By: Ashleen Sahni
Beginning on June 15, 2020, the Small Business Administration (SBA) reopened the Economic Injury Disaster Loan (EIDL) program to new qualified applicants. Low-interest EIDL loan funds are available to certain small businesses and US agricultural businesses to help them cope with the economic impact of the coronavirus (COVID-19) pandemic.
Features of the Economic Injury Disaster Loan (EIDL) Program
The Economic Injury Disaster Loan (EIDL) program is just one type of COVID-19 lending program offered to small businesses by the US government. EIDL provides low-interest loan funding to small businesses and private nonprofits that have experienced economic losses due to the COVID-19 pandemic and are also located in a county (or contiguous county) where a disaster has been declared. Businesses must have fewer than 500 employees to qualify for EIDL funding. If they have more than 500, they must be considered small by SBA standards.
EIDL Loan Terms, Interest, and Eligible Expenses
EIDL loans are available in amounts up to $2 million per business, with no upfront fees or early payment charges. Loan terms vary based on each business’s ability to repay the loan, up to a maximum of 30-year terms. EIDL loans feature an interest rate of 3.75% for small businesses, or 2.75% for nonprofits. Loan funds may be used to pay for fixed debts, payroll expenses, accounts payable, and other expenses that cannot be covered due to the impact of the coronavirus pandemic.
Cash Advances with EIDL Loans
EIDL applicants are also eligible for an additional $10,000 cash advance. This advance does not need to be repaid, and applicants can receive the advance without being approved for an EIDL loan. If businesses are approved for an EIDL loan after receiving the cash advance, the advance amount is deducted from their total loan amount.
Agricultural Businesses Newly Eligible
When the United States Congress approved increased funding for the EIDL program, they approved certain agricultural businesses for EIDL funding. Eligible agricultural businesses include those with 500 or fewer employees that are engaged in food and fiber production, ranching, livestock raising, aquaculture, and agriculture and farming related industries.
Contact a trusted Chugh CPAs, LLP professional today to help your business obtain critical Economic Injury Disaster Loan (EIDL) funding. New clients may contact us at firstname.lastname@example.org to schedule a consultation.