We're In This Together / Government Assistance / Economic Injury Disaster Loan Program (EIDL)

As of June 11, the SBA has administered in excess of $90.9 billion in EIDL funds.

 

Economic Injury Disaster Loan/Grant UPDATE (EIDL)

On April 6, early EIDL applicants received emails that contained new information about this government assistance program. The SBA confirmed earlier rumors that the grant portion will be paid out at $1,000 per employee up to a maximum of $10,000.  Sole proprietors and single-owner small businesses that have no employees but themselves have been receiving $1000 since the email was sent out.

 

According to the email, no grants (advances) were to be distributed until a business moves forward and submits a FULL EIDL application. Update – the email that went out on April 6th appears to have been incorrect. Since then, small businesses have been receiving the grant/advance into their bank account with no correspondence received from the SBA first. After receiving the grant, the business, if eligible, has received an email from the SBA inviting them to create an account on the SBA loan portal. Once an account is created, the business can find out how much of the full EIDL loan they are eligible for and apply if the loan is needed.

 

EIDL Loan Application

The SBA is currently accepting new EIDL loan applications.

Loan Application

The grant/advance does not have to be repaid. However, if you receive the EIDL advance and a PPP loan, the amount of the EIDL advance will reduce the amount of your PPP loan forgiveness.

The full EIDL loan is NOT forgivable. Here are the details of the loan included in the email –

  • Up to $2 million
  • 3.75% interest rate for businesses
  • Can be paid back in up to 30 years
  • The first payment is deferred for 1 year

Other details previously released –

  • You can borrow up to $200,000 without a personal guarantee
  • Loans of $25,000 or less require no collateral.
  • For loans above $25,000, general security interest in business assets can be used.
  • This loan does require credit underwriting.
  • Interest begins to accrue when the loan is disbursed
What is the Economic Injury Disaster Loan Program (EIDL)?

The CARES Act expanded the Small Business Association’s (SBA) existing EIDL program by relaxing eligibility requirements under the program and increasing the funding through December 31, 2020. Under this program the SBA offers EIDL Loans of up to $2 million for small businesses to recover from temporary losses following a state-wide economic injury declaration to include losses experienced from the COVID-19 outbreak. The expansion under this law was made to include sole proprietorships, with or without employees, and independent contractors.

 

Is my business eligible?

You are eligible if your business was in existence on and prior to January 31, 2020, you are a sole proprietorship, with or without employees, an independent contractor, self-employed individuals, or a business with no more than 500 employees.

 

What can I apply this loan towards?
  • Fixed debts (rent, etc.)
  • Payroll
  • Accounts payable
  • Some bills that could have been paid had the disaster not occurred.

 

Ineligible uses of the loan –
  • Dividends and bonuses
  • Disbursements to owners, unless for performance of services
  • Repayment of stockholder/principal loans (with exceptions)
  • Expansion of facilities or acquisition of fixed assets
  • Repair or replacement of physical damages
  • Refinancing long term debt
  • Paying down (including regular installment payments) or paying off loans provided, or owned by another Federal agency (including SBA) or a Small Business Investment Company
  • Payment of any part of a direct Federal debt, (including SBA loans) except IRS obligations
  • Relocation

 

Information from SBA on EIDL Program

*Be sure to review your loan documents thoroughly and have your attorney review before signing.

 

Is there a requirement to demonstrate that you are unable to obtain credit elsewhere?

No, the CARES Act waives that requirement.

 

What is the SBA’s Basis for Approval?

The SBA must make the determination that the applicant has the ability to repay the loan. In addition to this, the SBA can approve a loan based solely on the credit score of the applicant or other means for determining the ability to repay the loan.