This Alert provides a brief summary of the EIDL for our small business clients. Additional details can be found on the SBA’s website. If we can help, please don’t hesitate to reach out.
Who is Eligible for the Economic Injury Disaster Loan (“EIDL”) program?
- Small businesses or nonprofits with no more than 500 employees or small under SBA Size Standards
- Sole proprietors and Independent Contractors
- Cooperatives, ESOPs or tribal small businesses with fewer than 500 employees
What are the terms of the loan?
- Maximum loan amount: $2 million (amount keyed to borrower’s actual economic injury)
- Additional funds: up to $10,000 advance (essentially a grant that borrowers need not repay; funds disbursed within 3 days, much more quickly than loan funds)
- Interest rate: 3.75% for small businesses; 2.75% for most private nonprofits
- Term: Up to 30 years (term keyed to borrower’s ability to repay); deferred for 12 months
- Loan forgiveness: Not available
- Personal guarantees: Not required for loans under $200,000; required for larger loans
- Collateral: Not required for loans under $25,000
- Approval criteria: Acceptable credit history; ability to repay loan
What can I use the money for?
EIDL funds are to enable your business to meet costs that it is unable to meet as a result of COVID-19. These costs include fixed debts, payroll, accounts payable, increased costs due to supply-chain interruption, and other expenses.
What do I have to do and when?
- Apply as soon as possible
- Certify that the applicant does not fall within the small number of EIDL exclusions (e.g., less than 1/3 of gross revenue from legal gambling; not in the business of lobbying; no principal is >60 days delinquent on child support)
- Quantify past revenues and COVID-19-related losses
- Provide any additional documents that may be requested
Can I get help with my application?
- Free assistance is available from SBA partners such as Small Business Development Centers, Women’s Business Centers, Veteran’s Business Centers, and local Chambers of Commerce.
- You may also seek assistance from an appropriately qualified attorney.
- Potomac Law Group has a number of long-standing relationships with many national, regional and local banks and other financial institutions offering SBA loans.