SBA Opens Up New Grants And Loans For Small Businesses And Independent Contractors: The EIDL Program
On June 15, 2020, the SBA announced that it was again opening up its Economic Injury Disaster Loan (EIDL) grant and loan program. This means that independent contractors, freelancers, and gig workers are eligible to receive a $1,000 grant that does not have to be repaid.
Small businesses and agricultural businesses also may apply for the grant, equal to $1,000 per employee of the business up to a maximum of $10,000.
A loan for favorable terms from the SBA may also be available. There is some uncertainty as to the amount available, but up to $150,000 or $2 million has been reported.
Under the CARES Act passed on March 27, 2020, independent contractors, gig workers, and freelancers affected by the coronavirus crisis are eligible to receive the grant. The SBA sometimes refers to these grants as “advances,” but you are not required to repay this money to the government.
The application process involves filling out a simple SBA form requesting an Economic Injury Disaster Recovery Loan, which provides for the advance even if the loan is not granted.
Initially, $10 billion was allocated by the government for these grants, but due to the overwhelming amount of applications, the SBA suspended accepting new applications in mid-April 2020 due to a lapse in appropriations for the grants. But now the SBA has lifted the suspension because of legislation passed on April 24, 2020, that allocated another $60 billion for EIDL and grants thereunder.
Who Is Eligible for the Grants?
The SBA disaster loans and grants include the following eligible claimants:
You must have been in business as of January 31, 2020. The grants are available until December 16, 2020, but the SBA will quickly run out of money, so you should apply as soon as possible.
Where Do I Apply Online for the SBA Grant?
The application should be found at covid19relief.sba.gov/#/. Background information from the SBA can be found at www.sba.gov/disaster-assistance/coronavirus-covid-19.
What Advice Is There for Completing the SBA Application If You Are an Independent Contractor?
If you are an independent contractor, freelancer, or gig worker, here are some tips on filling out the application:
The form should take about 15 minutes to fill out. After it is completed and submitted, the SBA will give you a confirmation number, so keep a copy of that for any follow-up.
How Can I Make Sure I Provide My Correct Direct Deposit Information to the SBA?
Direct deposit information is as follows:
Be sure to include your routing number and account number, as seen in the example above.
How Long Will It Take to Actually Get the Grant Money from the SBA?
The first grants took over a month to be issued; hopefully, newer grants will be quicker.
The SBA has been directly depositing the grant money into bank accounts without notifying people that the funds are on the way or have been deposited. So check your bank account regularly.
Do I Need to Accept an Economic Injury Loan in Order to Get the Grant?
No. You can decide just to accept the grant you receive, and you do not have to accept an Economic Injury Disaster Loan. But the loans have favorable terms, repayable in up to 30 years.
Do I Have to Pay Back the Grant?
No. It’s clear under the CARES Act that this is a grant that does not need to be repaid. No interest payment is required either.
How Can You Contact the SBA to Follow Up on Your Grant Application?The SBA website sets forth these means of contact:
If you can’t get through to the SBA, try contacting the Small Business Development Center (SBDC) in your area. For example, the Northern California SBDC has been extremely helpful, and you can actually talk to a person live (see www.asksbdc.com or call 833-ASK-SBDC). Advisors can help you with both the PPP loan process and the EIDL loans/grants as well as special programs in your state.
Copyright © by Richard D. Harroch. All Rights Reserved.
About the Author
Richard D. Harroch is a Managing Director and Global Head of M&A at VantagePoint Capital Partners, a venture capital fund in the San Francisco area. His focus is on Internet, digital media, and software companies, and he was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on start-ups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. He is the co-author of a 1,500-page book by Bloomberg—Mergers and Acquisitions of Privately Held Companies: Analysis, Forms and Agreements. He was also a corporate and M&A partner at the law firm of Orrick, with experience in startups, mergers and acquisitions, and venture capital. He has been involved in over 200 M&A transactions and 500 start-ups. He can be reached through LinkedIn.
This article was originally published on AllBusiness. See all articles by Richard Harroch.
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