Banknotes of the United States of America and a protective mask against the virus. World economic crisis associated with coronovirus. concept: coronavirus SBA Small Business Relief Programs, Economic Injury Disaster Loans
Chad Morris
By: chadmorris
Read in 12 minutes

EIDL Loan: Everything You Need To Know About SBA Economic Injury Disaster Loans

You need an EIDL loan If a declared disaster has impacted your small business.

The US government, acting through the Small Business Administration, offers the Economic Injury Disaster Loan program to assist small businesses that have suffered economic hardship because of COVID-19 or other disasters.

ADD_THIS_TEXT

What is the EIDL Loan program?

The Economic Injury Disaster Loan program is a low-cost service from the US government. It provides loans to small businesses that have been hard hit economically by a declared disaster.

The goal of the EIDL is to aid entrepreneurs through hard times.

There are 2 types of EIDL assistance loans, one for COVID-19 and another for other disasters. This article will tackle both types and tell you who qualifies for this government loan.

COVID-19 Economic Injury Disaster Loan

When the COVID-19 pandemic hit, the government declared all 50 states, US territories, and the District of Columbia as disaster areas. That’s why the government decided to create another EIDL that was specific to the situation.

This lending product helps companies that suffered economically because of the coronavirus pandemic.

*NOTE: The COVID EIDL application deadline is over (it was Dec. 31, 2021).

Loan Details

Amount

COVID-19 EIDL borrowers are eligible for loans up to $500,000 (originally, it was $150,000). Then, there was an EIDL loan increase that brought the max up to $2 million.

Of the total amount, the SBA can distribute the first $10,000 within three days from the moment they approve the EIDL application. The total time from submission to approval could be 2-3 weeks.

One of the great features of small business loans through the program is that you don’t have to pay back the $10,000 loan advance. It’s almost like an SBA grant.

On top of this generous policy, the Small Business Administration can defer the loan payments of the principal and interest for up to four years.

Along with the deferral, an SBA COVID-19 loan comes with no fees upfront. And you can pay it off early: there are no prepayment fees.

#DidYouKnow
The SBA will accept and review reconsideration and appeal requests after 6 months of the declination.

Interest rates and terms

An SBA COVID-19 loan is a low-interest loan. The Annual Percentage Rate (APR) is 3.75% for companies. For non-profits, the rate is 2.75%.

Borrowers who take out a COVID-19 Economic Injury Disaster Loan have a long time to repay it. The Small Business Administration offers a repayment term of up to 30 years.

The exact term on a specific loan depends on the borrower’s ability to repay the loan.

EIDL Loan Requirements

You’ll need to meet various criteria to qualify for the program:

  • You’ll need to have been operating since January 31, 2020.
  • Your company must have 500 or fewer employees.
  • The SBA is not restricting the COVID EIDL loans to just US citizens. Green card holders can qualify.

Also eligible for an SBA COVID-19 loan are:

  • sole proprietors
  • small tribal companies
  • private nonprofit organizations
  • agricultural enterprises
  • independent contractors
  • freelancers

Learn what you can do if you don’t apply for government relief programs

How can you use the money?

You can use money from the COVID EIDL program to finance commercial expenses and financial obligations that you can’t meet due to the coronavirus outbreak. These items include things like:

  • working capital
  • operating expenses
  • employee salaries, inventory
  • debts

How To Get An EIDL Loan

If you meet the EIDL loan requirements, we do encourage you to apply. You can apply online.

If you’re unsure whether you qualify, the SBA has a user-friendly tool that can help you determine your eligibility.

The program stopped receiving applications on December 31, 2021.

COVID-19 Economic Injury Disaster Loan Application

Click here to go to the application. 

Help with the application

If you have any questions during the application process or need assistance, contact the SBA. The agency’s phone number is 1-800-659-2955. You can also call this number to get an EIDL loan status.

You can also e-mail the SBA with questions: [email protected]

dollars icon

What Are the Targeted EIDL Programs?

EIDL Targeted Advance

Owners in a low-income community can access up to $10,000 of forgivable funding. Applicants must prove a 30% reduction in revenue during the 8 weeks beginning on March 2, 2020 (or later) and have fewer than 300 employees. 

Those eligible for an EIDL can also apply for the Targeted EIDL Advance.

SEIDL Supplemental Targeted Advance

You don’t need to repay this $5,000 advance. 

So the SBA considers them for the SEIDL, applicants must complete Supplemental Targeted Advance applications

Like the Targeted EIDL Advance, you must be in a low-income community and have no more than 10 employees. To qualify, you must prove a 50% economic loss during the 8-week beginning March 2, 2020.

More COVID help and resources

Read more articles and find some more helpful resources to help you during the coronavirus crisis on our COVID-19 Resources Hub.

EIDL loan application form

If you don’t qualify for an EIDL loan, don’t worry, you still have alternatives.

Apply for a Camino Financial loan

EIDL for other disasters

This SBA EIDL loan helps businesses affected by a catastrophe that need economic relief.

The funds help sustain a business while they work through the aftermath of said disaster.

#DidYouKnow
These non-COVID EIDL loans are only available in areas where the SBA has formally declared a disaster.

Loan Details

Amount

Borrowers can access amounts up to $2 million

The SBA bases loan amounts on confirmed economic injury and each business’s monetary needs. You aren’t required to have property damage to receive an EIDL.

Interest rates and terms

Borrowers pay a low annual interest rate not to exceed 4% with repayment terms not to surpass 30 years. 

The SBA determines repayment terms based on the owner’s ability to repay the loan. 

There are no prepayment or penalty fees.

