In this 3-minute read:
- How do I apply for an EIDL advance or grant?
- What’s the difference between EIDL loans, EIDL advances or “grants,” and targeted EIDL advances?
- Will an EIDL advance impact my PPP loan eligibility or forgiveness?
- FAQs about EIDL program
In the wake of the continuing economic impacts of the coronavirus pandemic, Congress has approved a new round of funding for 2021, which includes a fresh influx of money for the emergency relief package for America’s small businesses.
The 2021 relief bill dedicates roughly $284 billion to replenish the Paycheck Protection Program (PPP), an additional $20 billion for the Economic Impact Disaster Loan (EIDL) program, in addition to allowing new types of businesses access to these funds.
PLEASE NOTE: THE EIDL ADVANCE PROGRAM IS NOT CURRENTLY OPEN FOR NEW APPLICATIONS. The SBA is focusing first on Targeted EIDL Advances (see below) to people who applied for the EIDL program last year but were underfunded or unable to receive an EIDL grant due to lack of program funding. There haven’t been any announcements about when businesses may start to apply for new EIDL grants/advances. We anticipate updates on this program over the coming weeks. We expect the EIDL advance program to re-open in early February, 2021, starting with Targeted EIDL Advances, and will update this post appropriately.
The PPP Loan program, however, is currently taking applications for First and Second Draw loans! Under the new terms of the PPP for 2021, you may apply for a “second draw” PPP loan even if you were approved and funded for a PPP loan in 2020. In addition, there are new terms and expenses that are covered under PPP loans and are forgivable, and these terms apply to previous PPP loans if they haven’t been forgiven yet.
Get your PPP loan or second draw PPP loan through Womply! Womply has helped over 200,000 businesses get their PPP funding. It’s free to apply for a PPP loan, and Womply can help connect you with an SBA lender that’s right for you! Start your PPP application.
What’s the difference between an EIDL advance or grant, a “targeted EIDL advance,” and an EIDL loan?
The SBA has offered both loans and “grants” or advances under the EIDL program, including a “targeted EIDL advance” in December, 2020 intended to provide businesses “located in low-income communities with additional funds to ensure small business continuity, adaptation, and resiliency.”
This targeted EIDL Advance applies only to applicable businesses located in low-income communities who already applied for and previously received an EIDL Advance for less than $10,000, or those who applied but received no funds due to lack of available program funding. If you don’t fit into this category, you don’t qualify for a “targeted EIDL advance.” The SBA is currently reaching out to businesses who qualify.
The SBA will first reach out to businesses that already received a partial EIDL Advance (between $1,000-$9,000). Applicants will be contacted directly by the SBA via email in the coming weeks with instructions to determine eligibility and submit documentation.
Applicants may qualify if they are located in a low-income community AND can demonstrate more than 30% reduction in revenue during an 8-week period beginning on March 2, 2020, or later.
Next, the SBA will reach out to those who applied for EIDL assistance on or before December 27, 2020, but did not receive an EIDL Advance due to lack of program funding. These applicants will receive an email from SBA with instructions to determine eligibility and submit documentation. Applicants may qualify for a Targeted EIDL Advance if they meet the above criteria (low-income location and reduction in revenue) AND have 300 or fewer employees. Again, the SBA will reach out to you if you qualify.
An EIDL ADVANCE is not currently available, but we expect the program to be reopened soon, after the SBA completes their assessment of people eligible for “targeted EIDL advances” discussed above. An EIDL Advance is a forgivable advance of up to $10,000 that was originally calculated based on the number of employees indicated on an applicant’s COVID-19 EIDL application: $1,000/employee, up to a maximum of $10,000.
- EIDL Advance does not have to be repaid.
- Recipients did not have to be approved for an EIDL loan to receive the EIDL Advance.
- The amount of the loan Advance was deducted from total EIDL loan eligibility.
- Contrary to how it originally worked, businesses who received an EIDL Advance in addition to the Paycheck Protection Program (PPP) loan will no longer have the amount of the EIDL Advance subtracted from the forgiveness amount of their PPP loan. (see more below)
The EIDL LOAN is a non-forgivable, low-interest loan available to small business owners and qualified agricultural businesses in all U.S. states and territories impacted by COVID-19. To learn more about non-forgivable SBA EIDL loans, read their FAQ.
It is currently unclear how many new applicants will be accepted for 2021 EIDL advances and/or loans after the SBA’s current priority of fulfilling targeted EIDL advances for businesses that were underfunded over the past year. We will post updates as soon as it becomes available. Read more FAQ about EIDL advances.
However, the PPP forgivable loan program is currently accepting applications for both first and second-draw PPP loans, and businesses can receive far more funding from a PPP loan, depending on their needs. Start your PPP loan application now!
Do the funds I got from an EIDL advance impact the forgiveness of my PPP Loan?
For 2021, no. Under the terms of the original CARES act and PPP program, you had to reduce the amount of your requested PPP loan forgiveness amount by the total of any EIDL advance you received. HOWEVER, for 2021, the Economic Aid Act repeals section 1110(e)(6) of the CARES Act, which required PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount. In other words, if you got a $10K EIDL grant/advance in 2020, you had to subtract that amount from your PPP loan forgiveness amount. This will no longer apply.
If you already received PPP loan forgiveness and you deducted an EIDL grant from your loan forgiveness amount, the new bill contains language requiring the SBA to issue rules that ensure borrowers are “made whole.” (see the following question)
If I have applied for PPP loan forgiveness and reduced my PPP forgiveness request amount due to an EIDL advance, will I get those funds forgiven?
Any EIDL Advance Amount received by a PPP borrower will not reduce the amount of forgiveness to which the borrower is entitled, and will not be deducted from the forgiveness payment amount that SBA remits to the lender. Any EIDL Advance Amounts previously deducted from a borrower’s forgiveness amount will be remitted to the lender, together with interest to the remittance date.
Is the Economic Injury Disaster Loan (EIDL) Program the same thing as the Paycheck Protection Program (PPP)?
No. These are two entirely separate programs. Both are designed to help small businesses recover from damages incurred by the COVID-19 pandemic, but they have different terms and eligibility requirements.
The Paycheck Protection Program (PPP) is currently open and accepting applications (start your free PPP application here).
The EIDL is currently not yet open or accepting applications for a second round of funding, and we don’t expect 2021 EIDL to go live until early February. We hope to get more updates regarding the EIDL grant program soon.
Can I still get a PPP First Draw or Second Draw Loan if I already got money from EIDL?
Yes. If you received EIDL funds, you may still apply for a First Draw or Second Draw PPP Loan.
If I’m applying for a Second Draw PPP Loan, do I use any EIDL funds I may have received when evaluating my “gross receipts” to determine eligibility for a second draw loan?
No. The amount of any forgiven First Draw PPP Loan or any EIDL advance, which are not subject to federal income tax, is not included in the calculation of “gross receipts”.
Why you should apply for your PPP loans through Womply
As you know, it’s free to apply for a PPP loan, and we know you have lots of choices. So why should you let Womply connect you with an approved SBA lender? Because we know what we’re doing and people love the help we provide. We’ve helped over 200,000 businesses, contractors, sole proprietors, and self-employed individuals get approved. Don’t wait! The deadline is March 31, 2021.
Learn more, plus get free reputation monitoring and customer insights when you sign up for Womply Free!