LeverEdge wants to get you and your friends a volume discount on student loans

Student loans are both a trillion-dollar debt category and also one of the most popular mini-verticals out there in fintech startup investing right now. There are dozens if not hundreds of companies in the space, and they all mostly do one of two things: either they help students think through their student loan options before choosing one (acting as a financial advisor to avoid mistakes) or they help students after they finish school figure out how to optimize their repayments or acquire loan forgiveness.

And so when I heard the pitch for LeverEdge, I was intrigued, because it really doesn’t fit either bucket.

Rather than approaching each user individually and trying to optimize their own financial decision independently, LeverEdge proposes helping students band together as a group and negotiate reduced student loan rates by essentially acting as a collective bargaining unit with banks.

For founders Chris Abkarians and Nikhil Agarwal, the idea came as they were entering Harvard Business School.

The two connected with some other HBS students through online new admit groups on Facebook and came up with the idea of trying to work together to lower their interest rates. The annual cost of attendance at HBS is $ 111,102 right now (annually!), so multiplied by two for the two-year MBA and you are looking at potentially massive cost savings if you can lower your interest rate.

There was just one problem: Banks loved the idea, but no one knew how to actually negotiate interest rates at individual branches. As Agarwal explained, “So after work we would try to leave at a reasonable time to get to the bank branch before it closes and then pitch the branch manager on this. They were super excited, but then they’d be like, well, I don’t know what to do with this, I can’t change interest rates for you.”

So Abkarians started sending cold emails to bank CEOs with the same proposition, and also got a positive response, but was told that he would need much more volume to make a negotiated deal worthwhile for banks. At the time, the two only had 50 to 70 people working together, but they spread the option around more heavily with their classmates and students at other business schools and eventually got to 700 students with $ 26 million in loan volume over the next 10 days.

With that scale, the two were able to negotiate a competitive rate with a bank that saved each student an average of $ 15,000 in fees over the full life of their loans, according to their calculations.

They did all this entirely virtually too. Abkarians and Agarwal eventually met for the first time in person at Harvard in the fall, still with a whirl of excitement over what had transpired over the summer. They started asking for feedback from their users about the process, and Agarwal said:

The number one negative feedback we got was you closed the deal on July 26, [but] I couldn’t use it because my tuition due date was before that day. And then every other piece of feedback — even for this haphazardly run group — was incredibly amazing. And that really convinced us [… that] we owe it to our members and really the future generation of classes to make this a thing.

LeverEdge is taking that one-off experience and systemizing it for more students in more contexts. The startup, which was officially founded in May 2018, targets the private student loan market outside of federal programs typical for most undergrads. That loan market typically has higher (and sometimes dramatically higher) interest rates than traditional federal student loans, and lenders also have the flexibility to negotiate interest rates unlike with federal loans.

Today, LeverEdge has more than 15,000 students on its platform and has financed $ 100 million in student loans, according to the startup. It also raised a $ 2.5 million seed round led by NFX along with Global Founders Capital and founders from fintech companies Earnest and SoFi.

The company spends most of the year aggregating students for the next school year, and then “we spend around two months in this auction process between different lenders,” Abkarians said. The company currently has nine employees, and “our staff is focused on partnership building,” he said.

The new version of a startup team photo. LeverEdge Team, photo via LeverEdge

As for business model, LeverEdge takes a pre-set referral fee from lenders upfront for each tranche of loans that they negotiate between students and the lender. That fee is “non-negotiable,” according to Agarwal, and all lenders participating in the auction agree to pay it if they have the winning bid. The company varies the fee based on the loans that are grouped together (Agarwal said that, for example, refinance loans have a lower referral fee than other student loans). He believes this approach ensures that LeverEdge always has the right incentives to get the best prices for students.

Importantly, no student is obligated to take the final loan as negotiated by LeverEdge. But, if the company is doing its job, then the offered loan should be competitive with any alternative loan on the market. “We still encourage people to compare it against other things and if they find anything that is better than what we’ve found to please just let us know. No one has yet,“ said Abkarians.

The big question now is what will happen this coming school year given COVID-19. On one hand, students may avoid campuses knowing that schools are moving heavily toward virtual classes due to social distancing policies. On the other hand, economic recessions and greater concerns around costs may lead more students to seek out cheaper student financing options: exactly the customers that LeverEdge wants to find.

Overall, it’s an interesting play on the student loan space and one of the more interesting fintech startups I have seen in some time.

