The $10,000 Emergency Grant from SBA – Fact or Fiction?

Note: This was originally published March 31, 2020. The SBA has ended the emergency grant program.

FACT – The Small Business Administration is providing $10,000 emergency grants as a forgivable loan advance in their streamlined EIDL loan application. Watch the video to learn more! Getting a lot of questions about whether this is real or legit and it is, folks! It’s not a free for all though. You are supposed to use the funds on eligible expenses under an SBA loan. So you need to understand what those are. I review what it is and what counts this in the video and the text of the Bill is below as well. Excerpts from the Bill (also available at… ) SEC. 1110. EMERGENCY EIDL GRANTS. … (e) Emergency Grant.— (1) IN GENERAL.—During the covered period, an entity included for eligibility in subsection (b), including small business concerns, private nonprofit organizations, and small agricultural cooperatives, that applies for a loan under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) in response to COVID–19 may request that the Administrator provide an advance that is, subject to paragraph (3), in the amount requested by such applicant to such applicant within 3 days after the Administrator receives an application from such applicant. (2) VERIFICATION.—Before disbursing amounts under this subsection, the Administrator shall verify that the applicant is an eligible entity by accepting a self-certification from the applicant under penalty of perjury pursuant to section 1746 of title 28 United States Code. (3) AMOUNT.—The amount of an advance provided under this subsection shall be not more than $10,000. (4) USE OF FUNDS.—An advance provided under this subsection may be used to address any allowable purpose for a loan made under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)), including— (A) providing paid sick leave to employees unable to work due to the direct effect of the COVID–19; (B) maintaining payroll to retain employees during business disruptions or substantial slowdowns; (C) meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains; (D) making rent or mortgage payments; and (E) repaying obligations that cannot be met due to revenue losses. (5) REPAYMENT.—An applicant shall not be required to repay any amounts of an advance provided under this subsection, even if subsequently denied a loan under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)).


Hey folks! This is Jess Birken with Birken Law Office, and I am going to talk with you today about the federal emergency grants through the SBA economic injury disaster loan assistance program. I am getting just tons of questions about how this works and what this is. So, in this particular video, I am only going to talk about the $10,000 emergency grant advance that you are able to get. What you’re seeing on my screen is the actual bill, the actual law. There’s been so much misinformation about this that as a lawyer I just decided I would go straight to the actual written law and see what it says. So, I’ve actually pulled up the law and I’ve been reading it. And it is actually true that we can get a $10,000 emergency grant. You can see it’s written right here into the bill that during the covered period, which is at the time of this recording right now and through June 30th, 2020, small businesses, nonprofits and agricultural co-ops that would otherwise qualify for an SBA loan can apply for an economic injury disaster loan. I’m going to, I’m going to start calling that EIDL. okay? Yeah. EIDL, you can submit a streamlined application for an EIDL loan and request an emergency grant in advance of $10,000. See right here it says the amount of the advance provided will not be more than $10,000. So, that is just to verify this is real. This is not a scam. It’s actually written right into the law. And as long as they verify you and your entity as being an eligible entity to apply for the EIDL loan, you are allowed to request the advance. Now, what are you supposed to use the money on? You’re supposed to use the money on any allowable purpose that the SBA loan would cover. Okay. So in this case, that’s probably a lot of things. And they want to specifically call out the fact that you can use it for providing paid sick leave to your employees, maintaining your payroll, right? So paying yourself if you’re self employed, I mean, you know, paying your folks. If you are buying supplies and they’re more expensive and you have increased costs because you have to go somewhere funky to get your materials right now, that’s covered. You can also make your rent or mortgage payments with this money. And I always recommend, you know, having a written rental agreement so that there’s some paper trail if you were ever to be audited for some crazy reason. And then repaying obligations that can’t be met due to revenue losses. So that just means money has not been coming in and we’ve been shoving everything into the line of credit or we’ve been shoving everything onto credit cards you can repay. You can pay down those debts with this money. Okay. Now the big kicker here that everybody is like “this for real?” is the repayment. And right here in the law, it says an applicant shall not be required to repay any amounts of the advance provided under this section, even if they’re denied for the full loan. So you can start the streamlined application, you can complete the streamlined application. If you are a qualifying business, you can request the advance and even if you don’t get the loan, that’s fine. This advance doesn’t need to be repaid. If you do end up getting an EIDL loan and/ or a PPP loan, which I will talk about at a different time, the extent to which the PPP loan is worth has a forgivable aspect. This $10,000 is taken off the top. So if you’re applying for another loan that has a forgiveness component, this $10,000 counts against that money. So that’s just something to be aware of. So I just wanted to take a few minutes to just show you that this is in the actual law. It is real. You don’t need to worry about the streamlined application being a scam or some sort of way to access your bank account information. It is legit and you should feel safe applying for it if you need to. If you have more questions or concerns or just want to know whether you should apply for one of these, please feel free to reach out to me through my website. It’s www.birken-law-backup.local. Also, stay tuned for my next video where I will do a walk through of how to apply as a nonprofit or a for-profit through the streamlined application process.

Related Link:  How-To: Filling Out the SBA $10K Emergency Grant Application

Birken Law Office – Law firm serving nonprofits organizations, and foundations – Birken Law

Birken Law Office – Law firm serving nonprofits organizations, and foundations – Birken Law

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