Economic Injury Disaster Loans (EIDL)
Guide for Small Businesses
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, allocating $2 trillion in federal relief funding for individuals and small businesses hurt by COVID-19.
From that total, $10 billion has been designated for Economic Injury Disaster Loans (EIDLs) through the Small Business Administration (SBA).
Is the EIDL only available to agricultural businesses?
As of June 15, 2020 the EIDL program is again accepting grant and loan applications from businesses in all industries (including the agricultural industry).
For a period of time, the EIDL program was only accepting loan applications from agricultural businesses since those businesses were ineligible in the past and because of high demand. That is no longer the case.
How does it work?
- The application is open to businesses that were operating before January 31, 2020.
- Registration ends December 31, 2020.
- Simply apply online to see if you qualify and how much you can qualify for.
Where else can I get funding?
You can also apply for funding through the Paycheck Protection Program (PPP) - also part of the CARES Act where you can borrow up to 2.5x average monthly payroll costs.
For more info on the PPP, click here.
Is my business eligible?
You can qualify for an EIDL if your business can prove to have been affected by the coronavirus pandemic, is located in the USA and is classified as a “small business” as defined by the SBA, that is:
- Businesses or ESOPs with up to 500 employees
- Nonprofit organizations
- Eligible independent contractors
- Sole proprietors
- Tribal businesses
Usually, you’d need to provide collateral, but due to the Coronavirus crisis, the SBA is waiving that requirement for now. Keep in mind that this is still a loan, therefore, you’ll still need a relatively good credit score to prove that you can repay the funds.
What can the funds be used for?
The EIDL was designed to help your business get back on track until normal business operations continue once again. The funds must be used to pay for existing business costs such as business debts, make payroll, and other bills that you could have paid had the coronavirus outbreak (disaster) not occurred.
Note that your EIDL cannot be used to replace lost revenue, refinance debt, or pay back loans.
What are the interest rates?
The interest rates of the coronavirus EIDL is 3.75% for businesses and 2.75% for non-profits.
Moreover, these disaster loans offer four months of payment deferral automatically that begins from the date of the note.
Which businesses are not eligible?
Businesses that don’t qualify for the SBA coronavirus business loan include:
- agricultural businesses
- adult entertainment
- religious organizations
- some charitable organizations
- gambling businesses
- government entities
- businesses that are owned at least 20% by the People's Republic of China or the Special Administrative Region of Hong Kong
- businesses that include a board member who is a resident of the People's Republic of China
- businesses that received a shuttered venue operator grant
How long will the loan application take?
According to the SBA’s estimate, the application process should take just over 2 hours to complete.
Top tip: Make sure that you submit a complete application with no mistakes, or information missing. Submitting an incomplete application will result in falling back in the long queue of applications.
How quickly can I get the funds?
For businesses in need of immediate cash, eligible small businesses will be able to access an advance of up to $10,000 within 3 days of applying! You won’t be required to repay that advance if denied a loan - making this a great opportunity for many businesses.
You should receive a decision within 21 days (if you provided all of your information accurately that is). You’ll then be asked to review your loan amount and terms and sign the required documents. Once signed, you should get your funds from the SBA via direct deposit within 3-5 business days.
How much money can I borrow?
You can request a loan amount up to $2 million to support your business through this economic crisis.
Where does the money come from?
Unlike typical SBA loans where funding comes from a bank, capital from an EIDL comes directly from the US Treasury.
Do I need a personal guarantee?
No personal guarantee needed for EIDLs of less than $200,000.