Emergency Injury Disaster Loan (EIDL) Program for Small Businesses
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides new emergency loan funding options for small businesses in the United States via the Small Business Administration (SBA). This funding can be applied for and approved on a case-by-case basis. The following is a review of the program and its applicability:
Who is eligible: Small businesses, according to the definitions provided by the SBA, which has been expanded to include companies with less than 500 employees. Sole proprietors and independent contractors can apply too. Businesses with multiple locations or affiliate companies are required to include all employees in their headcount, though separate businesses (separate FEIN numbers) can apply for individual loans despite common ownership.
Covered period: Loans are available for businesses in operation as of and prior to 01/31/2020
Potential Value: Businesses who apply are eligible for $1,000 per employee up to $10,000 as a cash advance that can be applied toward payroll and would not be subject to re-payment. This amount would be made available with a completed application and is available even if a further loan application is denied.
Business loans are available up to $2 million. Applications, terms, and total funding are considered on a case-by-case basis.
Terms: Interest rates are fixed at 3.75% for businesses (2.75% for non-profits) and loan terms can be up to 30 years.
• Many previous requirements for EIDL loans have been waived
• Payments of principal and interest can be deferred for the rest of 2020 (approximately 8 months); interest will continue to accrue during this period, however.
• EIDL can be taken in addition to the Paycheck Protection Program, so long as the loans cover separate areas of the business
• No loan forgiveness for EIDL
• Loan applications could take two to three weeks to review and businesses may be denied a loan by the SBA upon review