SBA Loans: A Small Business Guide to PPP, EIDL, SVOG, RRV Loans

As the country races toward herd immunity, COVID-19 continues to threaten small businesses. This has led to the U.S. Small Business Administration (SBA) to release more funding to support Main Street businesses through its SBA loan program.

While COVID-19 relief began in 2020 with the Paycheck Protection Program (PPP), there are now 3 additional funds small businesses can take advantage of, but eligibility and the application process differ widely.

The 4 SBA programs are:

1. The Paycheck Protection Program

2. Economic Injury Disaster Loan

3. Shuttered Venues Operators Grant

4. Restaurant Revitalization Fund

In this guide, we cover the essentials for eligibility, funding terms, and starting the application process for all SBA programs.

Paycheck Protection Program

Out of all the SBA COVID-19 relief programs, the PPP is the most extensive and the most complicated of the bunch. For one thing, there are actually two PPP schemes — a First Draw and a Second Draw option. While most of the criteria are the same between these two types, there are a few distinct differences.

But before we get into the nitty-gritty details, let’s talk about what the PPP is and who is eligible.

Does my small business qualify for a PPP loan?

The purpose of PPP loans is to help business owners keep workers on the payroll. At first, that sounds limiting, but you can actually use the PPP loan for a variety of needs, including:

• Payroll costs, including benefits
• Mortgage interest
• Rent
• Utilities
• Worker protection costs related to COVID-19
• Uninsured property damage costs from vandalism during 2020
• Certain supplier costs and expenses for operations

PPP First Draw eligibility

Unlike the other COVID-19 relief programs, the PPP business eligibility is more general. For First Draw applicants, you can apply if:

• You’re a sole proprietor, independent contractor, or self-employed
• Your business is a 501(c)(3) non-profit, 501(c)(19) veteran organization or tribal business with fewer than 500 employees, or you meet the industry-standard size
• Your business has the 72 North American Industry Classification System (NAICS) code and you have more than one location with fewer than 500 employees at each location

You can determine your industry-standard size using the SBA calculator. If you’re a non-profit, veteran, or tribal organization, you can also use an alternative size standard, meaning:

• Your maximum tangible net worth is not more than $15 million
• Your business’s federal income taxes (excluding carry-over losses) for the past two full fiscal years is not more than $5 million.

PPP loan terms

The PPP loan terms are fairly straightforward. They have an interest rate of 1%, and loans issued after June 5, 2020, have a maturity of 5 years.

You can defer payments if you apply for loan forgiveness with the SBA, who will convey your loan forgiveness amount to your chosen lender. If you don’t apply for forgiveness, your payments are deferred 10 months after the end of the covered period of your loan forgiveness. This period runs for about 8 to 24 weeks.

What makes this funding even more valuable is that the application does not require collateral for personal guarantees. In addition, both the government and lenders will refrain from charging additional fees.

First Draw PPP loan forgiveness

Businesses can get their First Draw PPP loan forgiven if during the first 8 to 24 weeks during reimbursement they:

• Maintain employee and compensation levels
• The funds are spent on payroll or other eligible expenses
• At least 60% of the funds are spent on payroll

How to apply for your First Draw PPP loan

To apply, you first need to be matched with a Lender. There are two ways to do this. You can use SBA’s Lender Match or manually look for lenders on a map.

You’ll need two forms:

• PPP First Draw Borrower Application Form
• First Draw Borrower Application Form for Schedule C Filers Using Gross Income

But you won’t want to waste time — the current deadline is May 31, 2021. 

First Draw vs. Second Draw

The biggest difference between the First Draw and Second Draw PPP option is the eligibility and some of the terms. The deadline of May 31, 2021 is the same for both applications. 

Businesses are eligible for a Second Draw loan if:

• They previously received a First Draw PPP loan
• They have already, or will soon, use the full amount of their first loan
• They have fewer than 300 employees
• They can show a 25% minimum reduction in gross receipts between comparable quarters in 2019 and 2020

In addition, there are a few additional terms for Second Draw PPP loans:

• The maximum loan amount is 2.5x the average monthly 2019 or 2020 payroll costs
• For the NAICS 72 businesses, the maximum loan amount is 3.5x the average monthly 2019 or 2020 payroll costs
• Both options have a limit of $2 million

First and Second Draw PPP Loan Comparison

Economic Injury Disaster Loan

The Economic Injury Disaster Loan (EIDL) is designed to help businesses fulfill financial obligations and operating expenses that could have been met if COVID-19, or a similar disaster never happened. As such, this loan is meant to replace a temporary loss of revenue.

