COVID-19 loans

As of May 28, 2021, the Paycheck Protection Program has run out of funding. You can learn more about the PPP with our COVID-19 resource hub.

There have been a number of financial assistance initiatives aimed at helping small businesses get the funding they need to keep their businesses afloat in the midst of COVID-19.

But which of these initiatives does your business qualify for?

Let’s take a look at the three major lending programs for COVID-19—the Paycheck Protection Program, Economic Disaster Injury Loans, the Main Street Lending Program—and how to determine which program (or programs) your business may qualify for:

Paycheck Protection Program

The Paycheck Protection Program is an emergency lending initiative administered by the U.S. Small Business Administration (SBA) designed to provide financial assistance and help small business owners keep their employees on payroll during the COVID-19 crisis. The Paycheck Protection Program was passed as part of the Coronavirus Aid, Relief, and Economic Security Act (more commonly known as the CARES Act). The program ran out of its initial $349 billion in funding in just under two weeks; funding has since been expanded to include an additional $310 billion in PPP loans for small businesses.

The biggest draw of PPP loans? If you qualify and are approved for a PPP loan, up to 100 percent of the loan is forgivable If you retain headcount and use your loan to cover payroll costs and other approved business expenses (including rent, mortgage interest, and utilities) in the eight-week period following loan origination, the loan amount is up to 100 percent forgivable.

In order to qualify for a Paycheck Protection Program, you must meet the following eligibility criteria:

  • Your business was in operation on February 15, 2020
  • You are a small business, eligible nonprofit organization, Veterans organization, Tribal organization, sole proprietorship, self-employed individual, or independent contractor
  • Your business has fewer than 500 employees (or fits the SBA’s small business size standard for your industry)
  • Owners with a 20 percent or higher stake in the business are US citizens or permanent residents
  • Owners/applicants have no criminal record over the past seven years
  • The business and owners are not delinquent on any SBA loan or other federal loan and haven’t defaulted on any such loans in the past seven years
  • Your business is not currently in bankruptcy proceedings

What other loans are you eligible for if you apply for a Paycheck Protection Program loan?

If you apply for a PPP loan, you’re also eligible to apply for EIDL loans and MSLP loans.

How to apply for a PPP loan

Paycheck Protection Program loans are processed through individual banks, credit unions, and other lenders and financial institutions. In order to apply for a PPP loan, you’ll need to submit a loan application and any required paperwork to an SBA-approved PPP lender. (Keep in mind that different lenders may have different application procedures and requirements, so get in touch with your lender and ask about their application process.)

You can search eligible lenders in your area on SBA.gov.

Economic Injury Disaster Loan

The Economic Injury Disaster Loan (EIDL) program is a disaster loan program administered through the Small Business Administration that provides financial assistance to small businesses dealing with the economic fallout of a disaster, like the coronavirus pandemic. Small businesses may apply for up to $2 million in low-interest loans to cover working capital needs, including payroll, fixed debts, and accounts payable.

Unlike PPP loans, SBA Economic Injury Disaster Loans aren’t forgivable. They do, however, offer generous loan terms, including a 3.75 percent interest rate and a term duration of up to 30 years, making them a more attractive option than traditional small business loans. The EIDL loan program also offers a loan advance option, which acts as an emergency grant, allowing you to apply for an advance of up to $10,000 if you need cash in the short-term.

In order to qualify for an Economic Injury Disaster Loan, you must meet the following eligibility criteria:

  • Your business was in operation on January 31, 2020
  • You are a small business, eligible nonprofit organization, Veterans organization, Tribal organization, sole proprietorship, self-employed individual, or independent contractor
  • Your business has fewer than 500 employees (or fits the SBA’s small business size standard for your industry)
  • Your business is located in an area with a declared disaster (the COVID-19 crisis has been declared a national emergency, so regardless of where your business is located in the United States, all states/areas are considered eligible for disaster assistance)
  • Your business is not currently in bankruptcy proceedings

What other loans are you eligible for if you apply for an EIDL loan?

You can apply for an EIDL loan in conjunction with PPP loans. If you received an EIDL loan between January 31 and April 3, 2020, you have the option to refinance it into your PPP loan by adding the loan amount to your payroll costs.

If you receive both loans and/or refinance your EIDL into your PPP loan, any money received through the EIDL Emergency Advance Program will be subtracted from the amount of the PPP loan eligible for forgiveness.)

How to apply for an EIDL loan

You can apply for an EIDL Loan directly through SBA.gov.

Main Street Lending Program

The Main Street Lending Program (MSLP) is another lending option available to small business owners during the coronavirus pandemic—especially if your small business is on the larger side and doesn’t fit the eligibility requirements for PPP or EIDL loans.

The MSLP offers two different direct loan options—the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF). Between the two facilities, the Main Street Lending Program offers $600 billion in loans for eligible businesses.

The terms of both loans are similar; all Main Street loans are four-year loans with a minimum loan size of $1 million and a variable interest rate between 2.5 and 4 percent. Principal and interest payments on both MSNLF and MSELF loans have an automatic deferment period of one year.

The main differences between MSNLF and MSELF loans are the loan type and the maximum loan size. MSNLF loans are new loans originated on or after April 8, 2020 and cap out at $25 million. MSELF loans expand on existing eligible loans—and, depending on the business, can go up to $150 million.

In order to qualify for the MSLP, you must meet the following eligibility criteria:

  • Your business has 10,000 or fewer employees, OR
  • Your business had less than $2.5 billion annual revenue in 2019
  • Your business is created or organized in the United States or under the laws of the United States with significant operations in and a majority of its employees based in the US
  • Your business is not currently in bankruptcy proceedings

What other loans are you eligible for if you apply for an MSLP loan?

Businesses are only eligible for one loan through the Main Street Lending Program. (So, for example, if you’re approved for a loan through the MSNLF, you’re not eligible for a loan through the MSELF). If you accept a loan through the MSLP, you’re also ineligible to participate in the Primary Market Corporate Credit Facility. You can, however, apply for a PPP loan if you meet the Paycheck Protection Program’s eligibility requirements.

How to apply for an MSLP loan

Business may apply for Main Street Lending Program loans directly through approved U.S. banks and insured depository institutions.

Apply for the financial assistance you need to navigate the COVID-19 crisis

There’s no rulebook for how small businesses should navigate this public health and financial crisis. But there is financial assistance available to help you weather the storm—and now that you know how to determine if your business is eligible, you can apply for the funds you need to keep your business moving forward during the coronavirus pandemic.

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