Small Business Relief: PPP Versus EIDL [Mini Video]
For your convenience, we've included a transcript of this video below.
Hello everyone, and thank you for taking the time to watch our next mini education video in our COVID-19 help series. My name is E Scot Fuller-Beatty and I am the Director of Sales & Education at ThinkReservations, and like several of my colleagues, I also own a lodging property. So I'm in the same boat as a lot of you are during these tough times.
Today I wanted to share with you information our team has collected about the two major financial assistance programs available to small businesses through the Small Business Administration that were part of the CARES Act. It hasn't been easy to keep up with all of the changes that have happened in the last few days. But today we're going to cover the basics of what the SBA and financial institutions are suggesting you do now.
I will be reading from a script because this information can be confusing and I want to make sure I pass along the best information I can to help you.
First I want to cover the two major financial relief packages that are available for small businesses: the Paycheck Protection Program, also known as the PPP, and the Economic Disaster Loan program also known as the EIDL.
There are some differences between the two programs and we have put together this graphic for you to better understand both programs offer funds that need to be used for specific purposes, can be borrowed in different amounts, offer different APRs and terms. But most importantly the Paycheck Protection Program loan is 100% forgivable with approval as long as 75% of the funds are used toward keeping staff employed. And this can include you as the business owner in addition.
To apply for the PPP you need to do that through an SBA approved bank or credit union. You will want to visit your financial institution’s website or give them a call to see if they'll be able to assist you. If not, you may need to open a deposit account with a new bank or credit union that can.
The two big questions on everyone's mind are, “which should I apply for” and, “if I take one does it disqualify me from getting the other?” The SBA is suggesting that all small businesses fill out the online application for the EIDL loan now since that at least starts the process. You are not actually making a decision now to move forward with the loan, but you are at least in line to have a conversation about what the right choice for your business is with an SBA loan counselor.
At this point, it is widely accepted that if you take out an EIDL now, you will be able to pay that off with the proceeds of the Paycheck Protection Program so that you can take advantage of the loan forgiveness feature. Since banks and credit unions are still in the midst of figuring out how quickly they will be able to get PPP loans, the EIDL could help you in the short term.
In addition, the EIDL comes with an optional $10,000 of instant relief that can be deposited into your bank account within three business days, whether or not you're approved for a full loan.
Here is the website that you'll need to visit to get started: covid19relief.sba.gov. And at any point during the application process, if you have any questions, they encourage you to call their number: 1-800-659-0599.
Now, let's move over to the actual SBA's disaster loan assistance website and I'll walk you through as much as I possibly can to help make this easier for you.
So when you go to that website, on the first page in the Eligible Entity Verification section, you will need to select one of the statements about your business. For our ThinkReservations customers, you will probably fall under one of the first two categories: “applicant is a business with not more than 500 employees”, or “applicant is an individual who operates under a sole proprietorship with or without employees”. Or as an independent contractor in the next section, you will need to review and check all the boxes.
You will not be able to continue to the next page unless you check all of the boxes. If you have any questions, as I said before, you can always contact the SBA Customer Service Center phone number, which is located here at the bottom of the page.
On the next page you will need to enter business information. Anything in red is required and cannot be skipped to proceed with the application. The SBA does suggest that you answer as many questions as possible on the form whether or not it is required. This will help speed up your application process.
Most of these questions you'll be able to answer off the top of your head, but some do require some digging. I found the two most difficult questions to answer were the gross revenues for the 12 months prior to the date of the disaster January 31st, 2020, and the cost of goods sold for the 12 months prior to the date of the disaster January 31st, 2020.
After a call with my accountant she was able to walk me through how to get that information out of my Quickbooks Online account. I've put together a little guide and some visuals to help you find this information in your accounting software.
But first I did want to say that we suggest speaking with your accountant to verify this information is correct for your specific business before submitting your application to the SBA. There are many different ways to enter your accounting data and we're not accounting professionals here at ThinkReservations.
That said, here are the steps if you are using QuickBooks, but they should be similar in any accounting software.
First, you're going to pull up your Profit & Loss Report. Second, you'll need to change the dates of the Profit & Loss Report to February 1, 2019 to January 30, 2020. Third, you'll find the line for Total Income. This is the number you'll use for your gross revenue. And forth you'll find the line for Total Cost of Goods Sold. This is the number you'll use for your cost of goods sold answer.
Now, let me show you on a sample Profit & Loss Report and I'll go over the steps verbally one more time with what I've pulled up.
So once again, the first step is to just pull up the Profit & Loss Report. The second, you'll want to change the dates to be February 1, 2019 to January 31, 2020. The third is to find the Total Income line and that digit will be what you'll need to answer. And then the second is the Total Cost of Goods Sold. That's going to be that other question that you need to answer.
You can always rewind and watch this again if you need to.
So now let's go back to the online application. You'll enter that data on the online application and continue to answer the questions. This is as far as I can take you since I don't really have any other data to enter to give you as examples.
On the next pages, which are up here at the top of the form, you'll be asked additional questions, which most of you will know off the top of your head. Most importantly, when you are on the additional information page, you'll be asked to check a box that says, “I would like to be considered for an advance of up to $10,000.” You'll want to check this as it is our understanding from the SBA that this is the $10,000 grant money. You will be asked if anyone assisted you in filling out this application. Please do not put me down, as this is just an educational video. This space is really reserved for paid professionals. And you aren't paying me anything to help you out after you submit your application.
On the next page you'll get a confirmation number. Print that out for your records. A loan counselor should be reaching out to you within the next three business days. And keep your eyes on your email as there is a message that reads you will be notified through the email address you submitted and it will list any additional information needed.
Once your application has been processed, once this is done, the next step is to reach out to your financial institution to let them know that you started the process with the SBA by submitting the EIDL online application and that you'd like the start to start the process of the PPP if that makes sense for your business.
I really hope that you found today's video to be helpful, and I want to thank our entire team here at ThinkReservations for putting all these mini videos together for our customers for the last three weeks. We have come to work every day to discuss what else we can share with you to make your life easier, and I hope we've helped you in that regard and if you found this video helpful, make sure to like, love, share, or comment and we'll see you on our next video. I hope you have a great day everyone. And I'll just end by showing our graphic of that website one more time for you.