Economic Injury Disaster Loan (EIDL) FAQ
What is an Emergency EIDL Loan?
An emergency grant from the Small Business Administration (SBA) that provides for immediate grants of up to $10,000, and up to $2M in total loan amount.
Are collateral or personal guarantees required to receive an Emergency EIDL Loan?
Collateral is not required for loans below $25,000 and personal guarantees are not required for loans below $200,000. Above those thresholds, collateral and guarantees are required.
What can the funds from an Emergency EIDL Loan be used for?
Providing paid sick leave for employees, payroll, meeting increased costs, making rent or mortgage payments, and repaying obligations that cannot be met due to revenue losses resulting from the emergency.
Will the applicant have to repay the funds acquired through an Emergency EIDL Loan?
Yes, except for any amount that is Advanced (up to $10k in total, or $1k per employee whichever is lower) if the Loan is not approved.
How long are Emergency EIDL Loan available?
Until December 31, 2020
What types of businesses are eligible to apply?
Small businesses with fewer than 500 employees, agricultural cooperatives, aquaculture businesses, private non-profit organizations, tribal businesses, cooperative, and individuals operating as sole proprietors or independent contractors.
What are the loan interest rates?
- 3.75% for small for-profit businesses
- 2.75% for non-profits
When is the deadline to submit my loan documents?
December 31, 2020. The SBA is, however, urging all business owners to apply as soon as possible.
What documents are required to prove that the Coronavirus pandemic has caused economic injury to a business?
Substantial economic injury is when a business is unable to meet its obligations and/or to pay its ordinary and necessary operating expenses. Economic injury is established by comparing financial information from the period of the prior year to the injury period of the current year. The loans are intended to pay fixed debts, payroll, accounts payable, and other expenses that could have been paid had the disaster not occurred – not to replace lost sales or profits.
How can a business owner document physical presence in the declared disaster area?
An applicant must show that they have tangible presence, such as a lease, property address, or property tax receipt. A P.O. box in the disaster area would NOT qualify as a physical presence.
What are the repayment terms of the loan?
Up to a maximum of 30 years. Terms are determined on a case-by-case basis.
Will someone notify an applicant if information is missing from an application?
An SBA loan officer works with applicants to provide all the necessary information needed to reach a loan determination. The SBA intends to arrive at a decision on applications in a matter of 3-4 weeks, however as of mid-April we are seeing these times run longer.
What if circumstances change and a business needs more money than originally applied for?
An SBA loan may be adjusted after closing due to changing circumstances, such as increasing the loan for unexpected costs or reducing the loan due to additional insurance proceeds.
What if a business has an existing SBA Disaster Loan?
They can still qualify for an Economic Injury Disaster Loan for this disaster, but the loans cannot be consolidated.
What happens if a loan request is denied?
The applicant will be given up to six months to provide new information and submit a written request for reconsideration.
Can a business that’s been operating for less than a year still apply for an EIDL?
Yes.
What are the underwriting criteria for EIDL loans?
The SBA can approve and offer EIDL loans based solely on an applicant’s credit score or use an appropriate alternative method for determining applicant’s ability to repay.
What can the advance payment be used for?
Advance payment may be used for paid sick leave to employees, maintaining payroll, meeting increased costs to obtain materials, paying rent or mortgage payments, or repaying obligations that cannot be met due to revenue losses resulting from the emergency.
Will the up to $10k advance payment be deducted from PPP loan forgiveness?
Yes.
The advance payment will be deducted from PPP loan forgiveness if the applicant transfers into a loan made under SBA’s Paycheck Protection Program. When determining loan forgiveness, the advance payment will be considered.
When does the EIDL grant program end?
December 31, 2020