While not nearly as extensive as the PPP loans and equipped with less favorable terms, the EIDL option can still be useful for businesses in various sectors. On the flip side, since EIDL is not based around loan forgiveness, you can use your funds for general working capital and normal operating expenses.

EIDL eligibility

Unlike the PPP loans, there are fewer restrictions when it comes to EIDL loans.

EIDL eligibility includes:

• Small business owners and qualified agricultural businesses in all U.S. states and territories
• Agricultural businesses with 500 or fewer employees
• Agricultural businesses include those businesses engaged in the production of food and fiber, ranching, raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b))

EIDL loan terms

Loan terms, as we mentioned earlier, are not as favorable as PPP loans. However, they do lack fees, and have a longer maturity period.

You can find the EIDL loan terms below:

• 24-months of economic injury with a maximum loan amount of $500,000
• Interest rate for businesses: 3.75% for businesses (fixed)
• Interest rate for non-profit: 2.75% for nonprofits (fixed)
• 30 years maturity period
• No prepayment penalty or fees
• Collateral is required for loans over $25,000

Since the maximum loan amount was raised in early April, participants who applied beforehand can also request an increase in funds.

How to apply for EIDL

You can apply online until December 31, 2021. The process is fairly streamlined, but the SBA staff might request additional information at any time during the application process.

The EIDL Advance and the Targeted EIDL Advance

There are two additional variations of EIDL:

1. The EIDL Advance
2. Targeted EIDL Advance

While the EIDL Advance category is currently closed, the Targeted EIDL Advance is open with limited eligibility.

The Targeted EIDL Advance provides funding to nonprofits and small businesses working in low-income areas. These businesses must have suffered a reduction in revenue of at least 30% and employ fewer than 300 people.

Businesses can obtain up to $10,000 per employee. Additionally, the Targeted EIDL Advance functions more like a grant than a loan. It does not need to be repaid.

Currently, only prior applicants are considered for the Targeted EIDL Advance. If you applied in the past, you will be contacted by SBA if you qualify.

Shuttered Venues Operators Grants

The Shuttered Venues Operators Grants (SVOG) includes over $16 million in grants meant for small businesses, non-profits, and venues. Designed as a disaster assistance package, the SVOG is not a loan and can be used for a variety of critical functions. For example, you can use your SVOG funds for:

• Payroll cost
• Rent, utility, or mortgage payments
• Worker protection expenses
• Payments to independent contractors, so long as the cost is less than $100,000 per contractor
• Necessary business expenses, such as maintenance costs
• Administrative costs
• Taxes and fees
• Operating leases
• Insurance payments
• Scheduled debt payments
• Advertising, production transportation, and capital expenditures related to producing a theatrical or live performing arts production

That said, unlike the EIDL or PPP Loans, SVOG eligibility is fairly limited.

SVOG eligibility

As the name suggests, the SVOG program is meant for a specific type of business. Live venue operators, theatrical producers, performing arts organizations, movie theater operators, and talent representatives are just some examples. In addition, some museum, zoos, and aquariums operators may also be eligible for the grants. For an extensive list of criteria based on your business, you can read the full requirements about eligibility on the SBA website.

Furthermore, your business must have been in operation as of February 29, 2020. And if you’ve already received a PPP loan after December 27, your SVOG grant will be reduced.

For a SVOG grant, applicants can gain up to 45% of their gross earned revenue

SVOG loan terms

For a SVOG grant, applicants can gain up to 45% of their gross earned revenue, with single grants being up to $10 million. For businesses that started operations after January 1, 2019, grants are awarded for the average monthly gross earned revenue for each full month you were in operation during 2019 multiplied by 6, with a cap of $10 million.

While there are many things you can do with your grant, there are some things that are off limits. You cannot use your grant money to:

• Buy real estate
• Make payments on loans originated after February 15, 2020
• Make investments or loans
• Make contributions or other payments to, or on behalf of, political parties, political committees, or candidates for election

Furthermore, you’ll need to maintain documentation to show that you were compliant in using your funds. You will also be required to retain employment records for 4 years after you receive your grant, and all other records must be kept for 3 years.

