Some Small Businesses Now Eligible for Economic Injury Disaster Loan Advance

Some Small Businesses Now Eligible for Economic Injury Disaster Loan Advance

The Small Business Administration (SBA) has opened up the Economic Injury Disaster Loan (EIDL) Advance program to provide additional relief to small businesses. You may be eligible if:

• Your business has less than 500 employees.
• You are an individual who operates under a sole proprietorship, with or without employees, or as an independent contractor.
• Your business has more than 500 employees but less than $8M of revenue.
• You are a private, non-profit organization that is a non-governmental agency with an effective ruling letter from the IRS granting tax exemption status under 501(c), (d), or (e).

The application is a quick and simple process at https://covid19relief.sba.gov/#/.  The following information will be requested:

• Revenues for the past 12 months,
• Cost of goods sold for the past 12 months,
• Lost rental income due to the disaster,
• Non-Profit cost of operation over the past 12 months,
• Compensation from other sources received as a result of the disaster (PPP for example),
• Date your business was established,
• Date of current ownership,
• Number of employees as of January 31, 2020, and
• Basic information about the owners such as ownership percentages, home address, cell phone numbers, date of birth, birth place, and SSN.  Personal financial information is not required as part of the application process. 

If your loan is approved, you may receive an advance up to $10,000.  The advance is calculated as $1,000 per employee up to a maximum of $10,000.  Therefore, if you have 5 employees, the maximum advance is $5,000 ($1,000 * 5 employees).  At this time, it appears that the advance amount will reduce the amount of PPP loan forgiveness. Clarification of this treatment is expected.

EIDL terms are:

• A maximum of 30 years,
• Maximum interest rate of 4% (typically 3.75% for for-profit businesses and 2.75% for nonprofits),
• Maximum loan amount is $2M,
• Payments begin 1 year after the loan is received,
• Interest accrues at the start of the loan, and
• Typically, there is no prepayment penalty. 

The details for each individual loan will be different based upon each Borrower’s qualifications.  If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford), or email us at info@cironefriedberg.com.