Startups – TechCrunch

Personal and Business Loans for Everyday Financial Needs.

Personal and Business Loans for Everyday Financial Needs. Personal and Business Loans for Everyday Financial Needs.

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with a loan size range of $ 5,000 to $ 75,000) the annual interest rate ranges between 19.0% and 34.0% (equivalent to 1.58%-2.83% monthly

And for personal loans,

They offer the best available rates and terms, and the paperwork required during the whole process is minimal. These are some of the features of our personal loans: Loan amounts from $ 300 to $ 4,000.

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Anyfin raises $30M Series B to let consumers refinance their existing loans

Anyfin, the Stockholm-based startup that enables consumers to refinance their existing loans, has raised $ 30 million in funding.

Leading the Series B round is EQT Ventures, with participation from existing investors Accel, Northzone and Rocket Internet’s Global Founders Capital (GFC). Anyfin says it will use the investment to “drive product innovation,” launch additional offerings and scale into new European markets (currently, the fintech operates in Sweden and Finland).

Launched in 2018 by Mikael Hussain (CEO), Sven Perkmann (CTO) and Filip Polhem (COO), Anyfin is on a self-described mission to improve the financial well-being of Europeans and “put them back in control of their finances.” It does this through a digital lending platform focused on refinancing. The idea is to make it easier to competitively refinance (or consolidate) loans and credit cards and therefore not get ripped off with high interest rates or compound interest.

Via Anyfin’s website or iOS and Android apps, consumers can select their current loan provider from a drop-down menu, snap a picture of their statement or upload it. Anyfin then gives feedback, including, where applicable, the option to refinance at a “fairer” price. “With one tap, the consumer can accept the new option from Anyfin and the company takes care of settling the existing loan for them,” explains the Swedish fintech.

Behind the scenes, Anyfin claims to use AI, combined with publicly available consumer data and information garnered through taking a photo of your existing loan statement or uploading an electronic copy, including your repayment history. This, it says, gives it a more complete picture than your credit score alone, which is likely the main data point used by the original lender.

“All the consumer has to do to save a bunch of money is to snap a picture of the credit card bill or loan statement and we do the rest,” Anyfin co-founder and CEO Mikael Hussain told me in early 2018. “When a customer sends us their picture we use OCR to get the data we need, run that through our risk algorithms and, based on that, give the consumer an individual price.”

Cue statement from Ashley Lundström, deal partner and investment advisor at EQT Ventures: “The Anyfin team is one of the most experienced and ambitious fintech teams that the EQT Ventures team has come across. But what really impressed us was that Mikael, Sven, Filip and the stellar team they’ve built around them are truly value-driven. They’re in the game for the consumer, and never has this been more important. At EQT Ventures we believe that squarely aligning with consumers is a sustainable path to building a healthy business – so we were obviously thrilled to find the combination of tech DNA, market validation, and heart in Anyfin.”

Startups – TechCrunch

Tech unicorns ask chancellor for access to emergency loans

The ‘unicorn letter’, sent by some of the best-funded private technology companies in the country, asks the chancellor to form an urgent taskforce to give them access to government-backed lending schemes during the pandemic
Latest Startups Articles from Techworld

Thrive gives loans to students based on summer internships and job offers

Thrive, founded by Twitter alumni Deepak Rao and Siddharth Batra, wants to fund student expenses by looking at job offer letters as a way to evaluate loans. Today, it launched its loan platform and is accessible to students on over 400 campuses across 31 states.

The San Francisco company helps underfunded students, a group that isn’t typically accounted for by traditional financial institutions that issue loans based on credit score. According to co-founder Rao, Thrive is for people like “first-generation Americans, people who come from low-income families, or first-generation students.”

Before launching broadly, Thrive secured $ 10.25 million in funding and $ 5 million in venture debt. Today, the company also announced that it has picked up a $ 200 million credit line from Credit Suisse.

Investors include Max Levchin, founder of PayPal and Affirm; Adam Bain, former COO of Twitter; and David Sacks, a general partner at Craft Ventures.

“We started the company with the mission to invest in human potential,” Rao said. “We basically built a product that empowers underfunded students and gives them access to funds for whatever things they need in order to transition into their professional lives.”

The cash can be used flexibly for items like new laptops or flights home.

Students can sign up on the platform and upload an offer letter for an upcoming summer internship or full-time college postgraduate offer. Thrive validates the document, then offers a loan to the students.

