In the new year, many Atlanta individuals, families, and businesses will benefit from the recently passed COVID-19 Relief Bill. There is something for everyone including tax incentives for businesses, stimulus payments, expanded individual tax savings, and favorable changes for Paycheck Protection Program (PPP) borrowers. The comprehensive relief is designed to provide individuals with an economic boost while providing businesses additional resources for dealing with the uncertainty of the pandemic. The Consolidated Appropriations Act, 2021 (the Act) which provides over $900B in assistance also brought back a popular program that had run out of funding in July 2020, Economic Injury Disaster Loan (EIDL) advances. The Act allocated $25B to restart and extend the program for small businesses in low-income communities. To help clients, prospects, and others, Wilson Lewis has provided answers to frequently asked questions below.
Who Qualifies for EIDL2 Advances?
Any business that applies for an EIDL loan that is located in a low-income community, has suffered an economic loss of 30% or more and has 300 or fewer employees qualify.
How does a Business Demonstrate Economic Loss?
To demonstrate loss simply determine the amount by which gross receipts declined during an 8- or 16-week period between March 2, 2020, and December 31, 2021. Then compare it against a similar timeframe immediately preceding March 2, 2020, or anytime during 2019. The Act does not outline the process that seasonal businesses should follow to make the determination, rather it directs the SBA Administrator to determine an appropriate amount.
What is a Low-Income Community?
The Act uses the same criteria as outlined for the New Markets Tax Credit. Specifically, it includes an area where the poverty rate is at least 20 percent or:
What about a Previous EIDL Grant?
For businesses that received a partial EIDL advance in 2020, it is possible to receive an additional advance assuming the above-mentioned criteria is met. It is important to note that it is only possible to receive the difference between the first advance and the $10,000 maximum. In other words, if a business received a $5,000 advance previously, they would only be eligible for another $5,000 advance.
Businesses that previously received a $10,000 advance are not eligible to participate.
How Long is the Approval Process?
The approval process for EIDL advances has been extended from 3 days under the initial round to 21 for the second round. In this timeframe, the SBA is required to determine applicant eligibility, disburse funds, or notify ineligible applicants why they have been excluded.
The replenished EIDL advances is welcome news to many Atlanta businesses seeking to bolster capital through an EIDL. Since the Act just became law it will take some time before the application process is updated and guidance issued. If you have questions about EIDL advances and whether an EIDL is the best loan option for your business, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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