For the past month or two, EIDL loan and grant requests were limited to businesses in the agricultural sector. Today, the Small Business Administration announced the reopening of the program for new applicants across all business sectors, according to CNBC.
As a reminder, one of the more interesting components to the EIDL loan request is that between $1,000 and $10,000 is given as a grant, which is essentially free money for any business affected by coronavirus with an easy application. Businesses get $1,000 per employee which means that a sole proprietor with get $1,000 and a business with 10 employees will max out at $10,000.
If your business was affected by coronavirus, and you have not yet applied for EIDL, it’s worth applying now. If you will be getting PPP forgiveness, you won’t gain from the EIDL grant.
Hat tip to readers CtownBin and Derek
Previous Articles:
- Stimulus Bill: Making Sense Of The Options For Small Businesses & Employers (Grants + Loans)
- Stimulus: EIDL Grant For Small Businesses Will Be $1,000 Per Employee, Per SBA Clarification
- A Few Updates On The Small Business Grant & Loan Programs (PPP, EIDL Funding Round 2)
- Stimulus: Government To Send Out $1,200 Checks/Deposits To Most US Residents; Expanded Unemployment & More
- US Stimulus: Should You File Your 2019 Tax Return Now?
- Stimulus Bill Adds $300 Charitable Contribution Deduction For 2020 & Beyond
- Stimulus Bill Forbids Credit Agencies From Issuing Negative Marks For Certain Deferred Payments
- Stimulus Bill: Explaining the Unemployment Benefit for Employees, Self-Employed & Gig Workers
- Stimulus Checks: People Who Don’t File Taxes Can Register Their Bank Info With IRS-TurboTax Online Portal To Get Their $1,200
- IRS Now Lets You Check Your Stimulus Payment Status
- A Few Updates On Those $1,200 Stimulus Checks
- IRS Website Finally Allows You To Add Bank Information For $1,200 Stimulus Direct Deposit
- Lawmakers Overhaul PPP Loan Forgiveness Program For Small Businesses
The funds allocated for EIDL advances/grants have now been exhausted, according to emails the SBA has started sending out. Loans are still available, but the full amount will have to be repaid.
so will the SBA send a tax form to report the $1,000 advance amount (or whatever advance someone is granted) to report on tax returns for next year? will it be some type of 1099? does anyone know how that is being treated, or is there no tax reporting involved with the grant?
Hmmm, just a had a weird thing happen. I applied over 2 months ago and was approved for a loan about a week ago. I have not received the grant yet though. Applied for my spouse about 3 days ago and already received a loan offer and the $1K grant showed up today. I did notice that my account info for my LLC appeared to be invalid. I changed it to a business account and it doesn’t show invalid anymore. This happened a few days ago as well. Still no grant me though.
I received an email after applying to choose a loan amount from 1K and larger. What do I need to do to get the 1K advance without any loan?
I am a Disaster Loan Specialist working at SBA, and I handle calls about EIDL and the EIDL Advance all day, nearly every day. I won’t deny that there is definite room for improvement in how SBA has handled COVID-19 EIDL, but it has over 5.5 million applications with only about 2,500 loan officers. It simply isn’t scaled to handle this crisis as efficiently as people seem to expect. So please do me and the rest of us a favor and do the following with your applications and followup: 1) Understand this program before applying. Even if you are applying only for the Advance, you are still ultimately applying for a loan at the same time. Your personal credit (not business credit) will get pulled… perhaps more than once in the process. It is not meant for expanding your business, relocating, acquiring new equipment, or paying off higher interest debt. It is meant for your operational expenses during the disaster (think rent, payroll, supplies, utilities, and monthly payments). This holds true for the Advance as well. It’s not supposed to be free money for you to spend on whatever you want. 2) Understand the Advance. It is not an automatic, free $10K for everyone. You can serve as an armchair attorney if you want to dispute how it’s supposed to work, but nevertheless, SBA will give you $1K per number of pre-disaster employees listed on the application. That’s actual employees… not independent contractors. If you’re taking PPP funds, then the Advance has little-to-no purpose for you since it will reduce your PPP forgiveness. And finally, despite SBA’s best intentions, it may not land in your account as fast as you want, so don’t pin your business’s hopes and dreams on it. 3) Check the Advance box. This may sound like a no-brainer, but every day, I hear from people who expect their Advance but their application doesn’t reflect that they ever requested it. Those folks usually want us to somehow change that on the application, but the reality is that it is highly unlikely that will ever happen. 4) Review all your data carefully. It may sound like it would be easy to change information at the drop of the hat, but SBA is a medium-sized bureaucratic agency in the midst of a crush of application. A mistyped email address or piece of bank information will cause you a lot of grief, and it may take weeks to change anything listed on your application or resend money. It amazes me that someone who owns a business would send in an official application full of errors… but it happens all the time. 5) Be patient. Calling customer service probably won’t affect any change to your application or Advance status. Agents can’t usually do much but document your concern, so you’re probably better off keeping your chill and waiting for an email or bank activity to understand your application status. (I can understand a once-a-week call or less after a couple weeks… Read more »
@SBA DRS – serious question. Wife can’t remember if she clocked the box for the advance or not before inputting the bank information. Anyway to have an agent adjust this? What’s the best route to confirm it was checked or to edit the application?
See #3. An agent can see your application Advance response, but he/she cannot change it and can only document that your intention was to request it. As far as I know, there is no current mechanism in place to change the Advance request. Submitting a second application in an attempt to “correct” the issue fruitless because SBA automatically withdraws duplicate EIDL submissions.
So just to be clear- does that mean if someone accidentally forgot to check that box, they will never be able to receive the advance, no matter what? It’s completely irreversible?
