Economic Injury Disaster Loans
The Consolidated Appropriations Act of 2021 (The Act) extended the Economic Injury Disaster Program until December 31st, 2021, or until funds run out. The SBA Economic Injury Disaster Loans (EIDL) loans are available to small businesses and non-profit organizations that suffer economic injury as a direct result of a federally declared disaster, such as the pandemic.
- EIDLs are working capital loans that can be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred.
- The interest rates can be as low as 3.75% for small businesses, and 2.75% for non-profits.
- Long-term repayments are offered in order to keep payments affordable, up to a maximum of 30 years.
- Small businesses; small agricultural cooperatives, most private non-profit organizations, tribal businesses; cooperative; sole proprietors and independent contractors are eligible.
Targeted EIDL Grant Program Update
The Consolidated Appropriation Act of 2021(CAA) provides $20 billion in funds for the Targeted Economic Injury Disaster Loan (EIDL) Grants. The grants will be disbursed to eligible applicants based on the following priority:
- First Priority Group includes applicants who previously received the EIDL Advance for less than $10,000
- Second Priority Group includes applicants that applied before December 27, 2020 but did not receive an EIDL Advance.
Additionally, the business must meet the following criteria:
- it is located in a low-income community,
- it suffered a 30% economic loss, and
- it has 300 employees or less.
Any applicants that are eligible will receive an email invite from the SBA to apply for the new Targeted EIDL Advance. Invitations to apply began to roll out on February 1st.
EIDL Grants are not taxable income. Businesses that obtain grants can claim the tax deductions for qualified expenses paid for with those funds. The new legislation also clarifies that the EIDL Grant will not be deducted PPP for loan forgiveness purposes.