There is no doubt that the COVID-19 pandemic has adversely impacted small businesses. In response to the pandemic, the U.S Small Business Administration (SBA) has allocated a unique funding program to assist small businesses, agricultural businesses, and non-profit organizations experiencing temporary revenue loss due to COVID-19.
What is the Economic Injury Disaster Loan (EIDL)?
The Economic Injury Disaster Loan (or EIDL) is a long-term direct loan from the SBA. The Federal government created this program to assist small businesses, agricultural businesses, and non-profit organizations that have been negatively affected by the COVID-19 pandemic. Such adverse effects include these entities not meeting their financial commitment covering their working capital and ordinary operating expenses due to the pandemic.
Generally, the amount available for each approved loan covers up to six months of working capital, with a maximum of $150,000. The businesses are expected to use these loan proceeds to fund their working capital and ordinary operation expenses, which could include payments for the continuation of healthcare benefits, rent, utilities, and fixed debt payments.
Under this program, approved loans that were approved are granted up to 30 years to repay with the following fixed terms: 3.75% APR for businesses and 2.75% APR for non-profit organizations. There are no pre-payment penalties or fees associated with this loan, and it would not mature for 30 years. However, collateral is required for loans over $25,000, and a personal guarantee is required for loans over $200,000.
An important thing to note is that an EIDL loan is not forgivable, but an EIDL Advance is forgivable.
Who is Eligible for the EIDL?
According to the SBA, all small business owners, qualified agricultural businesses, and non-profit organizations in all U.S states and territories are eligible to apply under this program.
Qualified agricultural businesses include those with 500 or fewer employees, and engaged in producing food, fiber, raising livestock, aquaculture, and other farming and agricultural-related industries.
What is a Targeted Economic Injury Disaster Loan EIDL Advance?
The COVID-19 Targeted EIDL Advance was created on December 27, 2020, as part of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.
This program aims to provide small businesses in low-income communities adversely affected by the pandemic with additional funds to promote continuity, adaptation, and resiliency.
Under this program, an approved applicant can be granted up to $10,000 if they had previously received an EIDL Advance for less than $10,000 or if they had once applied but were not granted any funds due to lack of available program funding at that time.
As stated above, the targeted EIDL Advance program is currently available to certain targeted individuals based on severely impacted areas.
Who is Eligible for a Targeted EIDL Advance?
Under this program, applicants who have 300 or fewer employees located in a low-income community can demonstrate that they had more than a 30% reduction in gross monthly revenue during an 8-week period starting March 2, 2020, or later.
What is the EIDL Increase?
On April 6, 2021, the SBA had raised the loan limit for the COVID-19 EIDL to cover a 24-month economic injury with a maximum loan amount of $500,000.
Who is Eligible for the EIDL Increase?
An applicant’s loan must be approved before April 7, 2021, for less than $500,000 to be eligible for an EIDL Increase.
Our firm can help you prepare to and assist you to apply for this loan. Please Call Us Today 301-363-2668.
Written by: Yoscaisa Jorge, Esquire.