In most places around the globe, the new SARS-CoV-2 pandemic has wreaked havoc in amounts that the world hasn’t seen since centuries ago. With more than 1.4 million confirmed cases and at least 85,000+ deaths as of 8th April 2020, the health crisis has got the whole world in panic mode. Especially in areas like the US where the number of confirmed cases is enormous, various sectors of the economy have been hit hard, and small businesses have not been spared by the socio-economic effects of this deadly virus. Business has gone down greatly as major cities have been forced to go on lockdown and employees are forced to work from home where possible. In this situation, many businesses are struggling to foot their bills, let alone stay afloat, and it gets worse considering that researchers and health experts predict that it might take months before the situation gets better.
Luckily, small businesses in the US can breathe a sigh of relief (barely) as far as financials are concerned. This is after President Donald Trump signed into law, the CARES Act, which provides Economic Injury Disaster Loans (EIDL) grants as well as forgivable loans for businesses with less 500 employees. This is provided under the paycheck protection program (PPP). Such business, under this law, may qualify for up to $10,000 in EIDL grants under this law. But the big question is, how exactly do you go about applying for the grant? In this post, we highlight the major steps to Applying for an EIDL Grant (COVID-19).
Know the Qualification Criteria
The first step you’ll need to take is ensuring you meet the eligibility criteria before applying for an EIDL grant amid COVID-19. To qualify for a grant, your business has to have its operations within the US or uses American products, labor, or materials. You may also qualify if your business makes a significant contribution toward the American economy through tax payment. This means that getting your tax record updated can increase your chances of qualifying for the grant. If you’re a bit behind with years of unfiled taxes,Long Island Tax Attorney, Peter Alizio, says that there’s always a solution around it, including paying any fees and penalties owed. Also, the business needs to be organized for profit, independently owned, not dormant, and have less than 500 employees to be eligible. In some instances, non-profits, independent contractors, and cooperatives may also qualify.
Gather Your Documentation
Once you meet the eligibility criteria, the next important step is to compile the necessary documentation to avoid delays and increase your chances of approval. Some documents you’ll need to get in order include:
- Tax return documents/records: 3 years, personal and business tax returns.
- The latest (2019) tax returns or end of year financial statements
- Personal financial statements for persons who own more than 20% stakes in a company
- Business debts schedule
- 7 months’ operating expenses (March-September 2019)
Apply For an EID First
Basically, EIDL grants are normally funded by the government, but it often takes quite long to process in most instances. Thankfully, the SBA may advance you with the $10,000 grant sooner, but only if you apply for an EID first, whose maximum loanable amount is $2M at a 3.75% interest rate. This means that the other most important step is to apply for an EIDL with the Small Business Administration (SBA) so you can request the advance. According to the SBA, the COVID-19-related EID application process is swift and you could be done in as little as 2 hours.
Once you get approved for the EIDL, you can request the grant advance from SBA and you’re good to go. This move by the American government is for sure going to help businesses to avoid shutting down in the middle of the current coronavirus crisis. Entrepreneurs with knowledge about these grants can take advantage and apply as soon as they can because the funds might as well be limited.