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This week the second round of Paycheck Protection Program (PPP) loans opens for application. However, under the new Economic Aid Act, Economic Injury Disaster Loans (EIDL) Advance Fund was replenished with $25 billion in new funds. The EIDL Advance grants are aimed at assisting businesses most negatively impacted by the pandemic, Forbes reports, by offering $1000 per employee up to $10,000 as an advance that need not be repaid by qualifying entities.

According to the report, a “qualifying entity” for this EIDL:

• “(i) means any entity that, during the covered period, is eligible for a loan made under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) (as expanded under section 1110(b) of the CARES Act (15 U.S.C. 9009(b))), if that entity—
• has not more than 25 employees; and
• has suffered an economic loss of not less than 30 percent; and
• except with respect to an entity included under section 123.300(c) of title 13, Code of Federal Regulations, or any successor regulation, does not include an agricultural enterprise.
• The amount of funding that a covered entity is eligible for in the targeted EIDL program is stated as follows:
  • IN GENERAL.—The amount of funding provided to a covered entity that submits a request under paragraph (2) shall be in an amount that is the lesser of—
    • the amount of working capital needed by the covered entity for the 180-day period beginning on the date on which the covered entity would receive the funding, as determined by the Administrator using a methodology that is identical to the methodology used by the Administrator to determine working capital needs with respect to an application for a loan submitted under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)); or
    • $50,000.

  The priority for the targeted EIDL program is as follows:

  • (8) PRIORITY.—During the 56-day period beginning on the date of enactment of this Act, the Administrator may approve a request for funding under this subsection only if the request is submitted by—
  • a covered entity located in a low-income community;
  • a covered entity owned or controlled by a veteran or a member of the Armed Forces; or
  • a covered entity owned or controlled by an economically disadvantaged individual or a socially disadvantaged individual.”

Additionally, the EIDL Advance fund will no longer reduce PPP loan forgiveness, presumably retroactively. Which, according to Forbes, means those that have already applied for and received PPP loan forgiveness can amend their application to request that their EIDL Advance not be counted against their forgiveness and request repayment₁.

Further, CPA Practice Advisor reports that existing EIDL Advance grantees can reapply for the difference between what the received and the maximum EIDL Advance grant of $10,000₂. As financial advisors continue to work closely to strategize with their clients regarding these opportunities for financial aid, keeping close track of all documentation will be crucial. Especially considering recent reports that the Interim Final Rules issues on Jan. 6 include a complex provision which could allow EIDL loans made between Jan. 31 and April 3, 2020 to be refinanced into PPP loans.

According to the National Federation of Independent Business (NFIB), the SBA is aiming to open EIDL grant applications by Jan. 17, 2021. The application deadline will extend through Dec. 31, 2021 but will close sooner if funds are depleted₃. The MICPA expects that, less any addition funding by the federal government ahead of Dec. 31, EIDL grant funds will disappear quickly as the need among small businesses is great.

Preparedness will be key. Advisors with eligible clients considering an EIDL grant should be watching the SBA application portal closely over the next week. Double check that you are only submitting clients that meet the eligibility requirements so as not to waste time (The Federal Financial Institutions Examination Council (FFIEC) provides a geocoding system which will help you and your clients determine if they are in a qualifying, low-income community). Finally, ensure that all required documentation is in order and ready for submission from the gate.

The MICPA is monitoring updates regarding new, ongoing and emerging resources for businesses impacted by the pandemic. Subscribe to our newsletter or follow us on social media for the latest in all breaking COVID-related resources.

1. Gassman, Alan. “January 6^th SBA Regulations Help Solidify PPP and EIDL Changes.” Forbes. 7 Jan. 2021. Accessed on 11 Jan. 2021.
2. D’Avolio, Mike. “What’s in the New Covid Relief Law?” CPA Practice Advisor. 28 Dec. 2020. Accessed on 11 Jan. 2021.
3. “EIDL Advance Grant Reopening Soon.” NFIB. 9 Jan. 2021. Accessed on 11 Jan. 2021.