Businesses owners in all 50 states and U.S. territories can now access the SBA Economic Injury Disaster Loan program (EIDL). Through this program, businesses can apply for up to $2 million in low interest disaster relief financing in order to address working capital needs due to the impacts of COVID-19.
This program is only available directly through the SBA, and not Prudent Lenders. The SBA will manage all inquiries and applications (see the “how to apply” section for more).
Use of Funds and Program Details
The program parameters for the SBA EIDL are as follows:
- Amount: Businesses can access up to $2 million, including affiliate loans. Loan amounts are determined by the SBA’s evaluation of the business’s losses related to COVID-19.
- Interest rate: fixed at 3.75%
- Term: 30 years
- Other facts: The program includes a one-year deferment (interest will still accrue during this period) and there is no prepayment penalty.
- Use of funds: Businesses can ONLY use EIDL loans for financial relief due to the COVID-19 crisis. The loan funds can be used to pay accounts payable, payroll, fixed debts and other bills that typically would have been able to be paid had the business not been affected by COVID-19. Businesses cannot use the loan funds to refinance long-term debt, expand, or replace lost sales.
Requirements and Eligibility for the EIDL Program
A wide range of businesses impacted by COVID-19 can apply for the EIDL program, including restaurants, manufacturers, professional services, hotel, health care providers, recreational facilities and more.
Small businesses (and most nonprofits) that have been directly impacted by COVID-19 are eligible for loans through the EIDL program, as well as organizations that directly offer services to businesses that have been impacted. Businesses likely to be negatively impacted by general losses in their community are also eligible.
Businesses must also meet additional important criteria to qualify:
- The business must be experiencing economic losses from COVID-19, and COVID-19 only. If the business was struggling financially before the COVID-19 crisis, they are not likely to qualify for the program.
- The business owner must have a fair-to-good personal credit history.
- The business owner must demonstrate that they can repay the loan.
- Loan over $25,000 require collateral, and real estate must be pledged as collateral if it is available. Businesses that truly do not have collateral to pledge will not be declined. However, businesses are required to pledge what collateral they have available.
Application Process Details
Business owners can apply for the SBA EIDL program in two ways: via SBA’s online application or by mailing an application. Below are details on each method to help you guide your clients on which will be best for them. You can find support through SBA at 1-800-659-2955 or firstname.lastname@example.org. The SBA is receiving a high volume of applications, so long hold times and delays in reply can be expected.
Business owners can apply online for the EIDL at disasterloan.sba.gov/ela/. Please note that this is the only accurate link for the application; scammers have been putting up fake links to predatory programs.
The SBA has encouraged business owners to apply online, and a high number of applications have been submitted causing the SBA website to crash frequently. Business owners are advised to access the application during off peak hours (between 7 PM – 7 AM Eastern Time), and try back at a different time if they’re unable to access it. If a business owner can access the website, you may want to advise them to register for the site and then download the application to complete offline. They can fill it out manually and then submit it online when the website is working.
Application by Mail
Some business owners might find the option to apply by mail more convenient if they’re having trouble accessing the SBA website. Business owners can download the application forms, and then send the completed forms through an overnight service to:
U.S. Small Business Administration
Processing and Disbursement Center
14925 Kingsport Road
Fort Worth, TX 76155
Application Tips and Advice
- Businesses should be sure to review the application in its entirety and double check that it’s complete before submitting. The SBA has warned that incomplete applications will not be processed. If an incomplete application is submitted, the applicant will be alerted but moved to the back of the processing queue.
- Apply ASAP. Hundreds of thousands of business owners will be applying in the months to come (applications are open until December). Businesses don’t have to take the loan if they’re approved. This gives them the flexibility to get their application at the front of the queue while waiting to see what other options become available over the next several weeks.
- Contact local business agencies for support with the application. Some Small Business Development Centers (SBDCs) and Women’s Business Centers (WBCs) are providing help with applications or will be doing so in the coming weeks.