You've probably heard a lot about the Payment Protection Program - a forgivable SBA loan paid for by the $2 trillion economic relief bill. But those loans aren't always forgivable.
The interest rate on the PPP is 1% with payments deferred for the first six months.
To forgive the loan, you must spend at least 75 percent on payroll over eight weeks. Other things you can use it for are mortgage interest, rent and utilities. But heads up, the amount forgiven falls if the number of full-time employees falls, or if you give your workers a pay cut.
There's also been a lot of confusion between the PPP and another SBA loan expanded under the stimulus bill - the Economic Injury Disaster Relief Loan.
This is not the same thing as the PPP.
The disaster loan has a higher interest rate, for one – with 3.75 percent interest for businesses, and 2.75 for nonprofits. You can use the loan for working capital costs and possibly get a grant up to $10,000 - but any grant money you get will be subtracted from anything forgiven by the PPP.
On Wednesday afternoon, the SBA announced it has approved 1.3 million PPP loans with a total value of nearly $300 billion. The program has a limit just under $350 billion.
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For a breakdown of other loans offered by the SBA, click here. Get more information on the PPP loan here and on the disaster loan here.
