This week, the SBA reopened the EIDL loan and grant program for applicants and released an updated form for PPP forgiveness. Here is what it means for your business or organization:
EIDL LOAN & GRANT
On June 15 th , 2020, the SBA began accepting new Economic Injury Disaster Loan (EIDL) and EIDL Advance Grant applications from qualified small businesses. The EIDL provides low interest loans to small businesses and non-profits that have been severely impacted by COVID-19, as well as a grant of up to $10,000 that does not need to be repaid. Here is what you need to know:
- Interest rates are 2.75% for nonprofits and 3.75% for businesses, with a maximum term of 30 years.
- Loans over $200,000 must be guaranteed by an owner with at least 20% interest in the company. We expect this requirement to be waived for schools.
- You can apply for this loan directly on SBA.gov. It is a simple form that can be completed in under 15 minutes.
- Eligible businesses can request an advanced grant of up to $10,000, calculated at $1,000 per employee.
- This grant does not need to be paid back, even if your organization is denied the EIDL loan.
- You do not need to accept the loan to receive the grant.
- If you get an EIDL grant, and later apply for a PPP loan, the EIDL grant will be subtracted from the amount that gets forgiven.
Small businesses with less than 500 employees, which have been in business as of January 31 st , 2020, are eligible. This includes:
- independent contractors (for whom there is expanded eligibility criteria)
- sole proprietorships, with or without employees
- gig workers
- agricultural businesses
Although, the grants are available until December 16th, 2020, funds are expected to run out quickly, so apply as soon as possible.
The application could be found here
UPDATED PPP FORGIVENESS APPLICATIONS
Today, the SBA, in consultation with the Department of the Treasury, posted a revised, borrower-friendly Paycheck Protection Program loan forgiveness application implementing the PPP Flexibility Act. In addition to revising the full forgiveness application, SBA also published a new EZ version of the forgiveness application which applies to borrowers who:
- are self-employed and have no employees; OR
- did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
The EZ application requires fewer calculations and less documentation for eligible borrowers. Details regarding the applicability of these provisions are available in the instructions to the new EZ application form.
Both applications give borrowers the option of using the original 8-week covered period (if their loan was made before June 5th, 2020) or an extended 24-week covered period. These changes will result in a more efficient process and make it easier for businesses to realize full forgiveness for their PPP loan.
to view the EZ Forgiveness Application.
to view the Full Forgiveness Application.
This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for, legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.