An Economic Injury Disaster Loan (EIDL) is a program by the U.S. Small Business Administration (SBA) to help businesses meet payroll and other essential expenses as they would, if only they weren't affected by a disaster, such as COVID-19. Funds should not be used to rectify damages incurred due to the pandemic or recovery efforts. EIDLs are low-interest, fixed-rate loans that can be used to cover working capital needs such as: In accordance with the information available on the SBA's official webpage, COVID-19 EIDLs are classified into two categories: Through the provision of easily available and borrower-friendly finance, this federal small company loan program aids small enterprises in their efforts to recover from the economic repercussions of the COVID-19 tragedy. You have an option of taking out a maximum loan amount of $2,000,000 and a maximum loan period of 30 years. Businesses will pay a set interest rate of 3.75 percent, while private nonprofit organizations will pay a fixed interest rate, at 2.75 percent. During the first two years (during which interest would accumulate), payments of principal and interest are deferred, with payments of principal and interest payable over the next 28 years. There is no penalty for paying in advance. There are no fees charged for loans of up to $25,000, and a $ 100 filing fee is charged for more than that amount. Borrowers who take out loans in excess of $500,000 are obliged to register a real estate lien and pay the related expenses. For loans more than $25,000, collateral is needed, while a personal guaranty is required for loans greater than $200,000. For first-time COVID EIDL applicants, follow the process outlined below to submit an application: The SBA typically takes several weeks to make a decision on a loan of less than $500,000 in value. If the applicants for the previously mentioned COVID-19 Economic Injury Disaster Loan (EIDL) are also qualified to participate in this program for granting advances, they may go one step further and request up to $15,000 worth of advance from the SBA. In that they are not expected to be repaid, these "advances" are similar to grants; however, the distinction is that they do not come with the usual conditions associated with a grant from the government. If you are qualified, you may take advantage of the benefits of this program by first submitting an application for the COVID-19 EIDL. You are under no obligation to accept or be accepted for the loan that is included with it. If your company is situated in a low-income area, the SBA will contact you via email to offer you to apply for one of the advance programs. Targeted EIDL Advance usually covers businesses such as single proprietorships, independent contractors, and private, non-profit organizations. Agricultural firms are rendered ineligible. Here are the basic requirements for the advance of a total of $ 10,000 to be granted: Supplemental Targeted Advance aims to assist recipients similar to that of the Targeted EIDL Advance, and also with the exception of agricultural firms. This is an additional advance of up to $5,000 that may be provided if the following conditions are met: Whether or not your region is designated as low-income may be assessed by visiting this tool map, and you can read the FAQs Regarding Targeted EIDL Advance to verify your eligibility. Applicants have until December 31, 2021, or when funds are depleted to submit an application. In the event of disapproval, they have up to six months from the day the application was rejected to seek reconsideration, regardless of the deadline. Any assistance is of great help for businesses in need. When they are subject to an unforeseen catastrophe, they may not be able to obtain the necessary funds on time to keep their operations running. The COVID-19 EIDL aims to address this issue, as well as the issue of lessening the economic loss experienced by low-income areas due to similar circumstances. For comprehensive information, check out the SBA's page on this subject.
The Two Kinds of COVID-19 EIDLs
A. COVID-19 EIDL
How to Apply for a COVID-19 EIDL
B. Targeted EIDL Advance and Supplemental Targeted Advance
Targeted EIDL Advance
Supplemental Targeted Advance
When Can I Apply for COVID-19 EIDL?
Final Thoughts
COVID-19 Economic Injury Disaster Loan (EIDL) FAQs
An Economic Injury Disaster Loan (EIDL) is a program by the U.S. Small Business Administration. EIDLs are used to help businesses meet payroll and other essential expenses as they would, if only they weren't affected by a disaster.
These "advances" are similar to a grant that could amount up to $15,000, offered to COVID-19 EIDL applicants who meet the eligibility requirements.
The first part of applying for a COVID-19 EIDL is visiting the SBA's official website to learn more about the program and the minimum requirements.
You may contact the SBA's Customer Service Center at 1-800-659-2955 (for the deaf and hard of hearing, call 1-800-877-8339) or through email at [email protected] to inquire about the progress of your application.
One application per qualified business can be submitted. At least 81 percent ownership for every business must be documented in the application.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.
