Emergency Economic Injury Grants
Updated April 1, 2020
IF YOU HAVE NEVER READ AN EMAIL FROM KETEL THORSTENSON, LLP THIS IS ONE TO READ.
The CARES act signed into law on Friday March 27 includes $10 billion in funding to provide an advance of $10,000 to small businesses and nonprofits within three days of applying for an SBA economic injury disaster loan (EIDL). Even if you don’t want or need a loan, you can get the grant by applying for the loan.
Eligible entities include any business with less than 500 employees AND which has been in business for one year. This includes any sort of legal entity, including cooperatives, ESOPs or any individual operating as a sole proprietor during the covered period (January 31, 2020 to December 31, 2020). Private non-profits are also eligible for both grants and EIDLs.
Effectively anyone in this country who is in a small business is being handed $10,000 of tax free money. In South Dakota, for example this would include ranchers, hair stylists, cleaning service, mechanic shops. Literally any small business. If you own a rental house is that a business? That is unclear. Apply and see what happens.
Get in line quick. It is first come first serve. EIDLs are loans of up to $2 million that carry interest rates up to 3.75% for companies and up to 2.75% for nonprofits, as well as principal and interest deferment for up to 4 years. The loans may be used for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.
The EIDL grant does not need to be repaid, even if the grantee is subsequently denied an EIDL. It may be used to provide paid sick leave to employees, maintain payroll, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. At this time, there may or may not be forthcoming regulations that require to prove where you have spent the monies. We suggest you keep track of the use of the funds, even though that is not likely.
A business that receives an EIDL grant between January 31, 2020 and June 30, 2020, as a result of a COVID-19 disaster declaration, is also eligible to apply for a PPP loan. However, in either case, the emergency EIDL grant award of up to $10,000 would be subtracted from the amount forgiven in the PPP loan. See separate blogs on PPP loans.
How do I apply for the loan/grant?
The PPP application needs to be completed by an SBA lender.
Any business owner or consultant working on behalf of the business owner can complete the EIDL loan application. The application can be found here: https://covid19relief.sba.gov/#/
To assist you in completing and submitting the EIDL loan application, KTLLP has a dedicated team to assist you for a nominal fee. Please contact us should you need assistance.
Act quickly and stay safe.
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