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Published August 6 2020 updated August 6 2020 4 min. 37 seconds read
Summary at a Glance
Can I take both PPP and EIDL then ask for 100 forgiveness for my PPP and use my EIDL as working capital to cover my reduced earnings because of the covered period of the COVID-19 pandemic?

Can I take both PPP and EIDL then ask for 100% forgiveness for my PPP and use my EIDL as working capital to cover my reduced earnings because of the covered period of the COVID-19 pandemic?

I'm going to explain the process of answering a simple question using the Federal Governments policy on policy change. Learn this and you'll have more success than you ever imagined.

(The information as published answers this question you just have to read everything published at the US Treasury page and everything from the SBA SOP.

In document published April 24, 2020
"PAYCHECK PROTECTION PROGRAM HOW TO CALCULATE MAXIMUM LOAN AMOUNTS &ndash BY BUSINESS TYPE"

On page one: "Step 4: Add the outstanding amount of any Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid)."

The keywords to focus on are "...made between January 31, 2020 and April 3, 2020 that you seek to refinance..."

Now we have to cross reference with with any US code or regulations that have changed and have been published to the federal register.

Published in the Federal Register Document Citation: 85 FR 29842 SBA Docket Number SBA-2020-2028. (https://www.federalregister.gov/documents/2020/05/19/2020-10658/business-loan-program-temporary-changes-paycheck-protection-program-loan-increases)

"The interim final rule posted on April 14, 2020, describes how partnerships, rather than individual partners are eligible for a PPP loan. The interim final rule further explained that the self-employment income of general active partners could be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership. Guidance describing how to calculate partnership PPP loan amounts and defining the self-employment income of partners was posted on April 24, 2020 (see How to Calculate Maximum Loan Amounts, Question 4 at https://www.sba.gov/​sites/​default/​files/​2020-04/​How-to-Calculate-Loan-Amounts.pdf)."

The above link then needs to be cross referenced with the US Treasure link to the document they hosted: https://home.treasury.gov/system/files/136/How-to-Calculate-Loan-Amounts.pdf

Now, because things are linked to the SBA you need to validate that the US Treasury is using the same guidance as published by the SBA docket and hosted on the SBA web pages: https://www.sba.gov/sites/default/files/2020-04/How-to-Calculate-Loan-Amounts.pdf

They match!

So now we move to the next step. Document updates since April 24, 2020.

Yes! Change was made!!!! Wow, to think our government makes changes.

The document in question was updated 5-19-2020 (today) so now we need to see if anything that changed today changed our "How to Calculate Loan Amounts" guidance from the SBA. ( https://www.federalregister.gov/documents/2020/05/19/2020-10658/business-loan-program-temporary-changes-paycheck-protection-program-loan-increases )

Changes I reviewed do not change the answer to the question so we are safe as of today's changes to use the April 24, 2020 SBA Guidance.

(One day they will have a job that pays to do this stuff I do.)

The Answer:

"Step 4: Add the outstanding amount of any Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid)."

If you seek to refinance you can merge your EIDL with your PPP otherwise you can use them independent of each other but do not use them for the same assistance during the same covered period because that violates the Stafford Act rules of "Duplication of Benefits" which you can look up if you want to go to the next level of Disaster Recovery Knowledge!

UPDATED: 9:18am 5-19 and 5-20-2020 EIDL CONTRACT DOCUMENTS.
Page 3 of 11:

This is the section that justifies PPP loans being reduced by the amount of the EIDL Emergency Grant Advance as shown in Section 1110 EMERGENCY EIDL GRANTS.

COMPENSATION FROM OTHER SOURCES

  • SBA will in its sole discretion determine whether any such compensation from other sources is a duplication of benefits.

PPP Forgiveness worksheet recaptures the Emergency Grant Advance which reduces your PPP forgiveness by the same amount. This policy was signed in your EIDL closing documents and overrules public law 116-136 of the CARES Act because no waiver request was made by Congress or the President.

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