For an internship, Thrive unlocks 25% of the student’s total internship salary for a loan. For a full-time job, Thrive will offer 25% of an individual’s first three months’ salary.

Thrive charges students between $ 7 to $ 15 per every $ 1,000 they receive per month, and they’re allowed to take as much as they need from the dollar amount that Thrive offers them. If you take $ 1,000 and your internship starts in three months, and if you want to pay it back in one go, you have to pay between $ 21 to $ 45 above the $ 1,000 when you pay it back.

Once students prove they’re soon going to be employed, they can access the funds within one business day and then start paying back Thrive once they start their new job.

Thrive’s payback structure is similar to the income-sharing format that a company like Lambda School uses. Lambda School says it gives students the option to pay zero dollars for tuition, and then pay 17% of their salary they earn from a job that pays a minimum of $ 50,000 annually for two years.

So while it’s not new to bet on salary, Thrive is looking at turning the concept of incoming sharing on its head and applying it to loan financing.

When they founded  the company in 2017, Rao and Batra were both classmates at Stanford and then co-workers at Twitter. Rao comes from a low-income family, so he personally felt the blow of costs that come with being a grad student in the United States, from flying home to paying for your laptop. Or just even dinner.

Thrive declined to share specific financials or comment on profitability. Rao did say that the company is growing “5 times year over year” and has enough funds to avoid raising venture capital until the end of 2021.

“Our biggest expense is the ability to fund loans, and we are not funding loans through equity money,” Rao said. “At the end of the day, it’s like a software business, our biggest cost is the cost of goods, which is capital, and someone else is funding the capital.”

Not needing more venture capital might be especially helpful as we enter a time of economic uncertainty due to COVID-19. Unlike other fintech companies, which have had to tighten their underwriting standards to prepare for risk due to the uncertain economy, Rao tells TechCrunch that Thrive will not change how willing they are to write loans.

Some tech internships have been canceled due to COVID-19, he noted, and if students have had an offer rescinded, Thrive “updates the payment plan accordingly.”

“As long as your internship is still active, your offer is still issued,” he said. That doesn’t matter whether the intern will be remote or in-person.

Thrive is expanding its business as undergraduate and graduate students are entering a job market with historically high unemployment. We’ll see how a tough job market impacts a company that depends on offer letters for loans, and whether their bet on alternative financing pays off.

Startups – TechCrunch

Frequently Asked Questions About Applying for SBA Disaster Loans Due to Coronavirus

This article was updated on April 3 to clarify that there is no guaranteed amount for the EIDL advance/grant. We want to correct original guidance we gave regarding the $ 10,000 grant—it’s a common misconception, but after reading the law and hearing from some who have applied for the grant, we want to clarify that the advance is up to $ 10,000—you are not guaranteed a full $ 10,000 advance on your EIDL.

Small business owners impacted by the coronavirus crisis may want to consider an SBA Economic Injury Disaster Loan. These loans are attractive for several reasons, including:

  • Low fixed interest rates: 3.75 percent or 2.75 percent for non-profits
  • Long-term repayment of up to 30 years
  • No prepayment penalties
  • Payments deferred (interest accrues)

Here are answers to some common questions from small business owners. Note, we have gathered this information from a variety of SBA sources and strive to provide helpful guidance, but do not rely on this as the definitive answer. Programs are changing quickly and we will do our best to keep it updated. 

In addition to the Disaster Loan, we encourage you to check out other resources including:

The SBA has changed the online procedure for applying for an Economic Injury Disaster Loan: go to the new SBA COVID-19 Disaster Loan portal and answer the questions on the screen.


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Who are these loans for?

  • You must be a small business cooperative, ESOP or tribal business with 500 or fewer employees
  • An individual who operates as a sole proprietorship, with or without employees, or as an independent contractor; or
  • A private non-profit or small agricultural cooperative
  • Your business must be directly affected by COVID-19

Are they available in my state?

All states and U.S. territories are now eligible to apply. 

How much can I ask for?

The maximum loan amount is $ 2 million.

Can I be approved for a lower dollar amount?

Yes, that’s possible. 

How do I get the $ 10,000 dollar grant?

The CARES Act signed by the President on March 27, 2020 now includes a $ 10,000 emergency grant to be made within three days of application.  The online form will now ask you for your bank account information to deposit those funds.

These grants may be used for: 

  • Providing paid sick leave to employees unable to work due to the direct effect of the COVID–19; 
  • Maintaining payroll to retain employees during business disruptions or substantial slowdowns;   
  • Meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains; 
  • Making rent or mortgage payments; and 
  • Repaying obligations that cannot be met due to revenue losses. 

