A breakdown of what the EIDL is, who can apply, and the application process
The U.S. Small Business Administration launched a new round of Economic Injury Disaster Loan (EIDL). The EIDL is designed to help businesses fulfill financial obligations and operating expenses that could have been met if COVID-19, or a similar disaster never happened. As such, this loan is meant to replace a temporary loss of revenue.
The EIDL is one of many government programs to help provide relief for small businesses impacted by COVID-19. The other programs include:
While not nearly as extensive as the PPP loans and equipped with less favorable terms, the EIDL option can still be useful for businesses in various sectors. On the flip side, since EIDL is not based around loan forgiveness, you can use your funds for general working capital and normal operating expenses.
Unlike the PPP loans, there are fewer restrictions when it comes to EIDL loans.
EIDL eligibility includes:
- Small business owners and qualified agricultural businesses in all U.S. states and territories
- Agricultural businesses with 500 or fewer employees
- Agricultural businesses include those businesses engaged in the production of food and fiber, ranching, raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b))
EIDL loan terms
Loan terms, as we mentioned earlier, are not as favorable as PPP loans. However, they do lack fees, and have a longer maturity period.
You can find the EIDL loan terms below:
- 24-months of economic injury with a maximum loan amount of $500,000
- Interest rate for businesses: 3.75% for businesses (fixed)
- Interest rate for non-profit: 2.75% for nonprofits (fixed)
- 30 years maturity period
- No prepayment penalty or fees
- Collateral is required for loans over $25,000
Since the maximum loan amount was raised in early April, participants who applied beforehand can also request an increase in funds.
How to apply for EIDL
You can apply online until December 31, 2021. The process is fairly streamlined, but the SBA staff might request additional information at any time during the application process.
The EIDL Advance and the Targeted EIDL Advance
There are two additional variations of EIDL:
- The EIDL Advance
- Targeted EIDL Advance
While the EIDL Advance category is currently closed, the Targeted EIDL Advance is open with limited eligibility.
The Targeted EIDL Advance provides funding to nonprofits and small businesses working in low-income areas. These businesses must have suffered a reduction in revenue of at least 30% and employ fewer than 300 people.
Businesses can obtain up to $10,000 per employee. Additionally, the Targeted EIDL Advance functions more like a grant than a loan. It does not need to be repaid.
Currently, only prior applicants are considered for the Targeted EIDL Advance. If you applied in the past, you will be contacted by SBA if you qualify.
Can you use more than one SBA fund?
In some cases, you may be able to get support from more than one SBA program.
If you are an EIDL recipient:
- You can apply to all of the other programs
- You cannot have more than one EIDL