In April, I wrote an article about the Economic Injury Disaster Loan program (EIDL). Shortly afterward, the Small Business Administration (SBA) announced that the program was closed to all businesses except certain agricultural businesses. Now, there’s another change: the program has been re-opened to all eligible small businesses.
Specifically, SBA began accepting new EIDL and EIDL Advance applications from all eligible small businesses and U.S. agricultural businesses as of June 15, 2020.
The EIDL is an existing program administered through the Small Business Administration (SBA). However, the stimulus bill (also called the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act) has expanded the program. To be eligible, a business must have no more than 500 employees.
The catch is that to qualify, you have must have suffered a substantial economic injury and be located in a presidentially-declared disaster area. However, on March 13, 2020, the President of the United States issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. In other words, the entire country has now been declared a disaster area. That means that virtually any small business in the United States can consider a loan.
There are two pieces to the EIDL that you might have heard about. One is the EIDL advance of up to $1,000 per employee (with a cap of $10,000 per business) designed to provide economic relief for companies currently experiencing a temporary loss of revenue. This loan advance will not have to be repaid. And, you don’t have to be approved for a loan to receive the advance (but the amount will be deducted from total loan eligibility).
The other piece is the “L” in EIDL: a loan. It’s a proper loan with a repayment piece. The upside is that the interest rates are favorable: 3.75% for small businesses and 2.75% for non-profits.
And unlike the PPP, you don’t have to seek out a lender. You can apply straight from the SBA (this link takes you to the application).
Also, unlike the strict 75/25 ratio for payroll in PPP loans, EIDL offers a bit more wiggle. Loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid. But it’s not an unlimited ask: there is a cap on the amount you borrow. Initially, that cap was pretty generous ($2 million), but the SBA has reduced the cap to $150,000.
For more details about the EIDL, check out this post.