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SBA Re-Opens EIDL Grants with Major Changes – Apply Now!

SBA has re-opened the EIDL advance grant applications. The Consolidated Appropriates Act of 2021(CAA) has made the EIDL advance grant a much more attractive option for businesses that may not have applied for the grant during 2020 or may have applied and did not receive the full $10,000 grant.

Under the CARES Act, if a business received an EIDL advance grant and a PPP loan, the business would need to repay the EIDL as part of the PPP loan forgiveness process. This rule is now gone under the CAA, so businesses can get both an EIDL advance grant and full PPP loan forgiveness. (Note: for businesses that already applied for forgiveness and are re-paying the EIDL grant, contact your lender to stop the payments and get a refund of any payments made).

In addition, the CAA makes the advance grant tax free and allows a deduction for expenses paid with the grant.

The EIDL advanced grant is based on the number of employees a business employs. The grant is $1,000 per employee up to $10,000. 

There are limited funds, so businesses should apply right away!

The CAA also created targeted EIDL grants. A company that qualifies for the target EIDL advance grant will get $10,000, regardless of the number of employees. To qualify, the business must:

  • Employs 300 employees or less;
  • Be located in a low-income community; and
  • Has a greater than 30 percent economic loss.

In order to measure economic loss, the business uses any 8 week period of gross receipts between March 2, 2020 and December 31, 2021 as compared to the same period prior to March 2, 2020.

The term “low-income community” means any population census tract if the poverty rate for such tract is at least 20 percent, or in the case of a tract not located within a metropolitan area, the median family income for such tract does not exceed 80 percent of statewide median family income, or in the case of a tract located within a metropolitan area, the median family income for such tract does not exceed 80 percent of the greater of statewide median family income or the metropolitan area median family income.

Use the following Census tool to determine if you are in a low-income community:

If a business previously receives an EIDL advance grant now qualifies for the targeted EIDL advanced grant, they can apply for the difference between the full $10,000 and the amount they originally receives.

Should you have any questions, contact a YHB advisor today!

About the Author

Nicholas Preusch, CPA, JD, LLM

Nick’s expertise includes helping high wealth individual and large business entities with complex tax compliance, along with specializing in international, non-for-profit tax issues, and tax ethics issues. He has used his tax expertise not only to serve his clients, but also his peers. He has authored publications for the AICPA’s Journal of Accountancy, AICPA’s Tax Advisor, NATP’s Tax Pro Journal, and CCH’s Journal of Tax Practice and Procedure and co-authored a textbook, Tax Preparer Penalties and Circular 230 Enforcement, published by Thomas Reuters. He has also lectured nationally on topics such as ethics, complex tax transactions, and IRS practice and procedure.