COVID-19 Stimulus Packages

Frequently Asked Questions

The information provided is based upon facts that were available at the time of publication and are subject to change. Better Accounting makes no warranties, express or implied, or representations as to the accuracy, completeness or timeliness of the information provided. Better Accounting cannot be held liable for any claims or damages that result from reliance on this information.

SBA Economic Injury Disaster Loans

The Federal Reserve will be creating over a dozen lending facilities in the coming days. The CARES Act specifically indicates that there should be a facility for states, municipalities and tribes, and a facility for businesses not eligible for the SBA program.

Yes. If a business is eligible for an EIDL, you can apply for an Economic Injury Emergency Grant. In the event the business is approved for an EIDL, the grant amount will be subtracted from the amount forgiven. If the business is not approved, they can still use the funds from the grant.

In order to be eligible for the grant, the business must be eligible for an EIDL and must have been in operation prior to January 31, 2020.

To be eligible for loan forgiveness, you must apply for forgiveness through your lender. The application must include:

  • Documentation verifying the number of employees on your payroll and their pay rates, including tax filings, state income, and unemployment insurance filings
  • Documentation verifying payments on covered mortgage obligations, lease obligations and utilities.
  • Certification from a representative of your business or organization that is authorized to certify that the documentation is true and accurate, and that the forgiveness amount was used in accordance with the program’s guidelines for use.

Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the 8-week period proportionate to maintaining employees and wages: payroll plus interest payments on a mortgage obligation plus payment on a covered rent obligation plus any covered utility payments.

The COVID-19 specific Economic Injury Disaster Loans is available through June 30, 2020.

You can get an SBA loan through any of their 800 preferred lenders. These include banks, credit unions and other financial institutions.

The SBA has also been authorized to establish additional preferred lenders in the coming days.

Yes, but only positively. The SBA is now required to pay the principal, interest and fees on their existing loans for six months to give businesses more working capital.

Additionally, the COVID-19 loans through the SBA determined by the CARES Act are different from their existing loan programs. Even if you have an existing SBA loan, you can still apply for an SBA COVID-19 Economic Injury Disaster Loan. However, you cannot use your existing loan and your PPP loan or EIDL for the same expenses.

The maximum loan size is $10 million.

For a business operating from February 15, 2019 to June 30, 2019, the max loan is equal to 250% of the average monthly payroll costs during that time period. If the business employs seasonal workers, they can opt to choose March 1, 2019 as the start date.

For a business that was not operating between February 15, 2019 to June 30, 2019, the max loan to 250% of the average monthly payroll costs between January 1, 2020 and February 29, 2020.

For businesses that take out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and want to refinance the loan into a PPP loan, the outstanding loan amount would be added to the payroll sum.

The primary difference between a grant and a loan is that you do not have to repay a grant, while you do have to repay a loan.

The CARES act complicates this distinction by supplying the grant as a part of the EIDL loan process.

Those applying for EIDL loans will automatically receive the $10,000 grant provided they have applied using the new EIDL loan link released Sunday, March 29th.

  • If a company has applied for an EIDL loan previously, they may elect to reapply using the new link in order to receive the grant.
  • If they do not reapply, they will not receive the grant, even if they are approved for a loan

The SBA has laid out the steps to receive a grant as follows:

  1. Businesses who wish to receive a grant MUST apply through the new SBA loan link for an EIDL loan.
  2. All businesses will automatically receive a $10,000 grant within three business days of submitting their new EIDL application.
  3. If the business is approved, they may take either the EIDL loan or reject the EIDL loan in favor of a PPP loan. Either way, the grant will be subtracted from the loan amount as an advance on the total loan.

NOTE: The grant does not need to be repaid, but will be deducted from the amount forgiven if applicant receives a PPP loan.

  • Small businesses under 500 employees who have suffered due to COVID-19.
  • Individuals operating under a sole proprietorship or as an independent contractor.
  • Any cooperative
  • The $10,000 grant is meant to be spent on:

    • Paid leave
    • Maintaining payroll
    • Increased costs due to supply chain disruption
    • Mortgage or lease payments
    • Repaying obligations that cannot be met due to revenue loss.
  • In order to qualify for the Advance, you must submit this new application even if you previously submitted an EIDL application. Applying for the Advance will not impact the status or slow your existing EIDL application.

    New Loan Application link (which will allow businesses to apply for the grant): https://covid19relief.sba.gov/#/

  • You can apply for both. However…

    If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.

  • If you took out an Economic Injury Disaster Loan between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum. The loan amount would include the grant as an advance on the loan total. The grant would not need to added separately.

  • The SBA can now approve EIDL loans solely based on the owner’s credit score without looking at tax returns.

  • Affiliation rules become important when the SBA is deciding whether a business’s affiliations prevent them from being considered “small”.
  • Generally, affiliation exists when one business/third party controls or has the power to control another.
  • The SBA website provides this resource to determine eligibility in regards to affiliations: https://www.sba.gov/sites/default/files/affiliation_discussion_0.pdf
  • If a business is suffering due to an additional disaster, such as earthquakes, flooding, tornados, hurricanes, etc., they are eligible to apply for a disaster loan through the SBA provided their area is declared as a disaster zone.

    • The applicant would have to apply through the standard disaster loan process.

    These loans would not include the $10,000 advance, but in this case, the business could apply for and receive both a Disaster Loan and a PPP loan.

    This would be classified as a FEMA loan.

Paycheck Protection Program

Employee Benefits