The EIDL, or Economic Injury Disaster Loan. The Small Business Administration’s (SBA) disaster loans are the primary form of Federal assistance for the repair and rebuilding of non-farm, private sector disaster losses. The disaster loan program is the only form of SBA assistance not limited to small businesses.
The Economic Injury Disaster Loan Program (EIDL) can provide up to $2 million of financial assistance (actual loan amounts are based on amount of economic injury) to small businesses or private, non-profit organizations that suffer substantial economic injury as a result of the declared disaster, regardless of whether the applicant sustained physical damage.
An EIDL can help you meet necessary financial obligations that your business or private, non-profit organization could have met had the disaster not occurred. It provides relief from economic injury caused directly by the disaster and permits you to maintain a reasonable working capital position during the period affected by the disaster. EIDLs do not replace lost sales or revenue.
To qualify for an EIDL, your business must meet the SBA definition and size standards of a small business, be located in the United States or a U.S. territory, and have suffered working capital losses due to pandemic.
Who is eligible for Economic Injury Disaster Loans?
To be eligible for EIDL assistance, small businesses or private non-profit organizations must have sustained economic injury and be located in a disaster declared county or contiguous county.
What are the loan terms for Economic Injury Disaster Loans?
The SBA can provide up to $2 million in disaster assistance to a business. The $2 million loan cap includes both physical disaster loans and EIDLs. There are no upfront fees or early payment penalties charged by SBA. The repayment term will be determined by your ability to repay the loan.
How do I apply for Economic Injury Disaster Loans?
Apply online for disaster loan assistance at your own convenience through SBA’s secure Disaster Loan Assistance website.
As well, EIDLs are open to nonprofits. Per the SBA, most private nonprofits should qualify for an EIDL. Other businesses qualifying for EIDLs include faith-based organizations and sole proprietors and independent contractors.
Loan Approval Conditions
The following loan approval conditions reflect some relaxing of traditional EIDL stipulations:
- You can borrow up to $200,000 without a personal guarantee.
- First-year tax returns are not required and approval can be based on credit score.
- You do not have to prove you could not get credit elsewhere.
- Loans of $25,000 or less require no collateral. For loans above $25,000, a general security interest in business assets can be used. You must allow the SBA to review your business tax records.
What Type of Business is Eligible for the EIDL Program?
The eligibility requirements for the EIDL are slightly different than those for the PPP and are intended to provide economic support to small businesses to help overcome a temporary loss of revenue resulting from the pandemic; and other than the grant portion described below, does not rely on payroll numbers to calculate the loan amount.
The EIDL Advance
As part of the EIDL an advance of up to $10,000 is available for those who apply for the EIDL. The advance portion of the loan originally was based on the number of employees in your business: $1,000 per employee, up to 10 employees (or $10,000). However, Congress later authorized Targeted EIDL Advances of up to $10,000, with an additional $5000 to certain hardest-hit businesses.
Business Owners Information
Here you will need to indicate whether your business is fully owned by another business. If owned by individuals, you need to provide information on each owner who has a 20% stake in the business or more. Information requested will include:
- Home address
- Phone number
- Social Security number
- Date and place of birth
- Citizenship status
When to Expect Your Funds
The EIDL process takes a minimum of 21 days to complete according to the SBA. Not surprisingly, the actual length of time is on a case-by-case basis, depending on whether there are questions or additional information is required.
Don’t confuse the new Targeted EIDL Advance with the former EIDL Advance, which is no longer available. You cannot apply for the Targeted EIDL Advance. If you qualify, the SBA will contact you.