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Best Small Business Loans (EIDL vs. PPP)

There’s all this talk about stimulus packages and business loans, but…

Where do I even start to understand this stuff?

My tiny brain can only handle so much. I like it when things are SIMPLE. 

So I hit up my friend David Hauser to help explain all this loan jargon. 

David sold his company for $200 million a few years back..So he knows a thing or two about MONEY. 

He distills everything down so you can take quick and necessary actions for your business. 

SBA Economic Injury Disaster Loan (EIDL)

  • Max loan is $2M
  • If needed, you can ask for an emergency grant advance of up to $10k
  • The loan will be forgiven if spent on paid leave, maintaining payroll, mortgage or lease payments
  • Cannot use funds to refinance pre-existing debt or pay dividends
  • Loans under $25k require no collateral 
  • Interest rate is 3.75% for small businesses and 2.75% for nonprofits
  • More information here 

Paycheck Protection Program (PPP)

  • SBA will forgive loans if all employees are kept on the payroll for 8 weeks and money is used for payroll, rent, mortgage interest, or utilities 
  • 75% of the forgiven amount must have been used for payroll
  • Available through June 2020
  • Loan maturity in 2 years and an interest rate of 1%
  • More information here

EIDL vs. PPP, what’s the difference? 

  • Size of the loan and how it’s used
  • EIDL is intended to cover 6 months of operational expenses
  • PPP is mainly to help cover payroll for 8 weeks

If you have available credit access (credit line, bank loans, etc.), David says to drawdown now. Aka borrow money right now to get cash to keep your business alive.

  • Worst case scenario you pay a few months of interest
  • If something bad happens, you now have access to cash (which no one else has)
  • Even with small interest, you are buying yourself time 

David sees two main categories right now:

  • Protection. Do everything you can to protect the business and cash (cut costs, get cash)
  • Opportunity. Go hire the best talent and/or opportunities in advertising while CPMs are low.


Comment below if you’ve applied for a loan for your business. 

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