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SBA provides more information on refinancing Economic Injury Disaster Loan and Paycheck Protection Program loans

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Because EIDL “advances,” or grants, do not need to be repaid, they are not eligible for refinancing.

This week, the U.S. Small Business Administration (SBA) released information for borrowers who have received both a Paycheck Protection Program (PPP) loan and an Economic Injury Disaster Loan (EIDL) or grant.

Under the law, EIDLs may be refinanced into PPP loans under certain circumstances.

See the full guidelines

Below are some key takeaways.

An EIDL may not be refinanced with a PPP loan when:

  • The PPP borrower received the EIDL before January 31, 2020 or after April 3, 2020.

An EIDL is not required to be refinanced with a PPP loan when:

  • The PPP borrower received funds from an EIDL from January 31, 2020 through April 3, 2020; AND
  • The PPP borrower used the EIDL for purposes other than payroll costs

A PPP loan must be used to refinance the full amount of the EIDL when:

  • The PPP borrower received funds from the EIDL from January 31, 2020 through April 3, 2020; and
  • The PPP borrower used the EIDL funds to pay payroll costs

Notably, the guidance also states that, ‚Äúthe amount of the EIDL to be refinanced does not include the amount of any EIDL ‚Äėadvance‚Äô also referred to as an EIDL grant‚Ķbecause the EIDL advance does not need to be repaid.‚ÄĚ

SBA also released formal guidance implementing the changes enacted by the Paycheck Protection Program Flexibility Act.

See a summary of that guidance

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