Articles Posted in Surviving and Thriving Through COVID-19

The Economic Injury Disaster Loan (EIDL) program is a loan and grant program offered by the U.S. Small Business Administration (SBA) to help small businesses and non-profit organizations recover from economic injury caused by a declared disaster. The EIDL program provides two types of financial assistance: EIDL loans and EIDL grants.

1. EIDL Loan: The EIDL loan is a long-term, low-interest loan designed to help small businesses and non-profit organizations recover from economic injury caused by a declared disaster. The loan amount is based on the economic injury suffered, and can be up to $2 million. The loan must be repaid, with interest and fees, over a maximum of 30 years.
2. EIDL Grant: The EIDL grant is a grant that does not have to be repaid, and is designed to provide immediate relief to small businesses and non-profit organizations suffering economic injury from a declared disaster. The grant amount is up to $10,000 and is meant to help cover basic needs such as rent, mortgage, and utilities, while the business is waiting for the loan application to be processed.

Let’s be frank.  If you have more than $10,000 unsecured debt, it may be better to use any stimulus monies to discharge all of your unsecured debt by filing a chapter 7 bankruptcy, rather than simply put it toward the interest that continues to accrue.

If this is your best option, there is good news.  The new stimulus bill provides that this money will not be considered property of the bankruptcy, nor will it count against your income.

The most recent stimulus payments under the new stimulus bill (Consolidated Appropriation Act) are not property of the estate under temporary Code § 541(b)(11) enacted under the CCA.  They are also excluded from CMI under the original CARES Act, at least until March 27, 2021.  After March 27, until Dec. 27, 2021 when the CCA provisions sunset, you might argue that they are not disposable income under a separate amendment to the Internal Revenue Code enacted under the CCA (adds new 26 U.S.C. § 6428A) by providing that “no applicable payment shall be subject to, execution, levy, attachment, garnishment, or other legal process, or the operation of any bankruptcy or insolvency law.”