So this was a big change made in the PPP rules last night.

The Treasury guidance said that 75% of each loan must be used for payroll costs. Not just 75% of what's forgiven, but of the whole loan.

This makes it a considerably worse deal for businesses that are entirely closed.

Also, if you misuse the money, the government is threatening to pursue fraud charges against you.

Here's a link to the Treasury guidance, for those wondering.

https://home.treasury.gov/system/files/136/PPP--IFRN%20FINAL.pdf

A Senate staffer tells me that the new rule was likely written to close an unintentional loophole in the law, that would have let businesses lay off their staffers before April 26, but still have their loans forgiven as long as they temporarily hired them back before June 30.

Here's what that might mean for a mid-sized restaurant in New York. It's a worse deal than before, but not a disaster.

For really low payroll businesses, it's worse.

On the bright side, LiveOak—the country's largest SBA 7(a) lender—tells me it expects to start disbursing loans today. So money is getting out the door.

New update from Bank of America: 85,000 applications requesting $22 billion. This money is going to go fast.

So, here's an example of the kind of business PPP absolutely won't save.

I was just talking with a bar/game spot whose payroll costs are about 11% of revenues, and rent makes up 35%.

If you hypothetically assume $1M in annual sales, here's how the math looks for them:

A business like this will probably need to rely on the EIDL program. Those loans carry a 3.75% interest rate and 30-year maturity (so, basically, it's like a mini mortgage). But they also make a $10,000 cash grant available immediately.

It seems like an incredibly simple move for Congress in phase 4—if we get one—would be to knock the interest rate on EIDL loans down a couple of percentage points and increase the advance. The government can borrow for zilch. Pass it on.

There seems to be a ton of confusion out there about whether businesses can borrow a PPP loan and an EIDL loan. I asked a group of lawyers at Foley & Lardner, who've been tracking the law. Tom Spillane, a partner, told me that yes, you can. Q on the left, A on the right.

A couple of other sources have also told me that they think that you can borrow both.