Who is Eligible for Economic Injury Disaster Loans (EIDL)?

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By Maunika Patel and Sanjay Patel

Economic Injury Disaster Loans (EIDL) provide a source of relief for businesses enduring the COVID-19 pandemic. Small businesses with 500 or fewer employees are eligible for EIDL funding if they have suffered working capital losses due to COVID-19 and are based in the United States.

The maximum Economic Injury Disaster Loan available is equivalent to six months of a business’s working capital, up to $150,000. Businesses can use EIDL proceeds for working capital and normal operating expenses.

Unlike Paycheck Protection Program (PPP) loans, EIDL funding is not forgivable and must be repaid over a 30-year period. Interest rates are fixed at 3.75% for businesses, and 2.75% for nonprofits. Businesses may defer EIDL payments for one year, but interest will accrue during that period. There are no pre-payment penalties.

EIDL advances  

Borrowers do not have to repay EIDL advances. At the time of writing, regular EIDL advances are no longer available, although new funding could reopen the program in the future. Targeted EIDL advances of up to $10,000 are still available for certain businesses in low-income communities.

Borrowers that have already taken out an EIDL advance do not need to deduct the amount of their advance from their PPP loan forgiveness amount. Further, EIDL advances are not taxable, and businesses can deduct expenses paid using EIDL funds on their 2020 taxes.

second round economic injury distaster loans

Businesses who have already taken out an EIDL loan are eligible for second round loans, subject to their revenue and credit limit. Additionally, businesses still qualify for an EIDL loan even if they have already taken out a PPP loan. However, borrowers cannot use funds from both loans for the same purposes.


For help applying for Economic Injury Disaster Loans or other COVID-19 financing, please contact your trusted Chugh CPAs, LLP professional.