The SBA recently made the announcement below about the reopening of the Economic Injury Disaster Loan (EIDL) program. This is a different announcement than the recent update on the Paycheck Protection Program, which is a forgivable loan. The EIDL is a fixed rate, long-term loan to help businesses hurt by the coronavirus crisis cover general expenses.
Here’s the SBA announcement:
“In response to the Coronavirus (COVID-19) pandemic, small business owners and non-profit organizations in all U.S. states, Washington D.C., and territories are able to apply for an Economic Injury Disaster Loan (EIDL). EIDL is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation to health care benefits, rent, utilities, and fixed debt payments.”
You can fill out the EIDL Application here.
What You Need to Know about the EIDL
Here are some important details of the EIDL (Reuters):
- They have up to 30-year terms
- Fixed interest rates of 3.75% for businesses and 2.75% for nonprofits
- EIDL applicants may request an Emergency Economic Injury Grant, also referred to as an “EIDL advance,” of up to $10,000 with a $1,000 per employee cap.
- A borrower of $200,000 or less doesn’t need to provide a personal guarantee.
- The loan must be used for working capital needed to survive the pandemic, including fixed debts (such as rent or mortgage), payroll, accounts payable and other bills that could’ve been paid had the disaster not occurred and aren’t already covered by a PPP loan.
EIDL versus PPP Loan
The difference between the EIDL and a PPP loan is the terms. A PPP loan is forgivable if certain criteria are met. The EIDL comes with repayment terms. A PPP loan is designed to help businesses keep their employees, while the EIDL is a loan meant to help businesses suffering a loss of revenue due to the crisis cover their expenses.
Have a Plan Before You Apply
If you’re considering applying for an Economic Injury Disaster Loan with the SBA, you need to know the conditions and have a plan in place. We’ll help you forecast payments and create a plan to use the money to survive the pandemic and ensure that your business thrives when the economy is back on its feet.