SBA EIDL Loans & How to Get COVID-19 Economic Injury Disaster Loans

Have you been yearning for a low-interest federal disaster loan for working capital for your small business? With the SBA EIDL loans of the Biden administration, that desire should be met. See the full details!

SBA EIDL Loans

Overview of SBA EIDL Loans

The U.S. Small Business Administration is offering SBA EIDL loans to designated states and territories.

A low-interest federal disaster loan for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19).

Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplement Appropriations Act.

SBA EIDL Loans Details

In response to the Coronavirus (COVID-19) pandemic, small business owners, including agricultural businesses, and nonprofit organizations in all U.S. states, Washington D.C., and territories can apply for an Economic Injury Disaster Loan.

The SBA EIDL Loans program is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to COVID-19.

PURPOSETo meet financial obligations and operating expenses that could have been met had the disaster not occurred
TERMSDeferred one year; interest still accrues
Borrowers may make payments if they choose to do so. Set up online payments through Pay.gov OR mail payments to: U.S. Small Business Administration
721 19th Street
Denver, CO 80202 Be sure to include SBA EIDL Loans number on mailed-in checks.
USE OF PROCEEDSWorking capital and normal operating expenses Example: continuation of health care benefits, rent, utilities, fixed debt payments.
COLLATERAL REQUIREMENTSRequired for loans over $25,000SBA uses a general security agreement (UCC) designating business assets as collateral, such as machinery and equipment, furniture and fixtures, etc.
FORGIVABLENO – EIDL LoanYES – SBA EIDL Loans Advance* *Advance funds have been fully allocated and are not currently available
MATURITY30 years
PAYMENTSDeferred one year; interest still accrues
Borrowers may make payments if they choose to do so. Set up online payments through Pay.gov OR mail payments to: U.S. Small Business Administration
721 19th Street
Denver, CO 80202 Be sure to include the SBA EIDL Loans number on mailed-in checks.

SBA is currently accepting new Economic Injury Disaster Loan (SBA EIDL Loans) applications from all qualified small businesses, including agricultural businesses, and private nonprofit organizations.

If you have already applied via the streamlined application portal, please do not resubmit your application.

SBA EIDL Loan Eligibility

Small business owners and qualified agricultural businesses in all U.S. states and territories are currently eligible to apply for a low-interest loan due to COVID-19.

Agricultural businesses with 500 or fewer employees are now eligible as a result of new authority granted by Congress in response to the COVID-19 pandemic.

Agricultural businesses include those businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural-related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)).

What Businesses Are Eligible to Apply?

SBA EIDL Loans

SBA’s Economic Injury Disaster Loans (or working capital loans) are available to small businesses, small agricultural cooperatives, small aquaculture businesses, and most private non-profit organizations.

This includes:

  • Businesses directly affected by the disaster
  • Businesses that offer services directly related to the businesses in the declaration
  • Other businesses indirectly related to the industry that are likely to be harmed by losses in their community

(Example: Manufacturer of widgets may be eligible as well as the wholesaler and retailer of the product.

Targeted SBA EIDL Loans Advance

COVID-19 Targeted SBA EIDL Loans Advance was signed into law on December 27, 2020, as part of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.

The Targeted EIDL Advance provides businesses located in low-income communities with additional funds to ensure small business continuity, adaptation, and resiliency.

Advance funds of up to $10,000 will be available to applicants located in low-income communities who previously received an EIDL Advance for less than $10,000, or those who applied but received no funds due to lack of available program funding.

Applicants do not need to take any action at this time. SBA will reach out to those who qualify.

SBA will first reach out to SBA EIDL Loans applications that already received a partial EIDL Advance (between $1,000 – $9,000).

Applicants will be contacted directly by SBA via email in the coming weeks with instructions to determine eligibility and submit documentation. 

All communications from SBA will be sent from an official government email with an @sba.gov ending. Please do not send sensitive information via email to any address that does not end in @sba.gov.

Applicants May Qualify If They:

  • Are located in a low-income community. To help applicants determine if they are located in a low-income community as defined in section 45D(e) of the Internal Revenue Code, a mapping tool is available at https://sbaeidl.policymap.com/app. Note that the business address must be located in a low-income community in order to qualify so SBA encourages potential applicants to check the map to see if they meet the low-income community eligibility requirement before they apply; and
  • Can demonstrate more than a 30% reduction in revenue during an 8-week period beginning later in the year. If an applicant meets the low-income community criteria, they will be asked to provide gross monthly revenue (all forms of combined monthly earnings received, such as profits or salaries) to confirm the 30% reduction. 