These grants do not have to be repaid. If you get an SBA 7(a) loan under the Payment Protection Act and are eligible for loan forgiveness, this grant will reduce the amount eligible for forgiveness.

How long do I have to be in business?

The time in business requirement has been waived. However, the business must be in operation by the date of the declared disaster. For COVID-19-related claims, that means before January 31, 2020.

Do I have to have employees?

No. Business owners without employees may be eligible. 

Are home-based businesses eligible to apply?

Yes. Being a home-based business does not disqualify you. However you must list a U.S. address on your application. If you normally use a PO Box for business correspondence, make sure to list your physical home address. 

How can I use the money? 

These working capital loans may be used to pay fixed debts, payroll, accounts payable and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or for expansion. Funds cannot be used to pay down long-term debt.

Can I use this to consolidate debt?

These loans cannot be used to refinance long term debt. 

If I have access to a line of credit elsewhere, can I apply?

Yes you can still apply. You can use that funding while you wait for disaster assistance. In fact, if you have access to another source of borrowed capital to bridge the gap between your application with the SBA and when funds are dispersed, we would recommend that.

What is the credit score requirement?

There is no minimum credit score required, however, applicants must have a credit history acceptable to SBA. 

What if I don’t have great credit scores?

If you have damaged credit, apply and include an explanation with your application. Guidelines for those who process SBA Disaster Loan applications state: 

“For disaster lending purposes, satisfactory credit history is defined as a history that generally shows payments to creditors as agreed unless otherwise justified… 

Generally, a history that consists of minor, isolated instances of adverse credit or late payments is acceptable. Major instances of adverse credit such as unpaid judgments, repossessions, previous foreclosures, chargeoffs, and unpaid collections can be overcome provided: 

  1. The applicant explains the lapse; and 
  2. The applicant has other accounts with “as agreed” payment records. 

For purposes of evaluating adverse information found on an applicant’s (credit reports), the information should be considered within the totality of circumstances; for example, financial difficulties caused by one-time situations such as divorce, job loss, serious medical illness, etc.

For purposes of disaster lending, medical collections are not considered adverse information.

Non-medical collections or charged off accounts with an aggregate of $ 10,000 or less and foreclosures or deed-in lieu of foreclosures which occurred more than two years from the date of the loan application are all considered an acceptable credit risk and do not require any additional justification.”

However, it does also state that loans cannot be recommended for approval if the credit history is unsatisfactory so there is no guarantee that it won’t result in a denial. 

What if I have been through bankruptcy?

Prior bankruptcy is not an automatic reason for denial. A previous Chapter 7 bankruptcy may be acceptable, especially if it is older, but even recent bankruptcy (within the past two years) may be acceptable if it was due to circumstances beyond the applicant’s control and he or she has maintained a positive credit history since.

Applicants currently in Chapter 11 bankruptcy may be eligible if payment history is satisfactory, though written permission from the Bankruptcy Trustee will have to be obtained. Businesses in Chapter 11 bankruptcy may or may not be eligible; it may still be worthwhile to apply.  

Will my business credit be checked?

The SBA requires a business credit check from Dun & Bradstreet or a similar commercial credit agency for approved loan amounts of $ 200,000 or more, unless your business is a sole proprietorship.

What credit problems will disqualify me?

In addition to the guidelines above you may not qualify if:

  • You are more than sixty (60) days delinquent on child support obligations
  • You have judgements against you for federal debts and you have not worked out a satisfactory repayment plan
  • You have federal tax liens of more than $ 10,000 (You may still qualify but you must provide a satisfactory explanation and be able to repay the tax debt. It’s recommended you work out a payment plan with the IRS as soon as possible)

What do I do if my credit is frozen?

It’s recommended that you lift any credit freeze (with all credit reporting agencies) before you apply. Make sure you have alerts set up to detect any new activity on your credit reports so you can freeze your files again once your credit has been checked. 

How fast can I get funding?

The SBA’s goal is to process completed applications within 21 days but this is an unprecedented disaster of national scope and it is entirely possible the SBA will become overwhelmed with applications. In previous disasters, processing has taken as long as an average of 45 days. 

Will I get the full amount right away?

The first disbursement will be up to $ 25,000 and there will be later disbursements. 


Related: 4 Types of Interim Financing While You Wait for SBA Assistance

What if I shut down and don’t know when I will reopen?

