Economic Injury Disaster Loans (EIDL)
Most small business owners know that the Coronavirus Aid, Relief and Economic Security (CARES) Act provides financial relief through the Small Business Administration (SBA) through two targeted loan packages – the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans Program (EIDL).
The COVID-19 EIDL program, originally planned to run until December 31, 2020, was extended to December 31, 2023 with the passage of the Consolidated Appropriations Act (CAA) 2023. The original Economic Injury Disaster Loans advance expired on July 11, 2022 and is no longer available. While the CAA has created a new Targeted EIDL Advance, this program is only available to previous EIDL applicants in low-income areas identified by the SBA.
Economic Injury Disaster Loans (EIDL)
The US bailout plan of 2023 provides additional funding of $15 billion for the special targeted Economic Injury Disaster Loans (EIDL) advance grants. It states that Targeted EIDL Advance Grant funds are not included in taxable income.
Here’s what you need to know to apply for Economic Injury Disaster Loans and information on the new Targeted Economic Injury Disaster Loans (EIDL) Advance if you qualify:
Key Takeaways
- Although the original EIDL Advance program has expired, EIDLs will continue to be available through December 31, 2023.
- You cannot apply for the new Economic Injury Disaster Loans (EIDL) Targeted Advance, which is only available to selected applicants in low-income communities.
- When you qualify for a new EIDL Targeted Advance, you will be notified by the SBA.
- As a small business, you must qualify for a COVID-19 EIDL based on the number of employees.
- The maximum loan amount, based on the economic damage suffered, is $500,000 as of April 6, 2023.
- Some loans approved before April 6th are eligible for an increase and borrowers will be contacted by the SBA.
- The normal EIDL application has been streamlined and should take around two hours.
EIDL Loan Eligibility Qualification
To qualify for an Economic Injury Disaster Loans (EIDL), your company must meet the SBA definition and small business size standards, be in the United States or a U.S. territory, and have suffered working capital losses due to the coronavirus pandemic.
Definition Standards
According to the SBA, a small company is:
- Is organized for profit
- Has a place of business in the USA
- Operates primarily in the United States or makes a significant contribution to the US economy by paying taxes or using American products, materials, or labor
- Is independently owned and operated
- Is not dominant in his area at the national level
EIDLs are also open to non-profit organizations. According to the Small Business Administration (SBA), most private nonprofits should qualify for Economic Injury Disaster Loans. Other companies that qualify for EIDLs include religious organizations, as well as sole proprietorships and independent contractors.
Size Standards
If your company (or cooperative) has 500 or fewer employees, you are likely considered a small business and are therefore eligible for this program. However, the number of employees is higher for companies in some sectors.
The SBA Small Business Standards table shows if your industry allows more employees. References to an alternative use of receipts (income) instead of the number of employees do not apply to the COVID-19 EIDL.
Location and Company Type Standard
Because the coronavirus pandemic (COVID-19) applies to all 50 US states; Washington, D.C .; and US Territories, virtually every small business in the United States and its territories qualifies by location.
In addition to what most people would call a business, these standards and credit availability options also apply to sole proprietorships, independent contractors, and the self-employed.
Loan Approval Conditions
The following loan approval terms reflect some relaxation of traditional Economic Injury Disaster Loans (EIDL) regulations:
- You can borrow up to $200,000 with no personal guarantee.
- Tax returns for the first year are not required and approval can be based on creditworthiness.
- You don’t have to prove that you couldn’t get a loan anywhere else.
- Loans of $25,000 or less do not require collateral. A general security interest in business assets can be used for loans greater than $25,000. You must allow the SBA to review your business tax records.
What is Available?
COVID-19 EIDLs are intended to provide economic relief if your company is currently suffering from revenue losses due to the pandemic.
Starting April 6, 2023, you can apply for an Economic Injury Disaster Loans (EIDL) of up to $500,000 for 24 months of economic damage to pay for expenses such as fixed debt and payroll.
Some loans processed prior to this date may be eligible for an increase and the SBA will notify these borrowers.