SBA EIDL Loans Line Of Actions to Expect

SBA EIDL Loans

Next, SBA will reach out to those who applied for EIDL loan assistance on or before December 27, 2022, but did not receive an EIDL Advance due to lack of program funding.

These applicants will receive an email from SBA with instructions to determine eligibility and submit documentation.

Applicants may qualify for a Targeted EIDL Advance if they meet the above criteria (low-income location and reduction in revenue) and:

  • Have 300 or fewer employees. Business entities normally eligible for the EIDL program are eligible, including sole proprietors, independent contractors, and private, nonprofit organizations. Agricultural enterprises are not eligible. 

All applicants may be asked to provide an IRS Form 4506-T to allow SBA to request tax return information on the applicant’s behalf.

Please do not submit duplicate COVID-19 SBA EIDL loan applications. Only prior applicants will be considered for the Targeted EIDL Advance. SBA will reach out to you if you qualify!

EIDL Advance (No Longer Available)

EIDL Advance funds were originally calculated based on the number of employees indicated on an applicant’s COVID-19 SBA EIDL Loans application: $1,000/employee, up to a maximum of $10,000.

  • The EIDL Advance does not have to be repaid.
  • Recipients did not have to be approved for an EIDL loan to receive the SBA EIDL Loans Advance.
  • The amount of the loan Advance was deducted from total loan eligibility.
  • Businesses that received an SBA EIDL loan advance in addition to the Paycheck Protection Program (PPP) loan will no longer have the amount of the EIDL Advance subtracted from the forgiveness amount of their PPP loan.

If you already applied for PPP loan forgiveness and had the amount of your EIDL Advance subtracted from the forgiveness amount, updated guidance will be published soon.

SBA EIDL Loans applications are still being processed, even though applications for the Advance are no longer available. Please do not submit additional applications on the COVID-19 EIDL portal.

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SBA EIDL Loans Requirements You Should Know

SBA EIDL Loans

Before you agree to a loan, be sure that you are aware of and understand SBA EIDL loan terms and requirements adequately.

1. Loans Are for a Term of 30 Years

All SBA EIDL Loans carry a term of 30 years, with an interest rate of 3.75%. Loans are automatically placed into deferment the first year of the loan, with repayment starting a year from when the initial loan was received.

2. Loan Amounts Have a Cap

Although disaster loan assistance is available for up to $2 million, the SBA EIDL Loans for COVID-19 were capped at $150,000.

3. Collateral is Required for Loans over $25,000

If you obtain an EIDL loan for more than $25,000, you will need to pledge business collateral to guarantee the loan. Collateral can include assets such as inventory and equipment as well as intangible assets such as trademarks and copyrights.

It’s also important to understand that if you do pledge collateral, you’re placing a lot of temporary restrictions on your business including the stipulation that while your loan is still outstanding, you cannot sell, lease, or transfer any collateral that was used as a loan guarantee without the approval of the SBA.

4. SBA EIDL Loans Recipients Cannot Change their Business Structure While the Loan is Outstanding

Your business structure must remain the same for the life of the loan. For example, if you’re looking to change your business structure from a sole proprietorship to an S corporation, you will first need the approval of the SBA.

5. Loans Cannot Be Used for Physical Improvements to Your Business

There are strict guidelines about what you can and cannot use SBA EIDL Loans for. And because the SBA requires you to save the receipts of any purchases made with EIDL loan monies, you must track these purchases properly.

What You Can Spend SBA EIDL Loans Funds On:

What You Can’t Spend EIDL Funds On:

  • Relocation costs
  • Bonuses
  • Stockholder dividends
  • Loan repayment, including federal loans
  • Facility repairs or additions
  • Refinancing long-term debt

Whatever monies you do spend, remember to save those receipts!

6. How Much Can I Borrow?

Eligible entities may qualify for loans up to $2 million. The interest rates for this disaster are 3.75 percent for small businesses and 2.75 percent for nonprofit organizations with terms up to 30 years.

Eligibility for these working capital loans is based on the size (must be a small business) type of business and its financial resources.

7. How Can I Use the Loan Funds?

These working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or for expansion.

8. What Are the Collateral Requirements?

  • Economic Injury Disaster Loans (SBA EIDL Loans) over $25,000 require collateral.
  • SBA takes real estate as collateral when it is available.
  • SBA will not decline a loan for lack of collateral but requires borrowers to pledge what is available.
SBA EIDL Loans

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