There are two mutually exclusive SBA loan programs that can benefit hard hit small businesses in South Dakota. We are not bankers, so let your banking expert chime in.

EIDL (Emergency Injury Disaster Loans)
PPP   (Paycheck Protection Program)

Eligible entities include any business with less than 500 employees AND which has been in business for one year.   For PPP loans, the 500 employee test is on a location by location basis.

EIDL Loans
EIDLs loans of up to $2 million carry interest rates up to 3.75%, as well as principal and interest deferment for up to 4 years. The loans may be used for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.  We believe the amount of the loan is negotiated with the SBA after the application is submitted.

If you apply for an EIDL loan, you will receive a $10,000 no questions asked GRANT.  See a blog re: this grant at

How do I apply for the loan/grant?   For EIDL loans, you do not start with your banker.

To get started on the loan/grant application….look here.

PPP Loans

The loan amount will be 2.5x the prior year’s average payrolls.  Some of the loan will be forgiven, if not all.

See page 4 regarding forgiveness of the loans.  For the 8 weeks following the date you receive the loan, four expense categories (cash basis)  are added up to figure the amount of the loan forgiven.

  • Interest on mortgage debt and secured equipment loans (not principal)
  • Rent paid (including rent paid to related companies)
  • Utilities (gas, electric water, phone, internet)
  • Payroll costs and benefits


HOWEVER……….The TOTAL FORGIVENESS AMOUNT WILL  be reduced if your FTE’s during the 8 weeks are less than the an average FTE. THIS CAN BE A TRAP—the formula FOR FIGURING THE ACTUAL FORGIVENESS AMOUNT IS:

times  this fraction 
FTE during the 8 week measuring period (8 weeks after you obtain loan.)
AVE FTE during January 1, 2020 to February 29 2020  (there are two other choices for these dates, but this will likely be  the lowest denominator)

So with this formula, if have laid off most employees, and you re-hire them now, you are really only saving interest, rent and utilities for 8 weeks—this is because we would not have paid the payrolls but for this loan program. 

How many people need to be hired back during the 8 weeks to not lose any of the forgiveness?  You need to run the numbers.

WITH THE CARES ACT ENHANCED UNEMPLOYMENT BENEFITS, many  employees are probably making more money on unemployment than they had been while working.  It looks like they get $600 per week on TOP of the regular benefits. 

A second TRAP, is that by choosing the PPP loan solution, you lose the opportunity for a 50% credit (50% of wages) for each person actually employed during the crisis period.  The credit can be up to $5,000 per employee in 2020.  


  • Make darn sure you pay as many of the four above bill categories during the 8 week time frame as you can.   It is cash basis.   

SO WHICH PROGRAM IS BETTER FOR YOU?   First we suggest applying for BOTH programs.

PPP program is better in these circumstances—generally:

  • You will have high FTEs employed during the 8 week measuring period; and
  • You have high mortgage interest costs.
  • You have over 500 employees, but not at any one location (If this is the case you don’t qualify for EIDL).
  •  You desire no guarantees.  There are no personal guarantees required of PPP loans.  EIDL loans over $200K must be guaranteed.

EIDL Loans would be better if:

  • You have Low or NO FTEs during the 8 week measuring period.
  • You have low mortgage interest costs.
  • You need more money than can be loaned under the PPP formula.
  • You want terms longer than 10 years (as is the PPP program).
  • And you can enjoy the 50% tax credit for employed workers up to $5K per worker (applies to any 2020 calendar quarter where revenues are less than 50% of the prior year quarter.)

Also, if you apply for the EIDL loan and receive the $10,000 grant, and you decide to pursue PPP instead, the amount of the PPP loan forgiven is reduced by the grant you have already received.

Click Here for SBC Small Business Loan Guide