Thank you so much for taking the time to help us out with your advice, we really appreciate it.
At this time, it’s not clear that it can be changed. The Advance is already challenging enough for SBA to fulfill for those who applied for it outright, so they are not focusing on trying to deliver it to those who didn’t… and I think that’s fair. Perhaps when the dust clears, SBA might go back and try to give those a second look… but I wouldn’t bet my life on it.
Sole Prop questions:
1. Customer Service told me that the business must have been *established* by 2/15/2020 to be eligible. How can a business have had revenues and expenses from 2/1/2019-1/31/2020 in this case?
2. Is there a minimum (or maximum) for the revenues or expenses to be eligible?
3. In case I got incorrect information from CS, the PPP requires that the business was *operational* on 2/15/2020 and a schedule C return filed for 2019. Is the requirement the same for EIDL? If so, must the 2019 return have been filed before applying for the EIDL?
1) I actually believe it has to have been established before 1/31/2020. Not sure where the 2/15 came from… perhaps PPP?
2) Eligible for a loan or the Advance? I believe reddit has a lot of folks who theorize on the formula, so you might want to check that out. We in customer service don’t formally have that info. (I think reddit says it’s (Revenue – COGS) / 2?) But I am unsure how other figures on the application affect it. Apply. The worst that can happen is that you get declined.
3) I’d look more at 1/31/2020 for EIDL.
2. Sorry, I was asking about the eligibility for the Advance wrt. to revenues and expenses. Also, if the business has only been operational for 3 months, do we multiply by 4 to get the annual numbers?
I don’t want to apply and “waste” a hard pull if I could find out in advance that I would not be eligible.
3. Again, the PPP requires a schedule C return filed for 2019. Is the requirement the same for EIDL? If so, for the EIDL, must the 2019 return have been filed before applying for the EIDL?
I think your challenge is that these funds aren’t intended for expanding your business or getting it off the ground. They are only eligible to be used to support your ongoing operational expenses to keep your business afloat during the ongoing disaster. This goes for both the Advance and the EIDL itself.
What is very frustrating is that the terms and conditions related to the EIDL loan/advance don’t seem to be available to review prior to accepting the loan which I find both unusual and concerning. I have written the SBA asking for the fine print and not gotten a response. I understand that loans of certain amounts will create lien on business equipment etc… but I want to review the fine print. For example, current owner dies, new computer needs to be upgraded how is the EIDL effected?
Also now that the PPP rules have changed I am still unclear how the EIDL advance is not helpful – it can be used on other expenses that are not being used by the PPP and still be forgivable.
1. Is there a pdf application form so that I can see what they will be asking for in the online application?
2. Will they ask for Tax returns etc for the $1K grant (sole prop)?
3. Can I get the $1K grant w/o the loan?
4. Does the loan start to accrue interest from the day the money is received?
I called and got some answers – which raised more questions..
First my original questions:
1. No pdf applications (only submitted online)
2. She couldn’t say anything about tax returns only that they will check the Tax return (which isn’t filed yet)
3. I can get grant (advance) w/o accepting the loan.
4. Interest accrues from date loan is signed.
More questions & comments:
5. What is the “cost of goods sold” if I don’t resell products? The rep said to put in my expenses. That doesn’t sound right…
6. The rep said that I could apply for two separate Sole Props (she suggested using EIN for one and SS# for other).
7. The rep stated that the business must have been established by 2/15/2020! How can one specify revenues or expenses (“cost of goods sold”) from 02/01/2019 – 01/31-2020 in this case?
Anyone smarter than me can figure this out? Im on unemployment, Im getting $800/wk, If I take this 1K grant, I wont be eligible for that weeks unemployment and netting $200 correct? Or does this grant work differently? $200 isnt worth possibly getting booted from UI. Same goes for PPP loan forgiveness. Or should I wait until closest as possible til end of PUA unemployment expiry then apply?
Not eligible for PPP or EIDL if youre on unemployment, If this is extended past 7/31 +$600/wk unemployment I will revisit.
I have not seen this guidance myself in regard to EIDL. Our information is silent on unemployment. I would seek guidance from your state’s unemployment division since all states are different.
I applied for the EIDL loan/grant on 4/5/20 and oddly just received the $2K grant today (2 employees). I was offered a $50K loan a couple weeks ago before I received the grant. I think the grant delay was caused by the routing/account number I used in my application. They would only fund an account in my name rather than my business name. It is a hard pull.
Did you get any notification about the routing/account issue? Poking around the SBA portal post-approval, I noticed a message that the account number was incorrect (even though it’s definitely correct); I changed it to an entirely different account, no flag on that, I’m wondering if it’ll finally work now or I need to do anything.
SBA did not tell me about the account issue. The loan approval web page SBA sent me said my account information was not valid which gave me the clue about the advance issue. The loan page accepted my personal account but not my business account. I asked about the issue in the SBA loan page via secured message and they sent me a web form to correct the issue.
My income was $345 — Am I eligible for the $1,000?
The $1k isn’t “”free money “ it’s a loan that you have to repay at $5 a month starting after 12 months at 3.75%interest for 30 years! Also, it’s a hard pull on your credit from SBA. I decided to pass. I wasted a hard pull on my credit to find all this out…
The advance part of the EIDL actually IS free money, it does not need to be paid back. You can even get it if you don’t end up getting approved for the loan.
can you get approved for the 1k advance and then just not take the loan if offered? i assume the advanced 1k doesn’t get picked back up on any tax returns since its a grant right?
A grant is taxable income.
that’s true. and it may affect people’s liabilities and eligibility for health care, unemployment, etc.
so you wasted a hard pull, didnt get the 1K and thought the 1K wasnt worth a lousy hard inquiry…rough