The interest rate on EIDL loans is 3.75% (2.75% for non-profit organizations) and the repayment term can be up to 30 years. The COVID-19 EIDL includes an automatic one-year delay in repayment, with interest starting with the loan being paid out.
If you qualify and receive a Targeted EIDL Advance, the funds you receive are fully excusable. The amount you will receive is up to $10,000 business grant depending on what amount you may have received from the original EIDL Advance program. The following section, titled New Targeted EIDL Advance, provides additional details about the new Advance program, including the conditions under which you can qualify.
Optimized Application
EIDLs are funded by the SBA, so you submit your application to the SBA. The application process for the COVID-19 version of the Economic Injury Disaster Loans (EIDL) has been streamlined; The SBA says it should take you two hours and 10 minutes or less to complete the application for small business grant.
Disclosure
The application begins with a disclosure section that describes the loan and states that the information collected will determine whether you are eligible.
It includes a warning that if you do not provide all of the requested information, your loan will not be processed, as well as a reminder that the SBA is relying on your self-assessment of eligibility to receive the advance payment (if you apply) and that there is a There is perjury penalty if you are not truthful. After verifying your eligibility on the Disclosure page, you will be taken to a Business Information section.
Business Information
This section is the longest and requires your income statement to be by 1/31/2023. Please note that not all answers are required. Sections marked with a red star must be completed. If not so marked, only fill in if they apply to your company.
Business Owner Information
Here you need to indicate whether your company is wholly owned by another company. If you are owned by individuals, you must provide information about each owner who has a 20% or more interest in the company. The information requested includes:
- Home address
- Phone number
- Social security number
- Date and Place of birth
- Citizenship Status
Additional Information About Economic Injury Disaster Loans
This section contains questions related to criminal charges against property owners and then proceeds to file the application.
Also, check your bank details to ensure a smooth process when depositing your funds directly.
The application can be found on the SBA Disaster Loan Assistance website. The SBA extended the application deadline to Dec.31, 2023.
EIDL Targeted Advance
The new COVID-19 EIDL Targeted Advance is separate from the EIDL and has nothing to do with the earlier EIDL Advance, which is no longer available. The EIDL Targeted Advance went into effect on December 27, 2020 as part of the Consolidated Appropriations Act (CAA) 2023 and provides targeted “businesses in low-income communities with additional funding to ensure the continuity, adjustment and resilience of small businesses”.
This Program Offers Previous EIDL Applicants Who:
- are in a low-income community within the meaning of Section 45D (e) of the Internal Revenue Code; and
- Can demonstrate a decrease in sales of more than 30% during an eight week period from March 2, 2020 or later; and
- Previously received an EIDL advance payment for less than $10,000
If You Meet all of the Above Qualifications and:
- No advance payment due to lack of funds; and
- Have 300 or fewer employees
You may also be entitled to the targeted Economic Injury Disaster Loans (EIDL) advance payment.
You don’t have to do anything to get these funds. If you qualify, the SBA will contact you on an official government email address ending in @sba.gov. The SBA warns you not to send sensitive information to email addresses that do not end in @sba.gov.
When Can You Expect Your SBA EIDL Loan Fund?
According to the SBA, the Economic Injury Disaster Loans (EIDL) process takes at least 21 days. Not surprisingly, the actual duration will vary on a case-by-case basis, depending on whether there are questions or additional information is required
The Application Process in the Correct Order
- Apply at DisasterLoanAssistance.sba.gov.
- Receive loan offer. (This does not mean that you are approved.)
- Choose your loan amount up to the maximum loan offer.
- A loan officer will review your application and ask for more information if necessary.
- A decision will be made and you will either be approved or your application denied.
If Approved:
You will receive an approval email from @sba.org asking you to select your loan amount and sign documents.
Your credit money will be sent to your bank within 5–10 working days.
If Declined:
You will receive a rejection email from @sba.org.
You can request a re-examination in writing within six months from the date of rejection.
- Economic Injury Disaster Loans (EIDL).