The SBA’s Economic Injury Disaster Loans (EIDL)

The EIDL (Economic Injury Disaster Loan) provides economic relief to small businesses and non-profit organizations that are currently experiencing a temporary loss of revenue.

Small businesses throughout the US are facing unparalleled economic interruptions due to the COVID-19 pandemic. Substantial economic injury means the business is unable to meet its obligations and to pay its ordinary and necessary operating expenses.

Under the SBA’s EIDL program, small business owners that include non-profits and agricultural businesses, are eligible to apply for an Economic Injury Disaster Loan. This program provides economic relief to businesses currently experiencing short-term financial losses due to the Coronavirus (COVID-19) pandemic as well as those small businesses, small agricultural cooperatives and most private non-profit organizations located in a declared disaster area.

EIDL assistance is available only to those small businesses that the SBA determines are not capable of obtaining credit otherwise. A business may qualify for both a physical disaster loan and an EIDL—the maximum aggregate loan amount cannot exceed $2 million. A separate SBA Disaster Assistance program known as Business Physical Disaster Loans covers property damage.

SBA is currently accepting new Economic Injury Disaster Loan (EIDL) applications from all qualified small businesses.

 Who Qualifies:

ELIGIBLE ENTITY VERIFICATION

• Businesses with 500 or fewer employees
• An agricultural enterprise with 500 or fewer employees
• A sole proprietorship, with or without employees, or as an independent contractor.
• A cooperative with 500 or fewer employees.
• An ESOP (Employee Stock Ownership Plan), as defined in 15 U.S.C. 632, with 500 or fewer employees
• A tribal small business concern, as described in 15 U.S.C. 657a(b)(2)(C), with 500 or fewer employees
• A business, that is small under SBA Size Standards as defined at https://www.sba.gov/size-standards, including an agricultural cooperative, aquaculture enterprise, nursery, or producer cooperative (excluding all other agricultural enterprises), with more than 500 employees
• A business with more than 500 employees that is small as defined by the SBA Size Standards found at https://www.sba.gov/size-standards.
• A private non-profit organization that has been granted tax exemption by the IRS under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, is a non-profit organized or doing business under State law, or a faith-based organization.

Loan Use and Amounts:

EIDLs are designed to provide working capital to small businesses until normal operations are resumed. The SBA can help meet financial obligations and operating expenses by providing up to $2 million. Your actual economic injury and your company’s financial needs determine the loan amount for which you may qualify. Proceeds may be used to pay rent, fixed debt payments, the continuation of health care benefits, utilities, and other operational expenses.

Eligibility and Terms

Repayment terms are determined by your ability to repay the loan.

• 3.75% for businesses (fixed)
• 2.75% for nonprofits (fixed)
• 30 years
• Payments are deferred for one year
• No prepayment penalties or fees
• Not forgivable
• Collateral is required for loans over $25,000
• SBA uses a UCC (general security agreement) that designates business assets as collateral, e.g., furniture and fixtures, machinery and equipment, etc.
• Real estate is the preferred collateral.
• Loans of $200,000 or less do not require the business owner to put their primary residence up as collateral provided there are other assets that are greater than or equal to the loan amount.

To apply, go to Loan Application. A completed loan application and IRS Form 4506-T giving the IRS permission to provide your tax return information to the SBA must be submitted as well. Please contact the SBA disaster assistance customer service center for additional information. Call 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail disastercustomerservice@sba.gov.

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