Today SBA announced they have resumed processing EIDL applications that were submitted before the portal stopped accepting new applications on April 15, all of which will be processed on a first-come, first-served basis. Additionally, SBA will begin accepting new Economic Injury Disaster Loan (EIDL) and EIDL Advance applications on a limited basis only. At this time, only agricultural business applications will be accepted due to limitations in funding availability and the unprecedented submission of applications already received. Attached you will find some recent talkers issued by SBA and below is some additional information on the program.
Economic Injury Disaster Loan (EIDL) Overview
EIDLs provide eligible small businesses and nonprofit organizations up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred. Loan proceeds can only be used for working capital necessary to enable the business or organization to alleviate the specific economic injury and resume normal operations.
- EIDL funds are intended to cover payroll and other operating expenses that the business could have otherwise met in a non-disaster economy.
- Funds cannot be used for refinancing, making loan payments on other federal debts, to repair physical damages, to pay IRS tax penalties or to pay out dividends.
- Interest rates for EIDLs are statutorily set at 4% per annum, but COVID-relate EIDL rates have typically been around 3.75% for companies and 2.75% for nonprofits, and can have maturities up to 30 years.
- Principal and interest payments of EIDLs can be deferred for up to one year.
- Collateral is generally required for loans over $25,000 if it is available, though SBA will not decline loans for a lack of collateral.
- While loan amounts may range up to $2 million, specific loans depend upon the amount of economic injury that a business has suffered. This amount is determined by the SBA on a case-by-case basis after businesses apply.
EIDL Grants & Advances
As authorized by the CARES Act, emergency EIDL grants are available within three days of submitting an EIDL application to the SBA. Grants can be used by small businesses for a number of purposes, including providing paid sick leave, payroll, meeting production costs, paying rent or mortgages on business spaces and anything else to help with the continuity of the business. Businesses that use these funds for permissible COVID-19 related costs will see the advance become a grant. Once this happens, the business will no longer need to pay back the advance they received. While total grant/advances are capped at $10,000, SBA has further restricted grants/advances to a limit of $1,000 per employee.
How to Apply
Applications for EIDL must be submitted directly through the SBA website. More information about the program is available here and the application can be found here. Please note, each eligible applicant will be expected to compile and enter basic information about their business, such as operating expenses, revenue, business names, contact information and employee information. SBA is relying upon a self-certification process contained within the application, which typically takes around two hours to complete. During this process, applicants will also need to note whether or not they’d like to receive the EIDL grant/advance. The SBA typically takes 18 to 21 days to process the loan and then two to five days to disburse the funds.