December 11, 2020

SBA Scales EIDL Advance Using Pre-Pandemic Number of Employees

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As we’ve reported, the Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated billions of dollars to provide eligible applicants an advance on an SBA Economic Injury Disaster Loan (EIDL)—a grant never needing to be repaid even if one’s loan application is rejected in the end.

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It’s been clear from the beginning that the grant is not a flat $10,000 to all applicants; rather, the applicant checks the box on the SBA application which indicates their request for up to $10,000 in advance. Until very recently, though, no one knew with any certainty how the SBA would determine how the amount of the advance would ultimately be granted per applicant.

On April 4, 2020, U.S. Senator Brian Schatz of Hawaii provided an update regarding EIDLs, indicating that:

The law provides that applicants can request up to $10,000; however, because of high demand, the SBA has decided to scale the advance and will provide $1,000 per employee for up to ten employees.  For example, an applicant with two employees would get $2,000, an applicant with ten employees would get $10,000, and an applicant with more than ten employees would still get $10,000. ¹

And shortly thereafter, on April 6, 2020, the U.S. Small Business Administration’s Massachusetts District Office issued a bulletin also indicating that “EIDL Loan advances will start to be distributed this week.  $1000 per employee up to $10,000 max.” ²

On April 14, 2020, the SBA issued an update further clarifying that:

To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.

Editors Note

Unless guidance to the contrary is issued, we believe that it is reasonable to assume that, in keeping with the spirit of the program, ³ self-employed individuals, sole-proprietors, and independent contractors will be eligible to receive $1,000 in advance as a “1 employee” business.

This guidance is helpful for business owners questioning how much of an EIDL advance they’re eligible to receive. But as with most of the relief programs, the funding for these programs may not last long. So if you have questions about applying or forgiveness, you can contact our team.


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