Federal small business assistance is still available and is overlooked by many small businesses. We understand: there have been so many programs to help small businesses that it is difficult to keep them in order. But there are still thousands of dollars to be made from the COVID-19 Economic Disaster (EIDL) Loan Program for businesses, sole proprietors, independent contractors and private not-for-profit organizations, this update day therefore deserves your attention. (Farm businesses are not eligible for these specific programs, but there are different programs for farming.)
Tillamook is classified as “economically depressed” with most of rural America by Small Business Administration standards, which means we have new opportunities to advance EIDL beyond forgivable initial advances. This means that you may be able to receive thousands of dollars in the form of grants. We did the research for you and we know firsthand how the program works because we received our advance grant last week.
But first, let’s go back to 2020 when the COVID-19 EIDL program was first released. At that time, the Small Business Administration claimed that any business that enrolled in the program would get an advance of $ 10,000 which was repayable and would not need to be repaid as part of its loan. This was confusing for many during its deployment, as the SBA subsequently changed the advance to $ 1,000 per employee, up to $ 10,000 in total. Also confusing was the fact that you didn’t have to accept the additional loan to get the advance. Bottom line: if you applied, you received an advance equal to $ 1,000 per employee, then you were able to choose a loan amount. Whether or not you took this loan, you were to keep the advance as a grant as long as you used it for operating expenses.
Fast forward to 2021 and the release of the US bailout. In this package, the SBA has been tasked with offering what is called a “targeted advance”. This additional advance is open to economically disadvantaged regions like ours, and it is an opportunity for companies to receive the difference between what their initial advance was and the full $ 10,000 that was originally intended for the advance, provided that they:
• Can demonstrate a reduction of more than 30% in earnings over an eight week period beginning March 2, 2020 or later.
• Have 300 employees or less.
For example, if your business had three employees, it would initially have received $ 3,000. The targeted advance would provide an additional $ 7,000 to make the grand total of $ 10,000.
And then there’s the icing on the cake – also in the US bailout. Some small businesses located in economically disadvantaged areas have also become eligible for an “additional targeted advance,” which provides an additional repayable advance of $ 5,000 on top of the first two advance programs. This advance is only available after receiving the full $ 10,000 from the two previous programs; this brings the grand total of EIDL’s “grant” funding to $ 15,000 per company. To be eligible for this advance, applicants must:
• Show more than 50% economic loss in an eight week period starting March 2, 2020 or later, compared to the same period the previous year. Applicants must provide gross monthly income (all forms of combined monthly income received, such as profits or wages) from January 2019 to the current month.
• Have 10 or fewer employees.
The advances are only accessible to companies that apply for the EIDL loan. Again, you are not required to accept the loan, but you must apply to the program in order to access the advance grant.
In short, if you haven’t applied to the EIDL program at all, you’re essentially leaving a “grant” of $ 15,000 on the table. If you’ve applied to the program but haven’t applied for any of the new advancements targeted, you may be missing out on thousands of dollars in “grant” dollars.
In the first year of the pandemic, the House sent out weekly updates to help local businesses raise millions of dollars through federal and state programs. This cash advance from EIDL is earmarked for businesses and will soon travel to communities across the country. Let’s bring it home to boost our local economy!
In addition to the advances, the EIDL program has increased loan limits for businesses that may need additional funds. There are restrictions on how these funds can be used, but a game-changing program update now allows you to pay off existing debt with these loans. For some businesses, this might be a good option to reduce debt and loan payments, as EIDL loans are amortized over 30 years and have an interest rate of 2.75% (nonprofit) at 3. , 75%, with deferred payments of two years. as soon as the loan is set up.
Stay tuned for a future article on this and the Employee Retention Tax Credit Program, another financial clawback opportunity for local businesses.
And in the meantime, I encourage you to start working on your application to the EIDL program and targeted advancements. To begin your loan application and receive the first advance, go to covid19relief.sba.gov. If you’ve already applied for the program, visit your online portal to find options to apply for the new targeted loan advances and increases.
As always, if you have any questions or need assistance, I’m happy to help. Quickly call me at 503-842-7525 or email [email protected]