Author: Gerri Detweiler            Published: March  15,2021       SCORE

Congress has allocated another $15 billion in EIDL advances (grants) as part of the American Rescue Plan signed by President Biden on March 11, 2021. This legislation includes a new $5000 supplemental grant for hardest hit businesses.

If you are not familiar with Economic Injury Disaster Loans (EIDL) and grants due to the COVID-19 crisis, we recommend you read this article.

Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not rely solely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs and Financial Advisors.

By way of background, the CARES Act that was passed March 27, 2020 included a grant (or advance) for those who applied for an EIDL loan, in the amount of up to $10,000. The SBA later determined that those grants would be made in an amount of $1000 per employee. In addition, the funds available for grants were exhausted before all eligible businesses received them. The Economic Aid Act that passed December 27, 2020 included funding for Targeted EIDL grants, which will allow some of those business owners to get the full $10,000 grant.

The American Rescue Plan signed March 11, 2021 includes $10 billion in additional funding for these grants as well as another $5 billion to fund $5000 supplemental grants for businesses with ten or fewer employees that have suffered an economic impact of at least 50%.

Do I qualify for the Targeted EIDL Advance (grant)?

Targeted EIDL advances (grants) are an extension of the emergency EIDL grants in the CARES Act, but the requirements are somewhat different. Important: Only businesses that previously applied for an emergency EIDL advance (grant) and meet the new criteria will be eligible for the Targeted EIDL advance (grant).

To qualify for the full $10,000 targeted EIDL grant, a business must:

  • Be located in a low-income community, and
  • Have suffered an economic loss greater than 30%, and
  • Employ not more than 300 employees

In addition, the business must qualify as an eligible entity as defined in the CARES Act:

  • A small business, cooperative, ESOP Tribal concern, with fewer than 500 employees;
  • An individual who operates under as a sole proprietorship, with or without employees, or as an independent contractor; or
  • A private non-profit or small agricultural cooperative.
  • The business must have been in operation by January 31, 2020
  • The business must be directly affected by COVID-19

Economic loss is defined as “the amount by which the gross receipts of the covered entity declined during an 8-week period between March 2, 2020, and December 17, 2021, relative to a comparable 8-week period immediately preceding March 2, 2020, or during 2019.”  The SBA will develop a formula for seasonal businesses.

A low income community is defined in Section 45D(e) of the Internal Revenue Code of 7 1986 as follows:

“The term “low-income community” means any population census tract if the poverty rate for such tract is at least 20 percent, or in the case of a tract not located within a metropolitan area, the median family income for such tract does not exceed 80 percent of statewide median family income, or in the case of a tract located within a metropolitan area, the median family income for such tract does not exceed 80 percent of the greater of statewide median family income or the metropolitan area median family income.” (There are additional ways areas may qualify as a low-income community in the legislation.)

The SBA has released an online tool to help borrowers understand if they are in a low-income area, noting that “the business address must be located in a low-income community in order to qualify, so SBA encourages potential applicants to check the map to see if they meet the low-income community eligibility requirement before you apply.”

How do I demonstrate economic loss? 

Getting your business tax documents organized and up to date will be essential to applying for this grant and demonstrating you qualify.

In a recent If you have not previously applied for EIDL, you may apply at SBA.gov. You will be able to apply for the low interest rate EIDL loan through December 31, 2021 as long as funds are available. However, you will not be considered for an EIDL advance (grant) at this time.

Can an EIDL loan be forgiven? 

No. EIDL loans must be repaid over 30 years. Unlike PPP loans, there is no forgiveness process for these loans.

Can I also apply for a Paycheck Protection Program (PPP) loan?

Yes! In addition to the EIDL grants your business may qualify for a PPP loan. These loans may be fully forgiven if they are spent on the right expenses (primarily payroll) which essentially turns them into a grant. Businesses may apply for both PPP and EIDL if they qualify.

Where can I get help filling out the EIDL application?

We recommend you connect with your local SBA resource partner such as SCORE, Small Business Development Center or Women’s Business Center. Many are providing free help and education for EIDL grants and loans. Find local assistance at SBA.gov/local-assistance.

PHONE: 1-800-634-0245
TECHNICAL SUPPORT: help@score.org