SBA EIDL Loan vs. SBA Paycheck Protection Program


As a national non-bank direct lender we specialize in helping small to midsize businesses finance their growth and create wealth through our SBA 504, SBA 7(a) and low LTV conventional loan programs.

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There is a lot of confusion surrounding the differences between the EIDL Disaster loans and the SBA Paycheck Protection Program. What are the terms of each? Which is better for your business? Can you get both? (To answer that question… it’s possible, but there are stipulations).

Here is what we currently know about each of these loans:

Economic Injury Disaster Loan (EIDL)

  • Apply through the SBA (click here)
  • Loan amount up to $2,000,000
  • 3.75% interest rate for For-Profit companies
  • 2.75% interest rate for Not-For-Profit companies
  • Loan term not to exceed 30 years
  • Uses: payroll, fixed debt, accounts payable, other expenses that can’t be paid because of the disaster’s impact
  • Only available in states with SBA approved declarations of disaster (As of 3/20/2020 – Alabama, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa,  Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Virginia, West Virginia, Washington, Wisconsin, Wyoming, and Utah)  This is the most current data we could find and continues to evolve.
  • We understand there are currently over 25,000 applications submitted with at least 3-week approval times.  As the number of applications grow, it is anticipated the approval times will be pushed out longer with funding coming several weeks after that.

SBA Paycheck Protection Program 

  • Apply through Fountainhead (click here)
  • Loan amount up to $10,000,000
  • Interest rate of 1%
  • 2-yr term
  • No payments for first 6-12 months, then a two-year term loan
  • Unsecured and no personal guarantee
  • Eligible for loan forgiveness
  • Loan proceeds are only for payroll support including medical leave, costs related to health benefits, employee salaries, mortgage payments, rent, utilities, insurance, and any other debt payments incurred before 2/15/2020
  • Relief loans are not eligible for business acquisition, real estate purchase, or other typical 7(a) proceeds, but may be eligible for business debt refi’s – stay tuned
  • Borrower SBA Guarantee Fee will be waived
  • No prepayment penalties
  • We’re anticipating an approval within a few days after the Keeping Workers Paid and Employed Act is passed, as long as all required documentation is submitted
  • A borrower with a current EIDL loan can only also receive the SBA Paycheck Protection Program if the EIDL loan is unrelated to COVID-19

While we realize time is of the essence and funding is essential at this point, it is our belief that the SBA Paycheck Protection Program will be the better option for the following reasons:

  • There is already a bottleneck of well over 25,000 applications with the SBA for EIDLs with approvals expected to be at least 3 weeks with funding even further out.
  • EIDL Funds are limited to $2 million.
  • With the SBA Paycheck Protection Program, it is anticipated that the entire process will be streamlined for quicker approvals and funding.  We are mobilizing to provide approvals in minutes and funding within weeks.