Businesses could get up to $10 million in loans forgiven through the CARES Act, if you can avoid coronavirus layoffs. Here's how to apply.

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Federal stimulus funds could begin paying out this week for loans and grants aimed at helping employers like Hyacinth Nembhardt maintain or restore employees.

• The federal government's disaster relief program provides loans and grants through two avenues: The Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).
• PPP offers up to $10 million to employers and independent contractors who retain workers during the disruption caused by the coronavirus pandemic.
• Through EIDL, small businesses can receive up to $2 million in loans with an interest rate of 3.75% and can use the money to pay for a variety of measures to keep or restore employment.
• Businesses applying to an EIDL are also eligible to receive an immediate cash advance up to $10,000.
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The federal government's CARES disaster relief program (the Coronavirus Aid, Relief, and Economic Security Act) provides two distinct avenues through which small business owners can access billions in loans and grants: The Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).

In addition to funding $350 billion for PPP to keep employees on company payrolls, CARES allocates another $10 billion to the existing EIDL program, which is meant to relieve businesses during economic disasters. This is the first time in the 60-year history of this loan program that a pandemic has been included as a disaster!

While the two programs have different features and funding limitations, both provide pathways for forgiveness, meaning the loans could turn into grants for companies that either maintain employees or restore payroll when it's safe to return to work.

The following information is based on Business Insider's review of the legislation, guidance from the Small Business Administration and Chamber of Commerce, as well as a leaked FAQ document from Senate Democrats. Here's what you need to know about these two programs.

The Paycheck Protection Program

Loans up to $10 million are available to support small business employers and independent contractors who retain workers during the disruption caused by the coronavirus pandemic.

Funds may be used for salaries, wages, and tips, as well as benefits like healthcare, retirement, paid time off, and to pay certain taxes. Additional uses include mortgage or rent payments, utilities, and interest on preexisting debt.

Borrowers can apply for forgiveness of up to eight weeks of qualifying expenses off of the principal, which effectively converts the loan into a grant.

Who's eligible: Small businesses, non-profits, independent contractors, freelancers/self-employed, and limited types of franchise affiliates that have been in business since January 31, 2020

A small business by SBA standards is generally defined as having 500 or fewer employees. For the first time ever, the CARES Act expands this definition to a sole proprietorship, an independent contractor, tribal business, cooperatives, and ESOPs. If you aren't sure where you fall, read our guide on what it means to be a small business.

Requirements: Actual financing amounts are calculated by taking your previous year's average monthly payroll cost, and multiplying by 2.5. Loans cap at $10 million for a business and $100,000 for a sole proprietor or independent contractor.

How to apply: Prepare an application (here's a sample from the SBA) and visit your local bank, credit union, community development finance institution (CDFI), or other SBA-qualified lender.

Expected timeline: Funds should begin paying out on Friday, April 3, according to Treasury Secretary Steven Mnuchin.

Economic Injury Disaster Loans

The SBA's Economic Injury Disaster Loans (EIDL) aren't new, but the CARES Act greatly expands who is eligible and the amount of total funding available.

Small businesses can receive up to $2 million in loans with an interest rate of 3.75% and can use the money to maintain payroll, pay for sick leave, meet increased production costs because of supply chain disruptions, or pay for debt, rent, and mortgage payments.

Who's eligible: Small businesses, non-profits, independent contractors, freelancers/self-employed, and limited types of franchise affiliates that have been in business since January 31, 2020

Requirements: Applicants will need to submit their credit score. There are no application fees, nor a prerequisite that you must be unable to receive funding elsewhere.

How to apply: Fill out the application at covid19relief.sba.gov. It should take roughly 30 to 50 minutes to complete.

Expected timeline: TBD. These loans are in high demand, so it could take weeks to process your application.

Immediate EIDL grants up to $10,000

Businesses applying to an EIDL are also eligible to receive an immediate cash advance up to $10,000. These grants are an option within the EIDL and business owners may receive them even if they are not approved for further funding. Grants will be available through December 30, 2020.

The US government leaves the spending of this money up to businesses' discretion, but encourages companies to use it to maintain payroll and train employees.

Who's eligible: If you are eligible to apply for an EIDL, you are eligible for this grant.

How to apply: Within the EIDL application, there will be a prompt to indicate that you would like to be considered for a cash advance.

Expected timeline: Businesses should expect to receive their grant within three business days after applying for an EIDL.

This post will be updated with additional details as they develop.

Kimberly Leonard contributed reporting.

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