The EIDL (Economic Injury Disaster Loan) program is a program available to certain small businesses located in areas subject to a presidential disaster declaration that have suffered a substantial economic injury as a result. The CARES Act includes $10 billion to expand the EIDL program to businesses beyond previous size limits to include those with up to 500 employees. Additionally, an EIDL “grant” provision allows applicants to request that the SBA provide an immediate advance of up to $10,000 within three days of an application, in an effort to get money into the hands of small businesses as soon as possible.
A small business can get both the EIDL and the PPP (Paycheck Protection Program) loans. They are very different, and each business needs to consider their own situation in terms of payroll, and any other obligations they have that are necessary. Some obligations may be eligible under the EIDL, but not under the PPP. You want to be sure if you want the payroll and related expenses covered by the PPP loan to be forgiven, then do not use the EIDL loan for that same period of payroll. The EIDL loan approval determination is made by SBA Office of Disaster Assistance.
Loans can be up to $2 million and can be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is capped at 4% and the repayment term is for a period of up to 30 years. Small (less than $200K) loans are also available without the need for personal guarantees. EIDL loans are not subject to forgiveness and must be paid back. The application period for the EIDL runs through December 2020.
Currently, only applications for EIDL loans are available through the SBA’s website. If you did not apply through the streamlined process which started last week, SBA request that you visit https://covid19relief.sba.gov/#/ and reapply with the secure streamlined process. You will not lose your place in queue with your original EIDL loan application.
See more from the US Chamber of Commerce here.
Contact us directly should you have any further questions. At this time, the majority of our staff are currently working from home, which means the best means for contact is via email. We continue to work hard to ensure your personal and business needs are met during these tumultuous times. Stay safe and healthy!
Yours truly,
Walter & Shuffain, P.C.