How to apply for a SVOG:

The SVOG application portal opened Saturday, April 24, 2021. Once you’ve applied, your access to the funds will be dictated by how dire your need is. There are four priority groups, with money being sent out in 14-day increments:

• First Priority: Suffered at least 90% revenue loss, awarded within the first 14 days
• Second Priority: 70% or more revenue loss, awarded within the next 14 days
• Third Priority: 25% or more revenue loss, awarded 28 days after the first two groups
• Supplemental Funding: Available to those who suffered at least 70% revenue loss in the latest calendar quarter

Restaurant Revitalization Fund

The Restaurant Revitalization Fund is focused on supporting restaurants and other food industry businesses. This program provides up to $10 million in funding per business, with no more than $5 million per physical location. And as long as the funds are used for eligible purposes before March 11, 2023, there’s no need to pay the money back.

RRF eligibility

Like the SVOG awards, the RRF funds are industry-specific. Restaurants, food stands, food trucks, food carts, caterers, bars, saloons, lounges, snack bars, nonalcoholic beverage bars, and taverns are just some of the eligible businesses. Other businesses that can benefit from the RRF, so long as 33% of their gross receipts come from onsite sales, are:

• Bakeries
• Brewpubs, tasting rooms, taprooms
• Breweries and/or microbreweries
• Wineries and distilleries
• Inns

In addition, licensed facilities of a beverage alcohol producer where the public may taste, sample, or purchase products, can also apply for the RRF.

RRF loan terms

As we mentioned before, there’s no need to repay the funds if you use them for eligible expenses. Those expenses are:

• Business payroll costs (including sick leave)
• Payments on any business mortgage obligation
• Business rent payments. Note: this does not include prepayment of rent
• Business debt service (both principal and interest). Note: this does not include any prepayment of principal or interest
• Business utility payments
• Business maintenance expenses
• Construction of outdoor seating
• Business supplies (including protective equipment and cleaning materials)
• Business food and beverage expenses (including raw materials)
• Covered supplier costs
• Business operating expenses

How to apply for a RRF loan

Business owners can apply via a SBA-recognized Point of Sale Restaurant Partners or directly in a forthcoming online application portal. Currently they are not accepting forms, but you can begin preparing your application with SBA Form 3172.

But that’s not all. You’ll need additional documentation to complete your application. In addition to completing the IRS 4506-T form, you’ll need Gross Receipts documentation.

Examples include:

• Business tax returns (IRS Form 1120 or IRS 1120-S)
• IRS Forms 1040 Schedule C; IRS Forms 1040 Schedule F
• For a partnership: partnership’s IRS Form 1065 (including K-1s)
• Bank statements
• Externally or internally prepared financial statements such as Income Statements or Profit and Loss Statements
• Point of sale report(s), including IRS Form 1099-K

There is additional documentation required for brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, or bakeries. Since you need to prove that onsite sales to the public made up at least 33% of gross receipts, you’ll need to provide paperwork such as the Tax and Trade Bureau (TTB) Forms 5130.9.

RRF funds will be distributed in priority groups.

Similar to the SVOG model, RRF funds will be distributed in priority groups. In this case, there are two divisions: a main priority group and general applicants.

The priority group will receive funds within the first 21 days, and the general applicant group will receive funds until the RRF is exhausted.

The priority group consists of a small business concern that is at least 51% owned by one or more individuals who are women, veterans, or the socially and economically disadvantaged.

Socially disadvantaged individuals are business owners who may have experienced racial or ethnic prejudice or cultural bias because of their identity.

Economically disadvantaged individuals are those who have diminished access capital and credit opportunities as compared to others in the same business area.

Can you use more than one fund?

In some cases, you may be able to get support from more than one program.

If you are a PPP recipient:

• You can apply for a Second Draw and a SVOG
• You can also apply for EIDL, but you cannot use the funds for the same expenses
• If you apply for an RRF after receiving PPP funds, that will affect your RRF total

If you are a SVOG recipient:

• You cannot apply for a PPP loan
• You can potentially get additional SVOG funding
• If you have received or have a pending application for SVOG, you are not eligible for a RRF
• You can apply for EIDL, but you can’t use the money for the same expenses

If you are an EIDL recipient:

• You can apply to all of the other programs
• You cannot have more than one EIDL

If you have an RRF pending application or have received funding:

• You cannot receive a SVOG award
• Your PPP loan will affect your RRF amount calculation, and you cannot apply for more than one RRF
• You can apply for EIDL