Apr 22, 2020

How to Apply for Your Economic Injury Disaster Loan

As the coronavirus continues to spread nationwide, small businesses are seeing a slew of negative impacts. From sales declines to supply chain disruption to sick employees, 2020 has delivered a grim first quarter.

“The pain and uncertainty of the impact of the coronavirus on small business owners is staggering and likely to be substantial,” explains a small business finance report from Forbes. “Entrepreneurs are being forced to take drastic steps to continue operating and many are fearful about their futures.”

The federal government took unprecedented action with the CARES Act. The $2 trillion relief package provides billions for the cause of supporting small businesses. A key part of the stimulus is the Economic Injury Disaster Loan (EIDL) program from the Small Business Administration (SBA).

These SBA disaster loans, which come in amounts up to $2 million, aren’t intended to replace sales or revenue declines due to a disaster. Instead, they provide financial support for everyday expenses such as rent payments, mortgage payments, payroll, paid sick leave, or accounts payable. As long as the expenses were part of your business operations before the disaster, they will likely qualify.

“The Economic Injury Disaster Loan Program (EIDL) can provide up to $2 million of financial assistance (actual loan amounts are based on amount of economic injury) to small businesses or private, nonprofit organizations that suffer substantial economic injury as a result of the declared disaster, regardless of whether the applicant sustained physical damage,” explains the federal government’s benefits website.

If you’re a small business owner, the interest rate for an EIDL is 3.75%. That rate goes down to 2.75% for nonprofits. Repayment terms vary, but you can expect the timeline to top out at 30 years.

As a bonus, the SBA is offering EIDL advances to help small business owners cover immediate needs. These advances are limited to $10,000 and can fund in just a matter of days. Best of all, the money doesn’t need to be repaid as long as it goes toward qualified uses such as payroll, mortgage payments, lease payments, or paid leave.

Qualifying for an EIDL

The SBA is famous for its strict qualifications and slow approvals. Given the severity of the coronavirus crisis, both those factors have now been relaxed somewhat for small business owners. But it’s still important to understand the unique qualifications and timelines before you apply for SBA emergency loans for small businesses.

To qualify, you must operate as an independent contractor, sole proprietor, or a nonprofit of the 501(c), 501(d), or 501(e) varieties. Additionally, your small business must have 499 employees or less. It’s important to note that you are allowed to have a higher number of employees in certain industries, so you’ll need to reference the SBA’s size standards to verify. You’ll need to prove that the COVID-19 crisis has delivered substantial injury to your finances. This condition means that if your business was floundering before the disaster, you probably won’t be a contender for the loan.

Applying for an EIDL

There are different application requirements for each of the SBA’s various loan products, so it’s advisable to over-prepare for your application so that you can answer any follow-up questions or provide additional documents if necessary. This proactive approach will streamline your application and help you get approved and funded sooner.

Here’s the information you should consider collecting before applying for an SBA disaster loan:

Your goal in the application process should be to get everything correct. If there are errors, you’ll get a notification and will have the opportunity to make corrections. But your application also gets bumped to the back of the line while they await your updated application. These delays could prove costly for your business, so make sure you do it right the first time.

While there is some variability on the application deadline based on where you live, plan on submitting before December 15, 2020. You can also consider applying for a PPP loan, but the money will likely need to be used for different expenses.

If you have additional questions about applying for an EIDL, check out our SBA loan page. You can also connect with your local SCORE chapter to talk to a mentor and get resources for navigating this crisis and rebuilding your business.


While every effort is made to ensure the accuracy of information when a story is published, the coronavirus pandemic and Paycheck Protection Program (PPP) have caused details to change at a rapid pace. Additional guidance from the government may change or clarify certain aspects of the forgiveness process and could result in changes to the information contained in these pages. For the most up-to-date information, please visit the COVID-19 section of our website. For more information, you can call us at (855) 853-6346. Lendio is not responsible for and provides no warranty as to the accuracy of this content. Lendio does not provide legal, accounting or tax advice. The information and services Lendio provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation.

About the author

Grant Olsen
Grant Olsen
Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.


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