Q: “It was initially suggested that EIDL recipients would receive an advance in the amount of $1k per employee (to be forgivable), and then the second round of funds, if available, would be distributed (as a loan). I received a lump sum instead of an advance, followed by a loan. Is there any guidance/clarifications to confirm what is considered the advance, and therefore forgivable, and what is considered the loan?”

Authored by Aria Eckersley

The SBA has confirmed that, under EIDL, the amount of the grant is determined by the number of employees an applicant has at $1,000 per employee, capped at a total of $10,000 or $1,000 for self-employed individuals. To be considered for the EIDL Grant, an applicant must indicate that they would like to apply for the EIDL Grant on the application where prompted. 

In the scenario posed in the question, it should be confirmed whether the applicant selected the option to apply for the EIDL Grant, which may explain why a lump sum was provided, rather than an initial advance. These specifics should be confirmed by the borrower after reviewing their original application and after confirming facts with an SBA representative.

The loan advance is not required to be repaid, even if the EIDL application is ultimately rejected. However, the final loan received is subject to the standard loan terms for these EIDL loans (e.g., maturity up to 30 years, interest rate at 3.75%).