The U.S. Small Business Administration has reopened the Economic Injury Disaster Loan (EIDL) and EIDL Advance programs for eligible small businesses and non-profits experiencing economic difficulties due to COVID-19.
The EIDL program offers long-term, low interest loans designed to alleviate temporary loss of revenue from disasters or unforeseen circumstances. Small businesses can use these loans to cover payroll, inventory, debt payments, or various other expenses. EIDL Advance is an additional program that provides up to $10,000 ($1,000 per employee) in emergency grants for small businesses that are experiencing temporary economic hardships. These grants do not require repayment.
EIDL Program Reopened to Aid Small Business Recovery
Small businesses in various industries have faced major difficulties since the onset of the COVID-19 pandemic. Many have had to shut down completely, slow down operations, contend with supply chain issues, or deal with lost employee hours or productivity. So this program is one step toward alleviating some of those issues for small businesses and their employees.
In addition to re-opening the portal, the federal government has opened up the loan program to sole proprietors, freelancers, and independent contractors — groups that weren’t previously eligible for this type of aid after previous disasters.
Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan said of the move, “Access to capital remains a top problem for many small businesses during the re-opening and recovery period. Re-opening the EIDL portal to all eligible small businesses is critical to a balanced and inclusive recovery across the country and economy. We are pleased small businesses across sectors will have a shot at getting the financing they need.”
More Access to Capital for Small Business
This change is just one part of the federal government’s plan to alleviate economic strain for small businesses impacted by COVID-19. The Paycheck Protection Program is also still accepting loan applications until June 30. However, EIDL loans can be used for operating expenses that are not already covered by a Paycheck Protection Program loan. The interest rate is 3.75 percent for small businesses and 2.75 percent for non-profits. Loans are also available with lengthy repayment terms of up to 30 years, with the first payment deferred for one year.
Small businesses and non-profits that require additional assistance may also request an EIDL Advance grant of up to $10,000 while completing their loan application. Some small businesses that are facing a temporary loss of revenue may even receive an advance if they are not approved for a loan.
The EIDL program has previously been available to businesses facing economic impact from other disasters, so the program itself is not new. But this announcement simply extends the program and provides another avenue for affected businesses to seek aid. Additionally, the nationwide reach of COVID-19 has made it even more important for the SBA to improve the portal and deliver the necessary solutions to help companies across the country stay afloat.
SBA Administrator Jovita Carranza said in a statement, “Since EIDL assistance due to the pandemic first became available to small businesses located in every state and territory, SBA has worked to provide the greatest amount of emergency economic relief possible. To meet the unprecedented need, the SBA has made numerous improvements to the application and loan closing process, including deploying new technology and automated tools.”
To qualify for EIDL loans or assistance, businesses must be located within the U.S. and have fewer than 500 employees or meet specific SBA industry requirements. You can apply for the program on the SBA’s website.