On July 11, 2020, the U.S. Small Business Administration (SBA) announced the conclusion of the Economic Injury Disaster Loan (EIDL) Advance program, which provided a total of $20 billion in emergency funding. According to information provided by the SBA, the funds assisted nearly six million small businesses employing 30.5 million people.
Lawmakers envisioned the program, an enhancement to the existing EIDL program, as a way to get fast cash to struggling entrepreneurs. The EIDL Advance program, created by the CARES Act, promised to give emergency grants to small businesses within three days of their application being filed, to provide an interim source of funds ($1,000 per employee up to a maximum of $10,000) while awaiting a decision on their loan applications.
The EIDL Advance grants did not have to be repaid, even if an application for an EIDL loan was ultimately denied. Unfortunately, the grants were plagued by long delays and changing rules that frustrated entrepreneurs. At the end of the day, the administrative challenge of moving funds as quickly as intended proved to be a major hurdle in this program with many business owner applicants ended up waiting weeks for the monies.
The SBA noted that applications for EIDL loans will still be processed even though the Advance grants have ended. The loan portion of the EIDL program, which was reopened on June 15, 2020, continues to have funds available. Borrowers can apply online for these loans.
According to SBA data, the average EIDL loan requested was $200,000 but, ultimately, the loans final loans were well below the requested amounts, as demand for the funds was exceedingly high and the federal funding level was simply too low to meet this demand. It is expected that further stimulus programs will be enacted as summer progresses, but at the current time there is no information as to whether the EIDL program will be reinstated with additional funding.
Grossman Yanak & Ford LLP continues to monitor developments daily and will provide updates as new developments arise. In the interim, should you have questions or comments, please contact Bob Grossman or Don Johnston at 412-338-9300.