As part of the SBA’s Economic Injury Disaster Loan (EIDL) program, small businesses could apply for an EIDL grant of up to $10,000 that need no repayment. The grant is back with the second round of stimulus but with stricter eligibility.
This piece contains all the information you need to know about the SBA grant and a detailed guide on how to apply for the grant.
About SBA Grant
The United States Small Business Administration (SBA) was founded in 1953 as an independent agency of the federal government to promote, advise, support, and protect the interests of small businesses in order to maintain the free competitive entrepreneurship and the general economy of our nation.
Although the SBA has grown and evolved over the years since its inception, its ultimate mission remains the same. The SBA helps Americans start, build, and grow businesses.
Highlights of the SBA Grant Program
The Small Business Innovation Research Program (SBIR) is a highly competitive program. It encourages small businesses to explore their technological potential and provides the incentive to take advantage of its commercialization.
The involvement of skilled small businesses in the country’s R&D arena fosters high-tech innovation and gives the United States an entrepreneurial spirit as it addresses its specific research and development needs.
SBIR focuses on the entrepreneurial sector, which is where most innovations and innovators thrive. However, the risks and costs of serious R&D efforts are often beyond the reach of many small businesses. By making a percentage of federal R&D funding available to small businesses, SBIR protects the small business and enables it to compete at the same level as larger companies.
SBIR funds the critical start-up and development phases and drives the commercialization of the technology, product or service, which in turn drives the US economy.
SBA Grant 10000
As a background, the CARES Act passed on March 27, 2020, provided for a grant (or advance payment) for those who applied for an EIDL loan, up to a maximum of $10,000. The SBA later determined that these grants come at a cost of $1,000 per employee.
In addition, the funds available for grants were exhausted before all eligible companies received them. The Economic Aid Act, passed December 27, 2020, provides funding for targeted EIDL grants so some of these business owners can receive the full $10,000 grant.
The American rescue plan, signed on March 11, 2021, provides additional funding of $10 billion for these grants, as well as an additional $5 billion to fund additional grants of $5,000 for companies with ten or fewer employees before who have suffered an economic impact of at least 50 percent.
How do I Demonstrate economic damage?
The economic loss is defined as “the amount by which the gross income of the company concerned during an 8-week period between March 2, 2020, and December 17, 2021, compared to a comparable 8-week period immediately prior to the 2 March 2020. “The SBA will develop a formula for seasonal businesses.
To apply for this grant and prove your eligibility, ensure you organize your trade tax documents and keep them up to date.
According to the SBA, “Applicants who meet the low-income community criteria are asked to provide gross monthly income for the most recent month (any form of combined monthly income, such as income or salaries) for January 2019 to allow for the reduction.
You can also submit an IRS Form 4506-T for the SBA to request tax information on behalf of applicants. The tax review process and requirements for companies in US territories may differ. “
The SBA recommends that you fill out your tax return as soon as possible. You need to submit your company’s gross monthly earnings for each month from January 2019 to the last month. This information is used to determine if your company meets the requirement to reduce sales by more than 30% over a period of 8 weeks from March 2nd, 2020.
EIDL SBA Grant
The SBA offers companies the opportunity to receive the subsidy even if they have already received a subsidy.
In 2020, the EIDL grant was capped at $1,000 per employee, up to a maximum of $10,000 per company.
In 2021, eligible companies that received a sub-grant of less than $10,000 can apply for the difference. So, if a company received a $2,000 grant with its EIDL but was eligible for the full $10,000 it can now apply for the remaining $8,000.
Similarly, companies that failed to receive a grant due to a lack of EIDL funding can now apply for the full $10,000.
SEE ALSO: EIDL Grant: Best Guide to Apply and All You Need
SBA Grant Application 2023
If you’ve suffered significant economic damage and are based in one of the following types of businesses in a declared disaster area, you may qualify for an SBA Economic Injury Disaster Loan (EIDL):
- Small business
- Small agricultural cooperative
- Most private nonprofits
Eligibility
- A significant economic loss means that the company cannot meet its obligations and cannot pay its normal and necessary operating costs.
- EIDL provides the working capital needed to help small businesses struck by a disaster survive until normal operations resume.
- EIDL support is only available to small businesses if the SBA determines they are not getting credit elsewhere.
SBA can allocate up to $2 million to meet financial obligations and operating expenses that could have been met without the disaster. The loan amount is based on your actual economic loss and the financial needs of your company, regardless of whether the company has suffered material damage. A company can qualify for both an EIDL and a physical disaster loan.
The maximum combined loan amount is $2 million. A separate SBA disaster relief program known as Business Physical Disaster Loans covers property damage.
Use of the proceeds
- Working capital and normal costs
- Example: Continuation of sick pay, rent, ancillary costs, and fixed debts.
- conditions
- The interest will not exceed 4%
Maturity
- Up to 30 years, the term depends on the ability to repay the loan.
- No fine or prepayment costs
Collateral requirements
- Required for loans over $25,000
- Real estate is the preferred collateral. Loans of $200,000 or less do not require the business owner to use their primary residence as collateral if the owner wants to have other assets of equal quality and value equal to or greater than the loan amount.
How to Apply for SBA Grant
- Apply online for an SBA disaster assistance loan. SBA will send an inspector to estimate the cost of damage, once you completed and submit your application.
- Complete, sign, and date IRS Form 4506-T with your application, giving permission for the IRS to provide SBA your tax return information.
Can I reapply if I received an EIDL Grant of less than $10,000?
Here too, the SBA will contact you by email. Do not fill out a new EIDL application if you have already submitted an application. Only a duplicate request is created.
If you have already applied for an EIDL loan or grant, the SBA will contact you directly via email for more information on how to apply for the full grant if you are eligible.
You have to prove the 30% reduction in sales. The SBA advises that all applicants may be required to provide an IRS Form 4506-T in order for the SBA to request tax return information on behalf of the applicant.
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