The Economic Injury Disaster Loan (EIDL) is a component of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Emergency Advance Grant
When funds were available, businesses could qualify for a forgivable Emergency Advance Grant of up to $10,000 within three business days. This grant doesn’t need to be repaid, as long as its used for debt that can’t be repaid due to COVID-19, materials, paid sick leave, and payroll.
If the advance program is extended, we will provide updates.
What Else Can I Do To Help My Business?
Key Features of the EIDL
If your business is in a declared disaster area, you can pursue an Economic Injury Disaster Loan from the SBA. Unlike the EIDL advance, this financing is not forgivable.
- Qualification Requirements:
Most U.S. Small Businesses with 500 employees or less qualify for the EIDL. In addition, most individuals who operate under a sole proprietorship, with or without employees, or as an independent contractor. During the application process, the SBA will run a credit check.
Certain industries will not be eligible, these include pornography related businesses, farms, and gambling establishments. In addition, businesses where an owner with 50%+ ownership and are more than 60 days delinquent on child support.
Businesses that were established on January 31st, 2020 or before are eligible for this loan.
- Loan Amount & Terms:
You can receive up to $2 Million with a maximum term of 30 years.
- Interest Rates & Fees:
The interest rate is 3.75% for small businesses, while the interest rate for non-profits is 2.75%. There is no application fee.
- Time to Funding:
Per current SBA guidance, you can receive this loan within 2 to 3 weeks of applying.
- Collateral Requirements:
Collateral is not required for loans of $25,000 or less. For loans exceeding $25,000, collateral is a blanket UCC lien against the assets of the business. The SBA does not decline loans for lack of collateral.
- Personal Guarantee Requirements:
There are no personal guarantees required for loans up to $200,000. If your loan exceeds this amount, a personal guarantee is required for anyone that owns more than 20% of the business, managing members of LLCs, and managing partners of LPs.
- Use of Funds:
This financing can be used to pay business expenses such as fixed debts, payroll, accounts payable, rent, utilities, and other bills.
- How to Apply:
Apply directly through SBA website.
- Deadline to Apply:
Loans are available through December 31st, 2020, but funds are limited so time is of the essence.
- Loan Deferment Options:
If you receive this loan, it can be deferred for one year after loan origination. In addition, recipients can prepay without penalty at any time.