COVID stimulus programs are winding down. One of the last to end would be the Economic Injury Disaster Loan (EIDL) program, which concludes on December 31, 2022.
As the EIDL’s name might imply, the program involves small businesses getting a loan. In general, loans must be paid off over time with interest, and the EIDL loan is no different.
Grants, however, are another story. Below we’ll undergo which COVID stimulus programs have to be repaid and which ones don't.
Are The EIDL Loans & Grants Forgivable?
There are two parts to the present EIDL program: loans and grants. The borrowed funds — which may be as high as $2 million — is usually not forgivable. You’ll have to repay an EIDL loan. Grants don't need to be forgiven or repaid. Here’s a fast breakdown of which stimulus programs are forgivable.
Usually, when individuals imagine a COVID stimulus program with a forgiveness process, they’re considering the Paycheck Protection Program (PPP). The PPP program is designed for staff retention; therefore, businesses have to meet numerous prerequisites before their loan is forgiven.
EIDL Loan Forgiveness
EIDL loans cannot be forgiven.
EIDL loans will have a deferment period, however. Loans made during the 2022 twelve months possess a 24-month deferment window from the date from the note. For EIDL loans made during 2022, the deferment window is 18 months from the date from the note. You don't need to make payments in that period.
Targeted EIDL Advance Forgiveness Rules
If you successfully qualified for any Targeted EIDL Advance and get the funds, there is no need to apply for forgiveness. As a grant, the Targeted EIDL Advance does not need to be repaid. Additionally, your Targeted EIDL Advance is not considered taxable income.
However, you have to spend your grant on approved expenditures or risk violating the terms of the grant, then you could be inspired to repay. Grant money may be spent on:
- Working capital and operating expenses that could have been met had the disaster not occurred
- Health care benefits
- Rent
- Utilities
- Fixed-debt payments
Supplemental Targeted Advance Forgiveness Rules
The Supplemental Targeted Advance grants especially hard-hit businesses in low-income areas an additional $5,000 in grant money. Like the regular Targeted Advance, it’s a grant and does not need to be repaid so long as you do with the money qualified expenses. These are the just like for the Targeted EIDL Advance.
You do not need to make an application for forgiveness.
Shuttered Venue Operators Grant Forgiveness Rules
The Shuttered Venue Operators Grant (SVOG) is a grant introduced in 2022 to assist live venues, movie theaters, museums, and talent agents who suffered economic losses because of the pandemic and lockdowns.
As grants, SVOGs don't have to be repaid, nor have they got a forgiveness process. You will, however, need to abide by the the grant to avert being inspired to repay it. SVOG funds can be spent on:
- Payroll
- Rent
- Utilities
- PPE, barriers, along with other COVID-related protections
- Debt payments on debts incurred prior to February 15, 2022
- Payments to independent contractors as much as $100K per contractor
- Maintenance
- State and local taxes and fees
- Administrative costs
- Operating leases in effect as of February 15, 2022
- Necessary insurance payments
- Capital expenditures for shows so long as this isn’t the main utilization of funds
Restaurant Revitalization Fund Forgiveness Rules
The Restaurant Revitalization Fund (RRF) is really a grant introduced in 2022 to aid restaurants negatively impacted by COVID-19 and the resulting restrictions imposed to try to control its spread.
As a grant, the RRF need not be repaid, nor do recipients have to make an application for forgiveness. Just like another grants we’ve covered, you will want to make sure you spend your funds on approved expenses to avert being inspired to pay back your grant. Approved expenses include:
- Payroll
- Business mortgage obligations
- Business rent obligations (although not for that prepayment of rent)
- Business debt service (but not for the prepayment of principal or interest)
- Utility payments
- Maintenance expenses
- Construction of outside seating
- Supplies, including protective gear and cleaning materials
- Food and beverage expenses, including raw materials
- Supplier costs
- Operating expenses
How To try to get EIDL Forgiveness
There isn't any need to apply for EIDL forgiveness. Remember, EIDL loans cannot for forgiven. EIDL grants are automatically forgiven, provided you apply the funds on approved expenses.
EIDL Loan Repayment Terms
Because you do have to repay EIDL loans, you might be wondering what repayment terms you might receive. With regard to EIDL loans, the SBA states that the rate of interest will not exceed 4% each year (the current rate is 3.75%), and the term length will not exceed 30 years. Your exact repayment term length will depend on what you can do to settle your loan.
One of the main benefits of EIDL loans is their long deferment period, during which you don’t have to make any payments. Once we touched on earlier, loans made throughout the 2022 calendar year have a 24-month deferment window from the date from the note. Borrowers who got their loans in 2022 may have an 18-month deferment.
EIDL Forgiveness FAQs
Is EIDL a loan or a grant?
There are both EIDL loans and Targeted EIDL Grants. The former is really a loan; the second is a grant.
Are EIDL loans still available?
EIDL loans is going to be available until December 31, 2022.
How much of an EIDL loan is forgivable?
No portion of an EIDL loan is forgivable. EIDL grants, however, don't need to be repaid.
Do I have to pay taxes around the Targeted EIDL Advance?
No, funds received with the Targeted EIDL Advance aren't taxable.
