The Emergency Income Disaster Loan (EIDL) program is a little-known Small Business Administration (SBA) loan program designed to help small businesses in disaster situations. Previous disasters would be floods or a major storm like hurricanes or snow storms. All states in 2020 have declared a state of emergency due to COVID-19. This has allowed the SBA to provide EIDL. As part of the CARES act in 2020, there was funding to provide EIDL and a grant up to $10,000 for any EIDL application, regardless of whether they qualified for a loan. The grant awards $1000 per employee. Many sole proprietors received $1000 as they counted as one employee. There is now additional funding for EIDL grant in 2021.
I posted about this last year and many Uber drivers and Lyft drivers who applied received $1000. This was free money. You do not need to pay it back and does not count as part of your income. Below are my two posts from last year:
Lyft and Uber Drivers Can Get a Federal $10000 Emergency Grant
Status Update on the SBA EIDL Emergency Grant for Independent Contractors
The latest stimulus bill that was passed in December 2020 provides for additional funding for the EIDL program, along with more funding for the EIDL grant in 2021. Small businesses who did not receive the full $10,000 in 2020 are eligible for another grant up to $10,000 for both grants. However, there are more restrictions this time:
- Located in a low-income community (more on this below), and
- Have suffered an economic loss greater than 30%, and
- Employ not more than 300 employees
In addition, the business must qualify as an eligible entity as defined in the CARES Act:
- A small business, cooperative, ESOP Tribal concern, with fewer than 300 employees (down from 500 employees from 2020)
- An individual who operates under as a sole proprietorship, with or without employees, or as an independent contractor; or
- A private non-profit or small agricultural cooperative.
- The business must have been in operation by January 31, 2020
- The business must be directly affected by COVID-19
The biggest change to EIDL grant in 2021 is that you need to be in a low-income community. For most sole proprietors, your address where you list on your taxes is your location. A low income community is defined in Section 45D(e) of the Internal Revenue Code of 7 1986 as follows:
“The term “low-income community” means any population census tract if the poverty rate for such tract is at least 20 percent, or in the case of a tract not located within a metropolitan area, the median family income for such tract does not exceed 80 percent of statewide median family income, or in the case of a tract located within a metropolitan area, the median family income for such tract does not exceed 80 percent of the greater of statewide median family income or the metropolitan area median family income.”
This below post will also help you find out if your address is in a low-income community.
The census department also have an online tool to look up your neighborhood metrics. See the below link:
https://geomap.ffiec.gov/FFIECGeocMap/GeocodeMap1.aspx
Since I live in a metropolitan area and the percentage of families under the poverty line is above 20%, I qualify for the EIDL grant in 2021. There are numerous other ways to qualify as a low income community so check out the above post and the map from the census department.
The percent below the poverty line is above 20% so I qualify.
The other stipulation for the EIDL grant in 2021 is that you need to have a 30% economic loss in any 8 week period between March and December 2020 as compared to before March or in 2019. It is unclear at this moment how the SBA will evaluate this qualifier, but I have multiple 8-week spans where my revenue declined by more than 30%. Most Uber and Lyft drivers can easily find an 8-week period where their income reduced by 30%.
Is this a grant or a loan?
This post is about the EIDL grant in 2021. In order to get the EIDL grant in 2021, you need to apply for the loan. I did not accept the loan last year but kept the grant I received in April. Note that you may be eligible for the grant regardless of if you were approved for the loan or not.
How Do I Apply For The EIDL Grant in 2021?
You can apply for the EIDL grant in 2021 directly at SBA.gov. The SBA will switch to a new portal on Friday, January 15, 2021 and expects the switch to finish by Sunday, January 17, 2021. SBA expects to be able to accept new applications for EIDL grant in 2021 on January 17th but consult the SBA website before applying. If you have previously submitted an application for an EIDL, see below.
What If I Applied Last Year?
If you applied last year for the EIDL, do not submit another application or it will be considered a duplicate. The SBA will email you directly with more information about how to apply for the full EIDL grant in 2021, regardless if you were approved for the loan or not. I asked the SBA about this and below was their reply:
You’ll need to demonstrate more than 30% reduction in revenue during an 8 week period beginning on March 2, 2020 or later. You’ll have to provide documentation to confirm that.
You’ll also need to fill out the 4506-T for your business. https://disasterloan.sba.gov/ela/Documents/Request%20for%20Transcript%20of%20Tax%20Return%20%28IRS%20Form%204506T%29.aspx?pt=Business&ff=true&sp=1
There are further instructions that will be emailed to you in the coming weeks. You will be contacted directly with instructions to determine eligibility and submit documentation. The procedures for this process are not yet in place – the agency as a whole is still working on that.
Do NOT submit a new / additional / duplicate application.
Note that those who applied last year and did not get the full $10,000 will be first in line to get additional funding from this new stimulus package.
As you can read from the above email, the process has not been put in place yet to determine eligibility. Check back here to find updates on the process as new information becomes available to me or on the SBA website.
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