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Are You Eligible for an EIDL Grant?

  • Stimulus bill provides $20 billion more for Economic Injury Disaster Loan grants
  • Grants of up $10,000 available to small businesses in low-income communities that have suffered major revenue losses due to COVID-19
  • Opening of application portal has been delayed but is expected to debut soon

A disaster recovery program that assisted millions of small businesses during the COVID-19 pandemic is expected to make its return soon after receiving $20 billion in funding under an economic stimulus bill passed last month.

The legislation revives the Economic Injury Disaster Loan Advance program, which was established in last year’s CARES Act and provided companies with grants of $1,000 per employee. Grants are capped at $10,000, and applications will be taken through Dec. 31 or until funding runs out.

The original program assisted nearly 6 million businesses before its funding was exhausted. Business owners could use the funds to maintain payroll, provide sick leave, account for higher costs brought on by supply chain disruptions, rent or mortgage payments, or repaying obligations.

To qualify for a grant, a business must be located in a low-income community, have 300 or fewer employees, and have suffered a revenue loss of more than 30 percent. The definition of a low-income community is based on the Internal Revenue Code, and includes areas with a poverty rate of at least 20 percent or a median income that doesn’t exceed 80 percent of the state’s median income. Revenue comparisons can use any eight-week period between March 2, 2020 and Dec. 17, 2021 against any comparable period before March 2, 2020 or in 2019.

Businesses must also qualify under the original conditions set in the CARES Act. These include the stipulations that the company was in business on Jan. 31, 2020, and that it has been “directly affected” by the pandemic.

The new legislation indicates that EIDL Advance grants aren’t taxable, won’t affect deductions if the funds are used to pay for normally deductible expenses, and won’t be deducted from the amount that can be forgiven under a Paycheck Protection Program loan if the business owner is receiving funding through this program as well. Companies that previously received funding can apply a second time, although any amount that was received will be subtracted from the $10,000 maximum.

The application portal for EIDL Advance grants was expected to open on Jan. 17, but has been delayed as the U.S. Small Business Administration switches to a new portal. Those reapplying for the full $10,000 will receive priority over first-time applicants. Once an application is submitted, the SBA must determine whether to accept it within 21 days.

The EIDL Advance grants are distinct from EIDL loans, which are designed to “meet financial obligations and operating expenses that could have been met had the disaster not occurred.” These loans are offered at 3.75 percent for businesses or 2.75 percent for nonprofits, have a 30-year term, and can be used for working capital or operating expenses. Business owners also have the option to defer payments for one year.

EIDL loans predate the COVID-19 pandemic and are typically only available to businesses that have been impacted by hurricanes or other disasters, although it was extended to all small businesses, agricultural businesses, and nonprofits during the pandemic. This expansion ceases at the end of this year.

While business owners can receive a second EIDL Advance grant, they cannot receive a second EIDL loan.

SCORE recommends that applicants consult with their attorney, certified public accountant, and financial advisors, since information on the program is subject to change.

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