Federal Loans for Small Businesses

 The US government passed the $350-billion Coronavirus Aid, Relief, and Economic Security (CARES) Act. The program is focused on helping American small businesses cover up to 8 weeks of cash flow in the form of federally guaranteed loans. 

There are two key types of loans that startup founders & small business owners should consider. 

1. Paycheck Protection Program (PPP) -Starting April 3, 2020

As a startup founder, or small business owner, the easiest way to get funding is via the Paycheck Protection Program.

This is designed as an emergency loan for small businesses to cover payroll, rent and other essential business operational expenses. 

  • “Forgivable loans up to 2.5x monthly payroll”

  • Section 1102 of the CARES Act (H.R. 748, “3rd Relief Bill”) signed March 27th

  • Administered by the SBA

  • Rating(A+): Easy to get, easy to forgive. 

  • To apply, fill out this PPP Loan Application Form, and apply via your SBA bank.

This handy calculator from Nathan Latka will show you how much you can borrow.

List of banks offering PPP loans
2. Economic Injury Disaster Loan (EIDL)

The EIDL loan involves much more paperwork, and is not necesarily forgivable. We recommend only applying for this loan if you have been rejected for the PPP.

  • “Up to $2m (<4%, 30yr) loan to alleviate specific economic injury. Not forgivable”

  • Part of the FFCRA (H.R. 6201, “2nd Relief Bill) sign March 18th  

  • Administered by the SBA

  • Rating(B+): must document specific injury. Not forgivable.

  • To apply, fill out this EIDL Application Form.