EIDL Loans – Economic Injury Disaster Loans and Grants – Part of Phase 3 Corona Virus Relief

As part of the $2 Trillion CARES Act sole proprietors, Independent Contractors (ICs) and self-employed became eligible for SBA loans and grants not previously available to them. One of those programs is the Economic Injury Disaster Loan program (EIDL), usually reserved for disasters like hurricanes and earthquakes.

The EIDL program is traditionally a loan, but for the short period between January 31, 2020 and December 31, 2020, it will have a grant portion as well if the economic hardship is caused by COVID-19. You will need to provide your ability to repay this loan. NAR put out a synopsis you may find helpful. The U.S.Chamber of Commerce published a Guide to the EIDL Loans.

EIDL grants are a $10,000 advance on an EIDL loan. The lender can issue the payment within three days of applying and it is forgivable.

The EIDLE loan is available to small business, sole proprietors, ICs, and the self-employed. The business must make a certification it is being negatively affected by COVID-19. Under current circumstances that should be easily accomplished for most.

The loan is an SBA loan you apply for through the SBA Disaster Loan Assistance website. Unlike other SBA loans that can take several weeks to be approved, the lenders of these loans are able to approve them with little SBA interaction or delay.

The EIDL loan is a low interest loan at 3.75% with a negotiable term up to 30 years. This loan may be used in conjunction with the Payment Protection Program loan. PNC Bank put together an easy to read info flyer comparing the PPP program and the EIDL program. Keep in mind, if you only want the PPP loan but already have an EIDL loan, you can refinance the EIDL into a PPP. Speak to your lender to learn more.

The EIDL loan can be used for payroll, accounts payable, bills, mortgages, costs due to supply chain disruptions, lease payments, or other obligations. The loan will not require a personal guarantee if it is under $200,000 and instead of real estate as collateral, the SBA will take a security interest in the business property. According to Director Alex Contreras at the Disaster Preparedness office, it is possible to get the $10,000 even if you don’t qualify for additional funds. You must have been in business as of January 31, 2020 in order to qualify.

The Senate Banking Committee put together an easy to read multi-page Q&A to guide you through small business debt relief, EIDL loans and grants, and the Paycheck Protection Program (PPP).