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Economic Injury Disaster Loans & Emergency Economic Injury Grants: What You Need to Know

By Travis Miskowitz

SBA’s Economic Injury Disaster Loan

THE BASICS

What is the criteria for a loan approval?

  • Credit History – applicants must have a credit history acceptable to SBA
  • Repayment – SBA must determine that the applicant business has the ability to repay the SBA loan
  • Eligibility – the applicant business must be physically located in a declared county and suffered working capital losses due to the declared disaster, not due to a downturn in the economy or other reasons

How much can I borrow?

  • Eligible entities may qualify for loans up to $2 million
  • The interest rates for this disaster are 3.75% for small businesses and 2.75% for nonprofit organizations with terms up to 30 years
  • Eligibility for these working capital loans are based on the size (must be a small business, less than 500 employees) and type of business and its financial resources

How can I use the loan funds?

  • These working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or for expansion

COLLATERAL REQUIREMENTS

What are the collateral requirements?

  • Economic injury disaster loans over $25,000 require collateral
  • SBA takes real estate (commercial & residential) as collateral when it is available
  • SBA will not decline a loan for lack of collateral, but requires borrowers to pledge what is available

INELIGIBLE ENTITIES

What are some of the businesses that are ineligible for an Economic Injury Disaster Loan?

  • Agricultural Enterprises – if the primary activity of the business (including its affiliates) is as defined in Section 18(b)(1) of the Small Business Act, neither the business nor its affiliates are eligible for EIDL assistance
  • Religious Organizations
  • Charitable Organizational
  • Gambling Concerns – (Ex: Concerns that derive more than 1/3 of their annual gross revenue from legal gambling activities)
  • Casinos & Racetracks – (Ex: Businesses whose purpose for being is gambling (e.g., casinos, racetracks, poker parlors, etc.) are not eligible for EIDL assistance regardless of 1/3 criteria above
  • Real estate developers – establishments primarily engaged in subdividing real property into lots and developing it for resale on their own account

ABOUT THE PROCESS

  • SBA’s Economic Injury Disaster Loan (EIDLs) funds come directly from the U.S. Treasury
  • Applicants do not go through a bank to apply. They apply directly to SBA’s Disaster Assistance Program at: disasterloan.sba.gov/ela
  • There is no cost to apply
  • There is no obligation to take the loan if offered
  • The maximum unsecured loan amount is $25,000
  • Applicants can have an existing SBA Disaster Loan and still qualify for an EIDL for this disaster, but the loans cannot be consolidated

Questions or concerns about SBA loans? We're standing by and ready to help.

Coronavirus, COVID, COVID-19, Economic Injury Disaster Loan, EIDL, SBA, Small Business Administration, Travis Miskowitz

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