Estimate how long you will be shut down. Note on your application how you arrived at that estimate on the application. You can also request additional funds in the future if needed. 

Do I have to be turned down by a bank first?

No. While you certainly should be looking at all financing options available, including the new SBA 7(a) loans available under the Paycheck Protection Act, you won’t have to supply credit rejection letters in order to apply.  The “credit elsewhere” test the SBA normally performs has been waived for these loans. 

Is there a prepayment penalty?

No. You can pay off the loan early without a penalty.

Can landlords with investment properties qualify?

Yes, you may be eligible.

Do I have to fill out all questions?

Make sure you fill out each question that has an asterisk, as those are required. If you can’t get an answer to help you fill out a specific question, just do the best you can. In addition, try to fill out all other questions if you can, as best you can. An incomplete application will likely result in delays. You can provide additional information to explain why you answered a question in a particular way.

Is a personal guarantee required?

While SBA loans normally carry a personal guarantee, they have been waived for COVID Disaster Loans, up to $ 200,000.

Is collateral required?

For loans over $ 25,000, collateral will be required if available (which can include home equity). However, the borrower will not be denied solely because there is no collateral. 

What name do I use?

If you are filling out Form 5 (for businesses that are not sole proprietors) the “Applicant’s Legal Name” is the legal name of the business. You can enter a trade name such as a DBA in box five. The owner’s names go in box 17. 

What do I list for the amount of physical damage?

If you are requesting a disaster loan due to COVID-19 you will not be requesting a loan for physical damage. Make sure you requested the correct type of loan (economic injury disaster loan), and if necessary, make a note on the application indicating you are not requesting a loan for physical damage.

What is the FEMA number?

You do not have to enter a FEMA number for the EIDL. Make sure you are in the right application.

Am I eligible if I already have a disaster loan from a previous disaster?

Yes, but there is a total limit of $ 5 million of SBA assistance. 

What if I have two businesses in different states?

Fill out an application for each business.

What happens after I apply?

Your loan application will be processed by a case manager. They may reach out to you at some point so make sure you provide a phone number you will answer and an email address you check regularly. 

When will I have to start making payments?

Payments will be deferred for one year. (Interest will accrue during this time). 

What if I get turned down?

You have up to six months to request a reconsideration. 


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The bottom line

This loan application can be confusing. Our best advice is that you try to get answers from SBA Disaster Assistance or an SBA resource partner such as your SBDC, Women’s Business Center or SCORE chapter. Many of these offices are hosting webinars, office hours and other events to help answer questions. If you can’t get a specific answer, apply and just do the best you can.

Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not rely solely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs and financial advisors.


This article originally appeared on Nav.com by Gerri Detweiler

The post Frequently Asked Questions About Applying for SBA Disaster Loans Due to Coronavirus appeared first on StartupNation.

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COVID Disaster Loans vs. Paycheck Protection Program Loans

There are two main loan programs to help small business owners through the COVID-19 crisis: 

  • Economic Injury Disaster Loans (EIDLs)
  • SBA Cares Act Paycheck Protection Program Loans (PPPs)

These loan programs have some significant differences, and many small business owners are confused. In the first part of this article, we spell out the basic program requirements, and in the second, we answer some frequently asked questions about Economic Injury Disaster Loans (EIDL) versus Paycheck Protection Program Loans (PPP).


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Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not rely solely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs and financial advisors. 

Maximum loan amount

EIDL: $ 2 million

PPP: $ 10 million

Grant/forgiveness

EIDL: The Economic Injury Disaster Loan includes a $ 10,000 emergency grant to be made available within three days of application.

These grants do not have to be repaid as long as funds are used for: 

  • Providing paid sick leave to employees unable to work due to the direct effect of the COVID–19 
  • Maintaining payroll to retain employees during business disruptions or substantial slowdowns   
  • Meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains
  • Making rent or mortgage payments
  • Repaying obligations that cannot be met due to revenue losses 

PPP: If you get one of these loans, you can request forgiveness of the principal portion of the loan for the eight week period after you get the loan that covers:

  • Payroll costs
  • Interest on a mortgage
  • Rent 
  • Utilities 

Your loan forgiveness will be reduced if you decrease your full-time employee headcount. It will also be reduced if you decrease salaries and wages by more than 25 percent for any employee who made less than $ 100,000 annually in 2019. You may also receive forgiveness for additional wages paid to tipped workers. There is a provision that allows you to rehire employees to qualify for forgiveness.

