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Coronavirus Small Business Loans: Three Options to Consider

Posted by Concannon Miller on Mon, Apr 13, 2020

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Coronavirus Small Business Loans: Three Options to ConsiderThe federal government is now offering several loans to help businesses through the Coronavirus pandemic, including a new loan just announced April 9.

Which loan is right for your business? Learn more about three available options below.



Main Street Business Lending Program Paycheck Protection Program Economic Injury
Disaster Loans

The Federal Reserve on April 9 announced a new $600 billion loan program for midsize businesses called the Main Street Business Lending Program.

This loan is meant to help businesses impacted by the COVID-19 pandemic.

The Paycheck Protection Program provides small businesses with loans meant to help support payroll during the period February 15, 2020 through June 30, 2020 if they maintain their employees during this emergency.

The Economic Injury Disaster Loan is an expansion of the U.S. Small Business Administration’s existing disaster loan program. Loans can be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid due to the disaster’s impact.

Who Can Apply

U.S. companies employing up to 10,000 workers or with revenues of less than $2.5 billion.

Small employers with 500 employees or fewer, certain nonprofits, self-employed individuals, and independent contractors.

The business eligibility requirements are the same as for the Paycheck Protection Program.

How Much Funding can be Received

A minimum of $1 million and a maximum of $25 million*.

*subject to limitations

The loan can be up to 2.5 times the borrower’s average monthly payroll costs with a $10 million maximum.

Up to $2 million. There’s also a loan advance available of $10,000 that doesn’t need to be repaid. The loan advance will be made available within days of the application.


Up to 4 years, with principal and interest payments deferred for the first year. Then terms would see an adjustable interest rate equal to the Fed’s Secure Overnight Financing Rate, currently 0.01%, plus 250-400 basis points.

If the employer maintains employees and salaries, the portion of the loan used during the 8 weeks after receipt of loan for payroll costs, interest on mortgage obligations, rent, and utilities will be partially or totally forgiven. For any amount not forgiven, the loan term will be 2 years and will accrue interest at a rate of 1%.

Up to 30 years with interest rates of 3.75% for businesses and 2.75% for nonprofits.

What Else
to Know

- Firms seeking Main Street loans must commit to “make reasonable efforts to maintain payroll and retain workers,” the Fed said.

- Cannot use proceeds to refinance or repay existing debt.

- Firms that have taken advantage of the Paycheck Protection Program may also take out Main Street loans.

- Congress is discussing allocating more funds for the program.

- No more than 25% of the forgiveness amount may be for non-payroll costs.

- Get more details on the PPP loans and forgiveness rules in our in our previous article.

- Businesses can apply for both EIDL and PPP loans but for different expenses (no double dipping)

- Businesses with existing relationship with an SBA Express Lender seeking an EIDL can also apply for an Express Bridge Loan Pilot Program of up to $25,000 for additional fast funding. More information can be found here.

How to Apply

Through any FDIC bank - check with your banker to see if they are offering these loans.

Contact your banker. If your banker is not able to issue the loan, check out this list to find a qualified lender.

Directly on the SBA’s website.


READ MORE: Stimulus Bill Gives Small Businesses $377B in Loans to Retain Employees

Which Loan to Choose

There are pros and cons to all three loan options, depending especially if your business is able to afford to maintain your employees through this pandemic. If not, an EIDL loan may be the way to go.

For some businesses, multiple loans for different costs may be the best option. Also stay tuned – Congress has been discussing allocating more funds for the PPP loans and other new measures to help small businesses may be forthcoming.

It’s best to speak to your trusted advisors – including your CPA and banker – about the best options for your business. Please contact us with any questions you have.

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Topics: Business consulting, 2020 Coronavirus

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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