FLORIDA SMALL BUSINESS DEVELOPMENT CENTER AT IRSC
QUALIFYING REQUIREMENTS OUTLINED FOR SECOND
ROUND OF ECONOMIC INJURY DISASTER LOAN PROGRAM
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TCBusiness.com
Update Jan. 20: The Economic Aid
Act, signed Dec. 27, includes additional
funding for Economic Injury Disaster Loan
program. This article includes information
about the targeted EIDL grant application
process provided by the Small Business
Administration.
Congress has allocated another $20 billion
in EIDL grants advances in the new
stimulus bill. 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 due to the COVID
19 crisis, in the amount of up to $10,000.
The SBA later determined that those grants
would be $1,000 per employee. In addition,
the funds available for grants were
exhausted before all eligible businesses
received them. This legislation appears to
help address some of these concerns.
Worth noting: Businesses that applied
for an EIDL — even earlier in 2020 — and
meet the qualifications may receive the
full $10,000 grant, minus any amount
already received.
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 or financial advisers.
To review your real-time funding options,
please contact a Nav lending expert.
Do I qualify for the new Targeted
EIDL Advance grant?
This legislation includes a new Targeted
EIDL Advance grant described under
the section Targeted EIDL Advance For
Small Business Continuity, Adaption, and
Resiliency and Congress has allocated
$20 billion for these grants. They 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 Jan. 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 eight-week period
between March 2, 2020, and Dec. 17,
2021, relative to a comparable eight-week
period immediately preceding March 2,
2020, or during 2019. The SBA will develop
a formula for seasonal businesses. SBA
states that potentially eligible applicants
will be asked to provide gross monthly
revenue all forms of combined monthly
earnings received, such as profits or salaries
to confirm the 30% reduction.”
A low income community is defined in
Section 45De 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%
or in the case of a tract not within a metropolitan
area, the median family income
for such tract does not exceed 80% of
statewide median family income, or in
the case of a tract within a metropolitan
area, the median family income for such
tract does not exceed 80% 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.
This census tool may help you understand
if your business is in one of these
areas. However, we recommend you do
not rely on it to determine if you qualify
until we get guidance from the SBA. The
SBA states that “additional details on how
SBA will identify low-income communities
will be available soon on www.sba.gov/
coronavirusrelief.”
Are EIDL grants taxable?
Good news: The legislation clarifies that
EIDL grants are not taxable, that businesses
who receive them will not be denied a
tax deduction for qualified expenses paid
for with those funds, and that EIDL grants
will not be deducted from PPP for loan
forgiveness purposes.
How do I apply for these new targeted
EIDL grants?
Only applicants who previously applied
for an EIDL advance and received less than
$10,000 or did not receive a grant because
funds were exhausted will potentially
qualify for this grant. There is nothing you
can do until you are notified by the SBA
that you may qualify. >>
BY GERRI DETWEILER
Gerri Detweiler is a leading, nationally recognized
financing and credit expert, with more than 20
years of experience. During the 2008/2009 financial
crisis, Detweiler was interviewed hundreds of
times, providing insightful expertise and actionable
advice for traversing the turbulent landscape
and unknown change. Today, she is education
director for Nav, the trusted financing partner of
more than 1.2 million businesses, where she gives
Nav’s customers certainty in an uncertain world
through expertise and actionable advice.
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