CARES Act: Emergency EIDL Grants
By: Timothy Lynn
Under Section 1110 of the CARES Act, Congress authorized certain advances in the amount of $10,000 to small businesses to assist with the impacts of COVID-19. These $10,000 payments are more in the nature of a grant and are not expected to be repaid by the recipient.
• Businesses with not more than 500 employees
• Sole proprietorships, with or without employees or independent contractors
• Cooperatives with not more than 500 employees
• ESOPs with not more than 500 employees
• Tribal concern or business with not more than 500 employees
The payment is a $10,000 advance on a 7(b)(2) loan – disaster relief loans for small businesses under Section 7(b)(2) of the Small Business Act.
The $10,000 advance does not need to be repaid even if the business is turned down for the 7(b)(2) loan.
Use of Funds:
The funds may be used for any purpose allowable under Section 7(b)(2) including:
• Providing sick leave to employees unable to work due to the direct effect of COVID-19
• Maintaining payroll during business interruption or substantial slowdowns
• Meeting increased costs to obtain materials unavailable due to interrupted supply chains
• Making rent or mortgage payments
• Repaying obligations that cannot be met due to revenue losses
Impact on Payroll Protection Program Loan:
The amount of the $10,000 advance is subtracted from the forgiveness available under a 7(a) loan made under the Payroll Protection Program.
Applications are submitted directly to SBA at SBA Emergency EIDL Grant