M in risk taken on!
So, don't forego the PPP, because you can re-fi the EIDL into it. But more to your point, you may get more benefit out of the EIDL than the PPP, although you won't get the loan forgiveness