The Economic Injury Disaster Loan (EIDL) Program was created to help homeowners, renters, private nonprofits, and small businesses that have suffered economic injury as the result of a declared disaster affecting the region in which they reside. The EIDL program provides low-interest loans to help businesses meet financial obligations they are unable to meet as a direct result of the disaster.
In view of the COVID-19 (Coronavirus) pandemic, the Small Business Administration (SBA) has expanded its EIDL Program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
How it Works:
Disaster loans are available only to businesses located in areas affected by a declared disaster. Businesses can apply directly via the SBA website.
The EIDL Program provides working capital loans up to $2 million, open to businesses in all U.S. states, Washington D.C., and territories.
Businesses that are eligible for an EIDL can also apply for an emergency grant of up to $10,000. Applicants are not required to have an approved EIDL to receive an emergency grant. Successful applicants receive funds for this loan advance within three days of their application.
The loan advance or emergency grant will not have to be repaid. However, if you can secure a Paycheck Protection Program (PPP) loan, the emergency grant will be subtracted from the forgiveness amount. Keep in mind that the PPP does not permit borrowers to take out more than one loan for the same purpose from another SBA program.
Who is Eligible:
The following types of businesses that have been impacted by a declared disaster and suffered substantial economic injury are eligible:
- Independent contractors and sole proprietorships, with or without employees.
- Businesses, cooperatives, Employee Stock Ownership Plans (ESOP), and tribal small business concerns with no more than 500 employees.
- Businesses (incl. those with more than 500 employees) that are small under SBA Size Standards.
- Most private non-profit organizations.
Other eligibility requirements include that the business must have been in existence on January 31, 2020 and does not derive more than one-third of its gross annual income from legal gambling activities, is not in the business of lobbying, is not an agricultural enterprise, other than an aquaculture enterprise, agricultural cooperative, or nursery, and is not a government entity.
Rates & Fees:
3.75% for small businesses and 2.75% for nonprofits
Up to 30 years
Loan amounts exceeding $25,000 require collateral
Early repayment fee
How to Apply:
Applying for a COVID-19 Economic Injury Disaster Loan.
To apply for a COVID-19 EIDL, go to www.sba.gov/funding-programs/disaster-assistance/coronavirus-covid-19. You will be asked to verify your eligibility and submit information regarding the business and business owner, along with supporting documents.
Applying for a disaster loan unrelated to COVID-19.
To apply for an EIDL unrelated to COVID-19, go to sba.gov/disaster/apply-for-disaster-loan. You will be prompted to download several forms, complete them, and then upload the completed forms or mail them to the U.S. Small Business Administration Processing and Disbursement Center (the full mailing address is provided on the website), along with the required documentation.
In order to apply for an EIDL, you will need to provide the following documents:
- A completed and signed Tax Information Authorization (IRS Form 4506T).
- Full copies of the business's most recent Federal income tax return.
- A completed and signed Personal Financial Statement (SBA Form 413).*
- A Schedule of Liabilities (SBA Form 2202).
*Not applicable to nonprofit organizations.
You may be asked to supply additional information, such as a year-to-date profit-and-loss statement.
How do I qualify for a SBA disaster loan?
The SBA's Economic Injury Disaster Loan (EIDL) program is available to homeowners, renters, private nonprofits, and small businesses that are located in a region affected by a declared disaster and have suffered a substantial economic loss due to that disaster.
What is the interest rate on SBA disaster loans?
The Economic Injury Disaster Loan provides loans up to $2 million with interest rates from 3.75% for small businesses and 2.75% for nonprofits.
Do you have to pay back SBA disaster loans?
Yes. Businesses that are eligible for an EIDL can also apply for an emergency grant of up to $10,000, which they are not obligated to repay. However, if you can secure a Paycheck Protection Program (PPP) loan, the emergency grant will be subtracted from the forgiveness amount.
What can I use SBA disaster loan for?
Economic Injury Disaster Loans can be used to pay fixed debts, such as rent, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred.
How long does it take for SBA disaster loan approval?
SBA disaster loans can be approved within 4 weeks.