We have been receiving several comments and questions about the Economic Injury Disaster Loan (EIDL) and wanted to give you some more detailed information and instructions on how to apply.
If your business (including sole proprietors and contract employees) was in existence as of 1/1/2020 and has less than 500 employees, you are eligible for a $10,000 Grant expanded by the Care Act. Yes, you heard correctly, a grant - which means this money does not need to be repaid.
CLICK HERE TO APPLY.
The form states that it takes 2.5 hours to apply but it really only takes 2.5 minutes. You will need to provide general information about your business such as:
- Name, address, email, and phone number
- EIN # or Social Security number (for sole proprietor)
- Start date
- Organization type (sole proprietor, S Corp, LLC, partnership, etc.)
- Gross revenue for last year
- Number of employees
- Main business activity
- Costs of Good sold in last year *
- Operating Expenses for the last year *
- General information about the owner(s)
(COGS includes direct labor, direct materials or raw materials, and overhead costs for the production facility. Cost of goods sold is typically listed as a separate line item on the income statement. Operating expenses are the remaining costs that are not included in COGS)
Check that you want the $10,000 grant. Provide your bank account routing and account number for the business account you would like the $10K deposited into.
That's it. They will then email you more information if you would like to apply for a larger loan with interest rates up to 3.75% and principal and interest deferment for up to 4 years. If you borrow less than $200,000, no personal guarantee is required.
This $10,000 grant does not need to be paid back, even if you do not qualify for any other loan amounts.
The guidance has suggested that you use the funds to provide paid sick leave to employees, maintain payroll, or pay debts, rent and mortgage payments. However, there has been nothing to suggest that proof of these types of expenses will be required. Our suggestion is that you still keep good records of how you spend the money, specifically on payroll, debts and rent/mortgage expenses.
There are many people applying, so keep trying if the system crashes while inputting your information. Make sure you keep your application number that is given after you submit the form.
A business that receives an Economic Injury Disaster Loan ("EIDL") between January 31, 2020, and June 30, 2020, is eligible to apply for a Paycheck Protection Program ("PPP") loan through your local bank, or the business may refinance their EIDL into a PPP loan. In either case, the emergency EIDL grant award of up to $10,000 would be subtracted from the amount forgiven in the payroll protection plan, so businesses aren't able to "double dip" by taking the grant and receiving forgiveness on the same amounts. That is where the strategy of using both programs to your advantage comes into play. We are here to help you maximize your benefits from the programs. Schedule a 30 or 60 minute legal consult today by calling or completing our contact form here.