Who Qualifies For An EIDL Loan? Requirements

Eligible companies are:

  • small businesses
  • agricultural coops
  • private non-profit organizations
  • small business owners that don’t qualify for credit anywhere else

#DidYouKnow
Generally, the SBA categorizes a business as small when it has up to 500 employees and averages no more than $7 million in annual sales. 

In addition, the SBA requires collateral for loans over $25,000, with real estate as the favored asset.

Borrowers aren’t required to use a primary residence as collateral for loans under $200,000 if they have assets of equal or greater value than the loan amount.

How can you use the money?

Because economic injury prevents your business from meeting its financial responsibilities, EIDL loans allow borrowers to have working capital to pay customary and required operating expenses. 

According to the SBA, expenses include “health care benefits, rent, utilities, and fixed debt payments.” 

If your business sustained property damage, you could apply for a business physical disaster loan. The SBA doesn’t limit companies to one loan or another. They may qualify for both to meet the $2 million loan cap.

How To Get An EIDL Loan

To apply for an SBA EIDL loan, you’ll need to complete an online application

As a reminder, your business must be in an SBA disaster-declared area to be eligible. 

As part of the application process, you must also complete IRS Form 4506-C, which grants permission to the IRS to provide a transcript of your tax return data to the SBA.

EIDL Application

Click here to go to the application. 

Help with the application

The SBA has a disaster assistance customer service center you can contact at 1-800-659-2955 with questions, concerns or to ask about your EIDL loan status.

hand giving money icon

What is SBA EIDL Hazard Insurance?

Since one of the EIDL requirements is to offer collateral for loans over $25,000, they also require hazard insurance to cover the asset’s value should there be a natural disaster. For example, a property insured for damage from hail, fire, water, etc. 

You must get a hazard insurance policy for at least 80% of the property’s value, but the recommendation is that you insure the asset for 100% of its value. 

You should contact your insurance company to determine if your existing commercial insurance policy covers the EIDL collateral property. 

The insurance policy should be in the name of the business. If sole proprietors operate as DBA, the policy should list the name of the DBA.

#DidYouKnow
The SBA takes a risk to invest funds in your property, and having hazard insurance is how they protect their investment.

Economic Injury Disaster Loans at a glance

COVID-19Other disasters
Max Size of LoanUp to $2 million
Interest RateFixed 3.75% (for profit); 2.75% (non profits)No more than 4%
Max Term30 years
EligibilityHave suffered economically due to COVID.

Be considered a small business.

Eligible parties:

  • Sole proprietorships, with or without employees
  • Independent contractors
  • Cooperatives and employee-owned businesses
  • Private non-profits
  • Tribal small businesses
  • Agricultural enterprises
Be in an SBA disaster-declared area.

Be considered a small business.

Eligible parties:

  • Agricultural coops
  • Private non-profit organizations
  • Small business owners that don’t qualify for credit anywhere else
How to apply?Apply directly at: https://disasterloan.sba.gov/ela/

diverse small business team

Ask for Help, You are Not Alone

Now that you know what is the EIDL loan, we sincerely recommend that you can apply for any disaster loans that can help you weather whatever crisis you’re going through.

But if you don’t qualify, for whatever reason (maybe you don’t have an SSN), we recommend you look for other forms of aid so that your company can survive this disaster.

An option is a commercial loan. At Camino Financial, our motto is “No business left behind”, and we work every day, and especially now, with this in mind. If we can help you, we will.

Let us be your partner during this difficult time. We can even help you if you only have an ITIN.

A Camino Financial loan is a great way to get the funds you need during thin and thick.

Get Approved For A Loan Today

 

FAQs

What does EIDL stand for?

EIDL stands for Economic Injury Disaster Loan.

Can a business owner access EIDL loan forgiveness?

A business owner must repay an EIDL loan. However, you’re not required to repay the Targeted Advance and SEIDL. The SBA cannot forgive more than $15,000, the combined total of the two advances.

What forms do I need to apply for the loan?

Besides the application, applicants must complete the IRS tax authorization form 4506-C and submit:

  • 3 years of business tax returns
  • a personal financial statement
  • a schedule of liabilities

The SBA may require copies of personal tax returns, business financial statements, and monthly sales figures.

What documents and required for nonprofits, churches, and associations?

For your non-profit to apply, you need:

  • articles of incorporation
  • by-laws
  • a charter if you have one
  • a Board of Directors Resolution authorizing the non-profit to apply for the loan

Additionally, the SBA needs copies of:

  • tax returns or a copy of the organization’s IRS tax-exempt certification status
  • 3 years of financial statements
  • a list of officers, trustees, and directors
  • the insurance policies in force at the time of the disaster

Can economic development organizations classified as 501(c)(6) apply?

Non-profits include 501(c) 6 organizations that are eligible to apply for grants and SBA disaster loans to cover losses. These are economic development organizations such as:

  • chambers of commerce
  • real estate boards
  • business leagues
  • boards of trade
  • other groups

When does the business have to start paying back the loan?

Businesses must start repaying SBA disaster loans, including COVID-19 EIDL made in 2020 from 12 to 24 months from the loan date. All 2021 loans have a first due date extended from 12 to 18 months.

All borrowers must resume regular payments by March 31, 2022. Interest accrues on the outstanding balance even with the deferred payments.

What is the process for and turnaround time from loan application to receiving the funds?

Processing loan applications can range from days to weeks, depending on how many requests the SBA processes. On average, the application process takes 21 days, with funding occurring 5 to 10 days after the approval.

Can you apply for an EIDL loan twice?

It depends. You can only get a second one if:

  • you were denied your first application
  • you’re applying for different EIDL loans (one for COVID and one for another disaster)
  • your loan was approved before the limit increase

Is the EIDL grant taxable?

You cannot report it as taxable business income, so it’s not taxable.

 

Check if you
qualify for a loan

LEARN MORE