Updated: CLIENT SBA EIDL (ECONOMIC INJURY DISASTER LOAN) ADVANCE & FORGIVENESS GUIDE

June 24, 2020

Great news! After the first round of funding; an additional $10 billion was allotted through the CARES Act to pay SBA EIDL applicants an advance on their loans. The application portal has re-opened, and will be available
until December 30, 2020.

Who Qualifies for EIDL loans?

The EIDL was designed to help during times of economic disaster and the following organizations and individuals qualify:
• Landlords/ Rental Property Owners
• SBA Qualified Small Businesses
• Private nonprofit organizations
• Independent contractors
• Sole Proprietorships
• Tribal Businesses


How your Loan and Grant/Advance amount is determined

The SBA will review 3 years of historical data, as well as credit history and credit score to determine the amount your business is eligible for. The loan funds will not provide for lost sales.

Originally, the ‘CARES’ act provided that the EIDL Loan advance was for $10,000. Unfortunately, further guidance shows that this is not a flat $10,000 grant to all applicants. $10,000 is the maximum you could receive. The SBA is now providing $1,000 per employee, up to ten employees (If you’re a sole proprietor, you’re eligible for $1,000 Grant/Advance only).

Loan Grant/Advance Forgiveness

SBA refers to the EIDL as an advance; because it will be subtracted from the total loan amount you are issued. However, it was written into law as a grant. This means that the amount you are given through the program will not need to be repaid, even if your loan application is rejected. Keep in mind that your final loan will, require repayment. For businesses impacted by COVID- 19, the
interest rates for EIDL loans will be 3.75% for small businesses and 2.75% for nonprofits.

Your entire Grant/Advance (up to $10,000) will be forgiven if you use the money for the following expenses:

• Consulting and Accounting Fees
• Working capital to continue business operations;
• Necessary expenditures to alleviate the specific economic injury suffered;
• Sick leave to employees unable to work due to the direct effects of COVID-19;
• Maintaining payroll;
• Increased supply costs;
• Rent or mortgage payments; and
• Repaying debt that cannot be otherwise repaid due to revenue losses.
• Importantly, EIDL proceeds cannot be used to refinance debt incurred prior to the disaster,
repair physical damage, expansion or to pay dividends.

Applying for both the EIDL & PPP Loan

SBA guidance allows you to apply for a PPP loan in addition to an EIDL, so long as you don’t use the funds from each loan for the same expenses. In other words, you cannot ‘double dip’ for the same expenses. If you decided to apply for a PPP loan and use those funds strictly for payroll, you cannot subsequently use funds from an EIDL for payroll, as well. You also have the option to refinance an EIDL loan into a PPP loan; however, if you are approved for a PPP loan, the $10,000 grant/advance will be subtracted from your PPP forgiveness amount.

Keep precise records

Keep records of how you allocate these funds. Invoices for expenses paid, copies of canceled checks or other evidence payments. Be prepared to present these records to the SBA upon request, potentially in an electronic format.


The application is available on the SBA Website and can be found here: https://covid19relief.sba.gov/#/


If you have any additional questions, please call us at 352-683-7365 or email at Rachel@mycpagroup.com.

Sign up for our newsletter to get updates to your newest tools, events, and other financial resources.

Click here for MY REDZONE RETIREMENT MASTER PLAN