COVID-19 Measure: Economic Injury Disaster Loan (EIDL) Overview

2020-03-28

On June 15, 2020, the SBA resumed accepting new applications not only from and U.S. agricultural businesses but also from qualified small businesses.  Agricultural businesses includes 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)) (see SBA webpage).

Small businesses and private, nonprofit organizations may apply for the Economic Injury Disaster Loan (EIDL) provided by the U.S. Small Business Administration (SBA).  An EIDL is a long-term, low interest rate loan that purports to support small businesses suffering substantial economic loss due to the coronavirus (COVID-19) pandemic.  The SBA has been updating its website frequently since late March 2020.  We will also update this webpage as new information becomes available.

Please also check the News about the Paycheck Protection Program (PPP) on our website.

1. Eligible Recipients

  • Small businesses*, small agricultural cooperatives, small aquaculture enterprises**
  • No more than 500 employees (including affiliates). Applicable to:
    • Businesses
    • Cooperatives
    • Employee Stock Ownership Plan entities (as defined in section 3 of the Small Business Act (15 U.S.C. 632))
    • Tribal business concerns under Section 31(b)(2)(C) of the Small Business Act
  • Sole proprietorships (with or without employees) and independent contractors
  • Most private nonprofit organizations

* The SBA’s standard business size differs depending on the industry. Please see the SBA’s Size Standards Tool (enter (1) NAICS code and (2) annual gross receipts*** or employee number) or the Table of Small Business Size Standards.

 E.g.: Restaurant (Full Service) (NAICS: 722511) – average annual receipts $8M.

** “Affiliates” mainly include a parent company, subsidiaries, and sister companies and are determined based on their control over the other. Generally, a business concern that has more than 50% ownership (or vice versa) is considered an affiliate. See “Affiliate” in the SBA’s Glossary of Business Financial Terms and 13 CFR 121.103.

There is no waiver of affiliation rules, which apply to hotels, restaurants, and other designated businesses under the Paycheck Protection Program (PPP), for EIDL loans.  (See “1. Eligible Recipients” on the PPP overview of our website.)

*** “Annual receipts” means the “total income” (or “gross income”) plus the “cost of goods sold.”  These numbers can be normally found on Internal Revenue Service (IRS) tax return forms.

2. Other Requirement/Prerequisites

  • An applicant has suffered or is likely to suffer substantial economic injury (i.e., the business is unable to meet its obligations and to pay its ordinary and necessary operating expenses) as a result of COVID-19.
  • The following credit conditions are met:
    • An applicant has credit history acceptable to the SBA.
    • The SBA determines that an applicant has an ability to repay the loan.
    • A loan of over $25,000 requires collateral.  However, the SBA will not decline a loan for lack of collateral but requires an applicant to pledge what is available. 
  • The SBA determines that an applicant is unable to obtain credit elsewhere.
  • An applicant does not need to wait for an insurance settlement before applying for the loan.  The SBA may approve a loan for the total eligible losses within the administrative guidelines and later adjust the amount of loan if the applicant receives insurance funds.

3. Application Deadline

  • An EIDL application deadline is nine months from the date of the disaster declaration (i.e., in Washington, December 16, 2020).
  • The SBA stopped accepting new applications on April 16, 2020 and then reopened only for U.S. agricultural businesses on May 4, 2020. On June 15, 2020, the SBA resumed accepting new applications from qualified small businesses as well. 
  • According to the SBA, applicants who submitted an EIDL application prior to March 30, 2020 and have a “2” as the lead number in their confirmation number need to reapply using the new streamed application for their application to be processed.  (If the front of the 10-digit confirmation number shows “3,” the application was successfully applied through the SBA’s new streamlined application.)

4. Loan Terms

  • Loan Amount:
    • Limit: $2M
    • The actual loan amount is limited to the economic injury determined by the SBA.
    • Business interruption insurance and other recoveries are subtracted from the amount of economic injury.
    • The SBA considers potential contributions from the business and/or its owner(s) or affiliates.
  • Interest rate (per annum): 3.75% for small businesses, 2.75% for nonprofits
  • Term: Maximum 30 years (determined by an applicant’s ability to repay the loan)
  • Covered period: January 31, 2020 to December 31, 2020
  • Allowable Uses:
    • The proceeds of the EIDL loan may be used for working capital, which includes fixed debts (e.g., rent and utilities), payroll, accounts payable, and other bills that could have been paid had the disaster not occurred.
    • If an applicant also received the PPP loan, both loans may not be used for the same purposes. If the EIDL loan was used for payroll costs, the PPP loan must be used to refinance the EIDL loan. (If the EIDL loan was not used for payroll costs*, it does not affect the applicant’s eligibility for a PPP loan.)
        * See “3. Allowable Uses” in PPP overview of our website for the details of “payroll costs.”

