A new coronavirus relief bill replenishes the Economic Injury Disaster Loan program with $10 billion. The SBA will begin accepting a limited number of applications from U.S. agricultural businesses only on Monday, May 4.
Applicants who already submitted EIDL applications will continue to be processed on a first-come, first-served basis. Agricultural businesses that already submitted an application don’t need to re-apply.
On March 27, 2020, the CARES Act passed, providing economic relief and resources to U.S. citizens and businesses affected by the coronavirus. The CARES Act established multiple funding opportunities for businesses including paycheck protection loans and economic injury disaster loans (EIDLs). Let’s talk about EIDLs to see if this assistance would benefit you.
How much funding is available?
The CARES Act set aside $10 billion in emergency EIDLs for those affected by COVID-19. If you apply, you can get a loan advance up to $10,000 in three business days via the Small Business Administration (SBA).
You can also get a working capital loan up to $2 million through the SBA since COVID-19 is a declared disaster for all 50 states as of January 1, 2020.
UPDATE: The SBA ran out of funding for the EIDL program on Thursday, April 16, 2020. However, Congress passed a relief bill which adds $10 billion to the program on April 23, 2020. President Trump signed this bill into law on April 24, 2020. This brings the total EIDL funding to $20 billion.
Am I eligible for an economic injury disaster loan?
The following businesses and individuals are eligible for an EIDL.
- Individuals who operate under a sole proprietorship, with or without employees
- Independent contractors
- Cooperatives with no more than 500 employees
- Employee Stock Ownership Plans (ESOPs) with no more than 500 employees
- A tribal small business concern with less than 500 employees
- Businesses, including agricultural cooperatives, aquaculture enterprises, nurseries, or producer cooperative, categorized as a small business according to the SBA size standards
- Businesses with more than 500 employees categorized as a small business according to the SBA Size Standards
- Private, nonprofit organizations
In addition, the SBA will look to see if you were in business on January 31, 2020. If you weren’t, you aren’t eligible for this loan program.
Are there any lending requirements?
Not really. The SBA isn’t requiring you to seek credit elsewhere first. Plus, it’s waiving the requirement that you have to be in business one year before the disaster (COVID-19) begins. If you apply for a loan amount less than $200,000, the SBA is waiving any rules related to providing personal guarantees. This doesn’t apply to loan advances.
Do I have to repay the loan?
If you receive the $10,000 loan advance, you don’t have to repay it. Why? It’s considered an emergency grant.
If you receive any additional funds through the EIDL program, you will have to repay them. You can repay the funds over a 30-year term. Interest rates are capped at 3.75% (2.75% for nonprofits).
How should I use the loan funds?
These loans were designed to help you maintain your payroll and manage your business obligations. Therefore, the allowable purposes for this loan advance include:
- Providing paid sick leave to employees unable to work due to COVID-19
- Maintaining payroll to retain employees during business disruptions or slowdowns
- Meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains
- Making rent or mortgage payments
- Repaying obligations that can’t be met due to revenue losses
Now, if you apply for a paycheck protection loan, you can’t use your EIDL funds and paycheck protection funds for the same purposes. For example, if you use your paycheck protection loan for payroll costs, you can’t use your EIDL funds for those same expenses. But, you could use your EIDL funds to pay suppliers or vendors.
Where do I apply?
You apply for an EIDL directly on the SBA’s website, here. The SBA estimates it’ll take you about two hours to complete the application.
If you apply for an EIDL and don’t hear back within three days, don’t reapply. Reapplying could void your first application. The SBA may flag you as a duplicate applicant, and remember, you’re eligible for just one economic injury disaster loan.
It’s likely that the SBA is receiving a high volume of applications which could be delaying processing times. If you need help applying for an EIDL or have questions, contact the SBA by calling 1.800.659.2955 or emailing email@example.com. Your local SBA lender may also be a helpful resource.
How do I apply? What do I need to submit?
The SBA will ask for the following information when applying for the loan advance. We recommend compiling it all before you begin. The following list isn’t exhaustive. The SBA may require additional information.
- Standard business identifying information (business legal name, EIN/SSN, organization type)
- Ownership details
- Gross revenues for the 12-month period before the disaster
- Cost of goods sold for the 12-month period before the disaster
- Lost rents due to COVID-19
- Any compensation you received from other sources as a result of COVID-19
You’ll also need to self-certify that you’re an eligible entity before the SBA distributes funds in your online application. If you’d like assistance, our professionals can help you compile your application and submit it to the SBA.
*Applicants who already submitted EIDL applications will continue to be processed on a first-come, first-served basis. Agricultural businesses that already submitted an application don’t need to re-apply.
Is this loan right for me?
If you’re eligible for EIDLs, we recommend you apply! Especially if you need immediate access to cash to cover your business. And, you can still apply for a paycheck protection loan. However, you should keep two things in mind.
- If you apply for both an EIDL and a paycheck protection loan, make sure to use the funds for separate purposes.
- Your loan forgiveness amount under the paycheck protection program will be reduced by $10,000 – the loan advance you receive under the EIDL program.
Originally published 4/3/2020. Updated 5/4/2020.
We’re dedicated to helping you obtain all the funding support you can receive during the COVID-19 pandemic. If you have additional questions about economic injury disaster loans or other funding resources, let’s talk!