The Economic Injury Disaster Loan (EIDL) is a component of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. If your business is in a declared disaster area due to COVID-19, you can pursue an EIDL.
Emergency Advance Grant
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.
- 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.
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.
However, you can, apply for an Emergency Advance Grant of up to $10,000 (forgivable). This financing could be in your account within 3 business days of application. It doesn’t need to be repaid, provided you use it for debt that can’t be repaid due to COVID-19, materials, paid sick leave, and payroll.
- 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:
You can apply directly through the SBA by clicking here.
- 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.