 4.a. Advance Loan

The SBA began accepting applications for EIDL Advance as part of the CARES Act (effective March 27, 2020).  The conditions are as follows:

  • Maximum amount: $10,000
  • When available: within days of a successful application
  • No need to be repaid.
  • How to apply: from the link below (see “6. How to Apply”), at the same time to submit an EIDL application

5. Repayment

  • One-time payment or recurring payments
  • How to Repay:
    • Payment online via Pay.gov. (Borrowers may set up recurring payments and confirm their payment(s).)
    • Payment by Mail: Send a check or money order to the SBA.
    • Payment by phone: Contact the SBA Customer Service Center toll-free at 1-800-659-2955 (TTY: 1-800-877-8339).

6. How to Apply: Online at https://covid19relief.sba.gov/#/

7. Application Documents

The information in this Paragraph 7 is provided simply as a reference, as it has been deleted from the SBA’s website after the new SBA’s streamlined application was introduced on March 30, 2020.

 7.a. Sole Proprietor

  • Disaster Home / Sole Proprietor Loan Application, SBA Form 5C
  • Request for Transcript of Tax Return, IRS Form 4506-T (This form authorizes the IRS to provide federal income tax information directly to the SBA.)
  • EIDL Supporting Information, ODA Form P-019

 7.b. Small Business Concern, Small Agricultural Cooperative, Small Aquaculture Enterprise

  • Disaster Business Loan Application, SBA Form 5
  • Fee Disclosure Form and Compensation Agreement, SBA Form 159D (if an applicant engages the services of any agent to file an application or close a loan)
  • Request for Transcript of Tax Return, IRS Form 4506-T, for the following applicable individual(s). This form authorizes the IRS to provide federal income tax information directly to the SBA:
    • Applicant
    • Principal owning 20% or more of the applicant business
    • General partner
    • LLC managing member
    • Any owner who has greater than 50% ownership in an affiliate business (including business partners, subsidiaries, and or/other businesses with common ownership or management)
  • Federal income tax returns, including all schedules (an explanation if not available)
  • Personal Financial Statement, SBA Form 413D, for the following applicable individual(s):
    • Each proprietor
    • General partner
    • LLC managing member
    • Each owner of 20% or more of the equity of the applicant (including the assets of the owner’s spouse and any minor children)
    • Any person providing a guaranty on the loan
  • Schedule of Liabilities listing all fixed debts (SBA Form 2202 may be used) 

  • EIDL Supporting Information, ODA Form P-019

 7.c. Nonprofit Organization

  • Disaster Business Loan Application, SBA Form 5
  • Fee Disclosure Form and Compensation Agreement, SBA Form 159D (if an applicant engages the services of any agent to file an application or close a loan)
  • Request for Transcript of Tax Return, IRS Form 4506-T, for the following applicable individual(s)/entity(ies). This form authorizes the IRS to provide federal income tax information directly to the SBA:
    • Applicant
    • Any affiliated entity (including business parents, subsidiaries, and/or other businesses with common ownership or management)
  • Tax Information – either of:
    • Most recent federal income tax returns, including all schedules
    • IRS tax-exempt certification and complete copies of the organization’s three most recent years’ “Statement of Activities”
  • Schedule of Liabilities
  • EIDL Supporting Information, ODA Form P-019

8. Additional Information (Deadline: 7 Days from Information Request)

 8.a. Sole Proprietor

 (1) To Process Application

  • If any applicant has changed employment within the past two years, a current (within 1 month of the application date) pay stub for all applicants
  • Federal income tax returns, including all schedules)

 (2) After Loan Approval, Before Closing

  • If an applicant owns his/her residence, a complete legible copy of the deed, including the legal description of the property

 8.b. Small Business Concern, Small Agricultural Cooperative, Small Aquaculture Enterprise, Nonprofit Organizations

  • Most recent federal income tax returns, including all schedules, for the following applicable individual(s)/entity(ies):
    • Principal owning 20% or more
    • General partner
    • LLC managing member
    • Affiliate when any owner has more than 50% ownership in the affiliate business (including business partners, subsidiaries, and or/other businesses with common ownership or management)
  • If the most recent federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year
  • A current year-to-date profit-and-loss statement
  • Additional Filing Requirement (SBA Form 1368) providing monthly sales figures

9. SBA Contact Information

10. References

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