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SBA changes grant computation for Economic Injury Disaster Loans

Grants cap remains at $10,000, dispersed at $1000 per employee

April 15, 2020

By Jennifer Garvin

Washington — The ADA has received updated information from the Small Business Administration regarding grant advances on Economic Injury Disaster Loans during the COVID-19 pandemic.

In an April 13 email to applicants, the agency said, “to ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of [the advance] will be determined by the number of [an owner’s] pre-disaster (i.e., as of Jan. 31, 2020) employees” and that SBA will “provide $1,000 per employee up to a maximum of $10,000.”

This response is an update to information originally announced in the CARES Act, which stated that small business owners could apply to receive an advance on an Economic Injury Disaster Loan of no more than $10,000. The CARES Act, which was signed into law March 27, also said the Small Business Administration “must distribute” these funds “within three days” and the advances would be awarded “on a first come, first served basis until the $10 billion fund is exhausted, and applicants would not have to repay the money even if they are denied the loan.” SBA guidance had originally indicated that the grants would be based on the credit score of the applicant.

Also in the April 13 email to applicants, the SBA said small business owners may be eligible for another loan program from the CARES Act, the Paycheck Protection Program.

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep or rehire their workers on the payroll. This loan is subject to forgiveness if the borrower adheres to certain stipulations. The SBA noted that Paycheck Protection Program loans are only available until June 30. The ADA has recommended that dental practices “seriously consider” applying for a Paycheck Protection Program loan because these “loans have greater flexibility and applicability," according to an ADA fact sheet on the subject.

The ADA continues to work with the Small Business Administration to help dental practice owners impacted by the COVID-19 pandemic. Later this week, the Organized Dentistry Coalition and state dental associations and societies — led by the ADA — will be asking Congress to provide additional funding and flexibility for these loan and grant programs. The coalition is also asking that lawmakers rescind SBA’s decision to limit the Economic Injury Disaster Loan advances to $1,000 per employee since it doesn’t take into account the differences in compensation. The organizations also told Congress that most small businesses were not aware of this limit when applying.

All of the ADA’s Small Business Administration resources can be found on the ADA Center for Professional Success’ website.

For the latest updates about issues surrounding COVID-19, visit ADA.org/virus.