Keep in mind, you may qualify for a larger amount of debt that may be forgiven under the Paycheck Protection Program Loan. 


Related: Resources for Small Business Aid Amidst the COVID-19 Crisis

Interest rate

EIDL: 3.75 percent (or 2.75 percent for non profits)

PPP: 0.5 percent on any remaining balance after forgiveness

Repayment period

EIDL: Ten years 

PPP: Two years for any balance not forgiven

It’s expected that most PPP balances will qualify for forgiveness, which explains the shorter repayment period. 

Who qualifies?

EIDL: To qualify, you must be 

  • A small business, cooperative, ESOP or tribal business with 500 or fewer employees
  • An individual who operates under as a sole proprietorship, with or without employees, or as an independent contractor; or
  • A private non-profit or small agricultural cooperative 
  • Your business must be directly affected by COVID-19

PPP: The following businesses may be eligible: 

  • Small businesses or non-profit 501(c)(3) organizations with 500 or fewer employees 
  • A 501(c)(19) veteran’s organization or tribal concerns that meet the SBA size standards
  • Sole proprietors or independent contractors
  • Businesses in the food or hospitality industry may be eligible on a per location basis; normal affiliation rules are waived for franchises or businesses receiving financial assistance from an SBIC.

Must be in business by

EIDL: January 31, 2020 

PPP: February 15, 2020

Where to get these loans

EIDL: SBA COVID-19 Disaster Assistance Portal

PPP: A number of lenders will make these loans. However, not all lenders will offer them to all borrowers. There may be geographic restrictions, for example, or some lenders may choose to make larger loans. 

Personal guarantee

EIDL: Only for loans above $ 200,000 

PPP: No 

Collateral requirements

EIDL: Yes for loans over $ 25,000

PPP: No 

Funding timeframe

EIDL: The $ 10,000 grant is to be made within three days of application. The next disbursement of $ 25,000 may take a few weeks due to record loan volume. 

PPP: These loans will become available beginning April 3 for small businesses and sole proprietors and April 10 for independent contractors and self-employed individuals. Fast processing is expected, but will depend on how quickly lenders can ramp up to process and fund the loans. 

Payment deferments

EIDL: Payments are deferred for a year. 

PPP: Payments are deferred for at least six months, and up to one year at the lender’s discretion. 

Allowable use of funds

EIDL: In addition to the use of funds for the grant listed above, EIDLS are working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or for expansion. Funds cannot be used to pay down long-term debt.

PPP: Loan proceeds may be used for: 

  • Payroll costs 
  • Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
  • Employee salaries, commissions or similar compensations
  • Payments of interest on any mortgage obligation (but not to pay principal or to prepay a mortgage)
  • Rent (including rent under a lease agreement)
  • Utilities
  • Interest on any other debt obligations that were incurred before the covered period

Credit requirements

EIDL: A personal credit check is required for all owners with 20 percent or more ownership. A business credit report from Dun & Bradstreet is standard on Disaster Loans. However, if your application is turned down, you can still keep the $ 10,000 advance. 

PPP: There is no word yet on credit requirements for these loans, though they are expected to be relaxed. 


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Frequently asked questions: EIDL and PPP

Can I apply for EIDL and PPP?

You can apply for both. But you can’t  “double dip” and get funds from both loan programs for the same purpose. Specifically, the legislation states that a borrower who has taken out an Economic Injury Disaster Loan for purposes other than payroll costs between January 31, 2020, and the date Paycheck Protection Program Loans are first made available are still eligible for a Paycheck Protection Program Loan as long as it is not used for the same purposes. In addition, you may also be able to refinance the EIDL with a Paycheck Protection Program Loan.  

Can I apply for PPP and the payroll tax credit?

There is a payroll tax credit of up to 50 percent of qualified wages for certain businesses whose operations have been fully or partially suspended by a government order or whose gross receipts in a quarter have fallen by at least half compared to a similar quarter the year before. 

Your business cannot receive both the Employee Retention Payroll Tax Credit and a Paycheck Protection Program Loan. 

Which is better for my business: EIDL or PPP?

Ultimately, this is an individual decision that will depend on a number of factors, including how much you qualify for, how you plan to use the funds and whether you expect to benefit substantially from forgiveness under PPP. 


This article originally appeared on Nav.com by Gerri Detweiler

The post COVID Disaster Loans vs. Paycheck Protection Program Loans appeared first on StartupNation.

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