Economic Injury Disaster Loans



In continued response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan (EIDL).  The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $150,000 that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

The Economic Aid to Hard Hit Small Businesses bill offers new improvements to the existing Covid-19 EIDL program, including:

  • target the $10,000 advance to low-income communities to ensure continuity, adaptation, and resiliency;

  • permit small businesses in low-income communities that received an EIDL advance to receive additional funds, up to $10,000;

  • extend the covered period for emergency EIDL grants through December 31, 2021;

  • authorize an additional $20 billion for emergency EIDL grants.

This is a longstanding program offering low-interest loans for businesses that have suffered losses from some kind of disaster. The loans are made directly by the S.B.A., you don’t have to go through a bank.  Federal legislation in response to the pandemic committed more money and relaxed some of the S.B.A.’s usual requirements for disaster loans.

The deadline to apply for a COVID-19 pandemic Economic Injury Disaster Loan has been extended to December 31, 2021.  To date (Jan 2021), SBA has approved $197 billion in low-interest loans, which provide U.S. small businesses, non-profits, and agricultural businesses working capital funds. Economic Injury Disaster Loan applications will continue to be accepted through December 2021, pending the availability of funds.

Loans are offered at affordable terms, including a 3.75% interest rate for small businesses and 2.75% for non-profit organizations, a 30-year maturity, and an automatic deferment of one year before monthly payments begin. All eligible small businesses and nonprofits are encouraged to apply.

The S.B.A. does not require a personal guarantee on loans of less than $25,000.  Business assets, like machinery and equipment, can be used to secure loans of up to $500,000; and larger loans may require real estate, whether it’s your business’s or your own, if you have it.

For these loans the S.B.A. will determine how much you can borrow using a formula intended to approximate six months of your operating expenses.  To calculate that, we will generally subtract the cost of goods sold from revenue and apply for half of that sum.  However, because of high demand, the S.B.A. has recently been capping EIDL's at $150,000; and the loans cannot be used to refinance previous loans; but may be utilized for most everything else.