Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), grants are now available through the Small Business Administration (SBA) to provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19, by applying for an SBA Economic Injury Disaster Loan (EIDL). The advance does not need to be repaid and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.

Businesses and private non-profits suffering substantial economic injury are eligible for an EIDL. “Private non-profit organizations” include any entity exempt under Section 501(c), such as trade associations, advocacy organizations, unions, and social clubs. However, religious organizations and those organizations primarily engaged in political or lobbying activities are not eligible to receive an EIDL.

EIDLs are lower interest loans of up to $2 million, with principal and interest deferment at the SBA’s discretion, that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.

Those eligible include small business concerns that meet the applicable size standard for a small business, most private non-profits of any size, as well as the following with 500 or fewer employees:

• Sole proprietorships, with or without employees
• Independent contractors
• Cooperatives and employee-owned businesses

The Emergency Economic Injury Grant is available to those businesses and private non-profits who have been in operation since January 31, 2020, when the public health crisis was announced.

Emergency Economic Injury Grants are available through December 31, 2020. The grants are backdated to January 31, 2020 to allow those who have already applied for EIDLs to be eligible to also receive a grant.

Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a Paycheck Protection Program (PPP) loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.

Please visit https://www.sba.gov/size-standards/ to find out if your business meets the SBA’s small business size standards. You will need the 6-digit North American Industry Classification Code for your business and your business’s 3-year average annual revenue.

To apply for an EIDL online, please visit https://disasterloan.sba.gov/ela/.

As always, your Legacy representative is here to help.