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A Revised Grant for Small Businesses: the EIDL Advance

By Jody H. Chesnov CPA | April 16, 2021

The American Rescue Plan Act (ARPA), signed into law on March 11, 2021, revisited and extended the Economic Injury Disaster Loan (EIDL) Advance program.  

If you applied for an EIDL and received an Advance in 2020 that was less than $10,000, you may now have an opportunity to apply for additional funds.  

Here is the EIDL Advance backstory

The EIDL Advance is a $10,000 grant that the SBA pays within 36 hours of your application for an EIDL.  

The idea is to provide band-aid assistance to those suffering a disaster. 

COVID, however, broke the system.  In March/April of 2020, applications for the loan overwhelmed the SBA and the funds available for the EIDL program.  

As a result, the SBA changed the grant: instead of providing a $10,000 grant, they paid $1,000 per employee up to $10,000.  So, if you had 1 employee, you received $1,000, and if you had 5 employees, you received $5,000.  Additionally, by mid-July, the Advance funds were completely depleted, so from mid-July on, no one received an Advance.

Enter the targeted EIDL Advance

The ARPA revisited the EIDL Advance and provided funds for “targeted” increases.  If you received the Advance and received less than the full $10,000, you may be eligible to apply for the difference between the amount you received last year and the $10,000 maximum.  

The SBA has established two priority groups for these targeted grants (subject to the requirements below): 

  • Priority group one is all companies that received an EIDL Advance of less than $10,000. 
  • Priority group two is all companies that applied for but did not receive the Advance because the program was out of money.  

If you applied in 2020 you should receive an email letter from the SBA inviting you to apply for the new program.  You will receive this invitation whether or not you qualify. There will be a simple application, but you will have to meet the targeting criteria to receive the grant.  

These criteria are: 

  1. The business must be located in a low-income community as defined in section 45D(e) of the Internal Revenue Code.  The SBA will map your address to verify that you qualify.  You can find the map and verify for yourself here.

  2. The business must have suffered an economic loss greater than 30 percent over an eight-week period beginning on March 2, 2020, or later, compared to the previous year.  To verify, the SBA will require that you provide the total gross receipts from January 2019 to the current month-to-date.  

    Gross receipts include “all revenue in whatever form received or accrued from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees or commissions, reduced by returns and allowances for the applicant business.” 

  3. The business must have fewer than 300 employees.  Most businesses that applied for the EIDL are eligible except for agricultural businesses (such as farmers and ranchers). 

How to apply and information that you will need  

You should receive an invitation from the SBA to apply.  The invitation will come to the same email address you used to apply for the original EIDL. 

This email will include a link unique to you that will take you to the application form.  Most of the form is simple; it just asks you to confirm your business and confirm that you qualify. 

The only tricky part is a month-by-month statement of gross revenues for 2019 and through this year.  They will also ask you some questions about your 2019 income.  So be prepared with your by-month revenue and your 2019 Federal Tax Return.  The SBA may also ask you for a 4506-T form so that they can access your 2019 tax return directly.

The SBA’s stated goal is to process all requests within 21 days of application. They will communicate through email, so check your email.   

One caveat: there is no appeal process.  If they reject your application, that is it.  So be sure to enter your information correctly and double-check.  

Use and repayment of the EIDL Advance funds

EIDL Advance funds can be used for working capital and normal operating expenses that could have been met if the disaster had not occurred. Those include (but aren’t limited to) continuation of health care benefits, rent, utilities, and fixed-debt payments. 

The advance is a grant so you will not have to repay it.  For this reason, if you think you qualify you should apply.  The worst that can happen is that the SBA rejects your application. 

The EIDL Advance grant is not taxable income and otherwise deductible expenses paid for with the EIDL Grant are deductible.

More information

The SBA has an FAQ document available here.

If you have more questions, concerns, or did not receive the invitation you should contact the SBA’s Customer Service Center at 1-800-659-2955 or by email at TargetedAdvance@sba.gov.

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Jeff Coyle, CPA

Jeff Coyle, CPA, Partner of Rosenberg Chesnov, has been with the firm since 2015. He joined the firm after 20 years of business and accounting experience where he learned the value of accurate reporting, using financial information as a basis for good business decisions and the importance of accounting for management.

He is a diligent financial professional, able to manage the details and turn them into relevant business leading information. He has a strong financial background in construction, technology, consulting services and risk management. He also knows what it takes to create organizations having built teams, grown companies and designed processes for financial analysis and reporting.

His business experience includes:

Creating and preparing financial reporting, budgeting and forecasting.
Planning and preparation of GAAP and other basis financial statements.
Providing insight on financial results and providing advice based on those results.

Jeff also has a long history of helping individuals manage their taxes and plan their finances including:

Income tax planning and strategy.
Filing quarterly and annual taxes.
Audit support.
General financial and planning advice.
Prior to joining the firm in 2015, Jeff was in the private sector where he held senior financial and management positions including Controller and Chief Financial Officer. He has experience across industries, including construction, technology and professional services which gives him a deep understanding of business.

Jeff graduated from Montclair State University, he is a CPA and member of the American Institute of Certified Public Accountants, New York State Society of Certified Public Accountants and New Jersey State Society of Public Accountants.

Jody H. Chesnov, CPA

Jody H. Chesnov, CPA, Managing Partner of Rosenberg Chesnov, has been with the firm since 2004.  After a career of public accounting and general management, Jody knows the value of good financials.  Clarity, decision making, and strategy all start with the facts – Jody has been revealing the facts and turning them into good business results for more than three decades.

He takes a pragmatic approach to accounting, finance and business. His work has supported many companies on their path to growth, including helping them find investors, manage scaling and overcome hurdles.  His experience and passion for business reach beyond accounting and he helps businesses focus on what the numbers mean organizationally, operationally and financially.

He has a particular expertise in early-stage growth companies.  His strengths lie in cutting through the noise to come up with useful, out of the box, solutions that support clients in building their businesses and realizing their larger visions.

Prior to joining the firm in 2004, Jody was in the private sector where he held senior financial and management positions including General Manager, Chief Financial Officer and Controller.  He has experience across industries, which gives him a deep understanding of business.

Jody graduated with a BBA in Accounting from Baruch College, he is a CPA and member of the American Institute of Certified Public Accountants and New York State Society of Certified Public Accountants.

In addition to delivering above and beyond accounting results, Jody is a member of the NYSCPA’s Emerging Tech Entrepreneurial Committee (ETEC), Private Equity and Venture Capital Committee and Family Office Committee.  

He is an angel investor through the Westchester Angels, and has served as an advisor for many startup companies and as a mentor through the Founders Institute.