Expertise Beyond the Numbers

How to Apply for an SBA Economic Injury Disaster Loan (EIDL)

Updated 5/7/2020 at 4:05pm ET

As of April 16, there have been nearly four million businesses that have applied for EIDL, and since the initial program details below were released, guidance has changed. Businesses are now being told funds will be distributed “within days” and that aid will be limited to $1,000 per employee up to $10,000.

We will keep you updated as more information is officially announced the program and future plans for potential expansion or not.

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The SBA began accepting applications from lenders under the Paycheck Protection Program (PPP) to small business and sole proprietorships on April 3, 2020. Many banks were not accepting or submitting applications until April 6th. For independent contractors and self-employed individuals, applications will begin on April 10, 2020. Businesses will need to determine which source of funding (EIDL or PPP) is most advantageous for their current situation. Some organizations and businesses either may not qualify for the PPP loan or have those request rejected or reduced. For those businesses, EIDL is likely the next place they should seek government-backed financing.

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In light of the economic turmoil brought on by the COVID-19 global pandemic, the U.S. Small Business Administration has been thrust into the national spotlight to provide assistance to thousands of small businesses looking to apply for disaster assistance loans for Coronavirus-related economic disruptions.

The SBA is providing low-interest working capital loans of up to $2 million to almost all U.S. small businesses (must have fewer than 500 employees) and private non-profit organizations to pay fixed debts, payroll, accounts payable, and other expenses. These loans carry an interest rate of 3.75% for small businesses and 2.75% for nonprofits — the loan repayment terms vary by applicant, up to a maximum of 30 years. There are a few exceptions:

  • Agricultural Enterprises (Per the May 7th update this will be changing, and agricultural businesses will be the only industry able to submit new applications.)
  • Religious Organizations
  • Charitable Organizations
  • Gambling Concerns
  • Casinos and Racetracks

Initial grants of up to $10,000 are available under the EIDL program and the SBA has stated these grants could be sent within 3 business days. The advance payment does NOT need to be repaid.

An EIDL will not be forgiven by the SBA, and loans with a principal balance in excess of $25,000 must be secured by some form of collateral. The CARES Act, however, waives the requirements for a personal guarantee when the EIDL is less than $200,000.

Additionally, due to increased volume the time to receive funds may take longer than normal and there are no fees to apply. Applicants are permitted to have an existing EIDL and still qualify for this disaster relief, but the loans cannot be consolidated (ie. If a Howard County small business has an EIDL due to the flooding, they are still eligible to obtain another EIDL for the COVID-19 disaster.) In the event their request is denied, the applicant will be given up to six months to provide new information and submit a written request for consideration.

TO APPLY: Applicants should visit DisasterLoan.SBA.Gov

U.S. SBA Economic Injury Disaster Loan (EIDL) Process

Tips for Completing the Application

  • Consider downloading and printing all basic filing requirements to verify that you have all requested information available before starting the online application process. Missing information will result in your application going back to the end of the queue.
  • Be prepared to provide monthly sales figures with the application – monthly revenue amounts will be the main driver used by the SBA to determine revenues lost during the period and the ultimate the loan amount offered.
  • Users have previously reported application issues using Google Chrome, so consider using an alternate browser when completing the application online.

Process/Timing for Loan Approval

Upon submitting an application, the SBA will review your credit prior to conducting its own inspection to verify losses. They will review any existing insurance recoveries you might have but they can issue you a loan while the recoveries are pending. The SBA is aiming to make a final determination on disaster loans within a two to three week time-frame, and if you’re deemed eligible, you will receive a loan closing document for your signature.

  • Initial Disbursement of $25,000: Expected to arrive within five days, per the SBA.
  • Remainder of your loan will be disbursed on a schedule until you receive the full amount.
  • The schedule will be set by an SBA loan officer responsible for ensuring you meet all loan conditions.

As this crisis plays out, we will continue to monitor the situation and Government responses and provide updates as things change. In the meantime, feel free to contact us with any further questions surrounding the SBA Loan Application Process. We are here to help.