Welcome back! Today, we’ll be talking about how to apply for the EIDL Loan Program, or Economic Injury Disaster Loan Program, part of the US Government’s initiatives to save small business during the coronavirus pandemic. We all know how difficult the pandemic has been for all of us for different reasons, and it’s encouraging to know that the government has stepped in to provide aid for small businesses specifically. Today we’ll discuss what the EIDL is, how much money they’ve allocated, who’s eligible for it, and how to apply for it. While reading, please also keep in mind that as of August 16, 2020, this is one of the only small business relief programs that still is actively accepting applications and receiving funding. So, if your small business is in need of some economic assistance due to revenue lost during the COVID-19 pandemic, you’ll want to listen up!
Basically, EIDL is a program instated by the SBA or Small Business Association to help alleviate loss of revenue for small businesses due to the coronavirus pandemic. Unlike the PPP, or Paycheck Protection Program, EIDL can be used to cover a wide range of costs and is not just limited to payroll, rent, mortgage, or utilities.
To date, EIDL has approved over $178 billion dollars in loans across all 50 states and US territories. And, while it did temporarily close due to running out of funds, it was rather quickly reinstated on June 15, 2020. So, what does that mean for you? If you hope to obtain an EIDL loan in order to cover loss of revenue caused by the coronavirus pandemic, then you should apply today!
While exactly what the funds can be used for is outlined in language that is a bit vague: fixed debts such as rent, accounts payable, payroll, and other bills and costs that could not be paid due to the pandemic, the SBA is rather clear on what funds CANNOT be used for: bonuses, repayment of loans (exceptions apply), repairing of physical damages, refinancing long-term debt, cost of relocation (exceptions apply), paying for a federal debt, expanding facilities, given to the business owner unless in exchange for hours worked. Additionally, SBA is the Small Business Association, therefore this loan is meant to assist just that: small businesses. In most cases, business with 500 employees or less are the only ones eligible to receive this assistance (this includes faith-based organizations such as churches or houses of worship, as outlined in this SBA document: https://www.sba.gov/sites/default/files/2020-06/SBA%20Faith-Based%20FAQ%20Final-508.pdf). Up to $2 million may be dispersed to your business through an EIDL loan, however SBA ultimately determines the amount of the grant based on your application. Additionally, you might also be eligible to apply for the “Emergency EIDL Grant” which is an advanced loan of $10,000 or less that the borrower is not required to pay back; these funds will be distributed within three days of requesting them. However, we wrote an additional piece just about that if you’re interested, feel free to read it here.
If accepted for the EIDL loan, you should know that the interest rate is 3.75% for small businesses and 2.75% for non-profits. Typically, you can expect your loan application to be approved or denied with 21 days of submitting the application. Should your application be approved, then you can expect to receive the loan within five business days. Additionally, once you’ve submitted one application, do not resubmit. Instead, forward any questions or concerns about your application to the SBA customer service center: 1-800-659-2955 or (TTY: 1-800-877-8339) DisasterCustomerService@sba.gov.
To apply for the EIDL, go here https://covid19relief.sba.gov/#/. You’ll be directed to a series of questions about company size and verifying that you and your business are honest and not engaged in any illegal activities. You’ll also be expected to provide basic information about the business i.e. address and gross revenue, and yourself, the “business owner.” All in all, this application shouldn’t take you more than 30 minutes to complete, and we highly recommend that you apply as soon as possible. As we mentioned before, this program did close down due to fund depletion earlier this year, and therefore it is wise to apply as soon as you know you have a need. This way your likelihood of receiving as much funding as you need, or receiving funding at all, is higher.
Additionally, as you apply for this SBA assistance, realize you are applying with a government entity. It is important to answer all questions honestly and apply in good faith as many small businesses and their employees have great financial needs that must be met.
Overall, we truly hope this article helped you better understand how your small business can get the assistance that it needs. The coronavirus pandemic has provided challenges for all people from all walks of life, and small businesses certainly weren’t immune. Entrepreneurs everywhere have been challenged to be resilient and creative and we hope that your small business will continue to thrive for many more years to come!