February 3, 2021
Show of hands, who here remembers the CARES Act? Extra credit if you can tell me what was included. Did anyone say Economic Injury Disaster Loans? Let’s be real, that was almost a year ago, and if you remember any of that now, might be time to try out for Jeopardy! (RIP Alex Trebek.)
Since the SBA has announced an additional $197 million in funding and extended the window for applying for an EIDL until December 31, 2021, let’s take a look at it again.
In order to be eligible, a business must have been in business prior to February 15, 2020. It also must have 500 or fewer employees. The program is also open to sole proprietors and independent contractors.
The EIDL is available in amounts up to $2 million dollars. That is probably more than most of us are eligible for, but the smaller amounts come with fewer strings: anything under $200,000 does not require a personal guarantee and amounts under $25,000 do not require collateral.
EIDL funds can be used for any normal operating expenses such as rent, utilities, and payroll. Funds cannot be used to pay off old debt or to purchase new assets. Funds must be kept in a separate account so their use can be easily documented.
Keep in mind that this is a loan, not a grant, so it will need to be paid back. The interest rate is generally around 3.75%, and, in some cases, repayment will be spread out over 30 years.
The SBA has also reopened the $10,000 EIDL advance grant program to businesses that meet certain criteria, the biggest of which is where the business is located. Wondering if that is you? Send me an email or give me a call. I am happy to help you determine if this applies to you.
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