What is an Economic Injury Disaster Loan (EIDL)?

An Economic Injury Disaster Loan is a traditional SBA loan reserved for disaster relief. While generally known for strict requirements and long wait times before receiving funds, much of that has shifted in response to the CARES Act and coronavirus (COVID-19) pandemic.

The SBA is offering a loan advance, the Emergency Economic Injury Grant (EEIG), of up to $10,000 for businesses that applied.

How Can You Use an EIDL?

These loans offer support for small businesses and help them stay operational during disaster-induced hardship. Use these funds to cover necessary day-to-day expenses your business would have successfully covered before coronavirus or other disasters impacted your finances. Examples include:

• Payroll
• Accounts payable
• Providing paid sick leave to employees
• Matching increased costs to obtain materials
• Rent or mortgage payments
• Other obligatory payments that cannot be met due to revenue loss

How Much Can You Get with an EIDL?

Loan amounts for this disaster relief loan cap at $2 million. However, there are several other important details you should know.

• Interest rates for small businesses are 3.75% and 2.75% for nonprofit
• You can get terms up to 30 years

Who Qualifies for an EIDL?

There are other specific requirements for EIDLs. These requirements also apply to businesses that had previously applied for an EIDL due to COVID-19.

Those requirements are that you:

• Are a US business with fewer than 500 employees
• Operate as a sole proprietor or an independent contractor during the covered period (January 31, 2020, to December 31, 2020)
• Are a 501(c), 501(d), or 501(e) private nonprofit
• Can prove substantial economic injury caused by COVID-19

The SBA requires you to prove your business has suffered as a direct result of coronavirus. If your business was experiencing financial hardship before the pandemic, you likely won’t qualify.

How Can You Apply for an EIDL?

You can apply for an EIDL and the advance on the SBA website.