Fix Announced for Reimbursement of EIDL Advance Grant Funds Deducted from PPP Loan Forgiveness
On February 8, 2021, the Small Business Administration (SBA) finally answered a lingering question created by the Consolidated Appropriations Act (CAA).
Many small business owners who received Advance Grants of COVID-19 Economic Injury Disaster Loans (EIDL) would go on to reduce their Paycheck Protection Program (PPP) loan forgiveness deduction by the amount of the Advance Grant, as was IRS policy at the time. But the CAA changed the law to small business owners to benefit from 2020’s EIDL Advance Grants as well as 100% PPP loan forgiveness.
This created a question: what about the small business owners who had already applied for PPP loan forgiveness, and reduced their forgiveness by the amount they had received from the EIDL Advance Grant?
After six weeks of uncertainty, the SBA has issued guidance on the issue. They will now work through lenders to reimburse owners with amounts equal to the EIDL Advance Grant reduction, as well as any interest accrued up to the date that the reimbursement is received. Reimbursements started on February 9, 2021 and will continue through February 19, 2021.
Borrowers and lenders do not need to request the return of their funds, it will happen automatically as SBA will identify loans where the Advance Grant amount was deducted. Lenders will inform borrowers of how this affects their remaining payments on their PPP loan. If the amount exceeds the remaining principal on the PPP loan, then the lender will remit the excess amount of money, including accrued interest, to the borrower.
You can read the SDA’s full statement on EIDL Advance Grant remittance here.