Since the onset of the coronavirus pandemic, the federal government has adjusted eligibility guidelines to better serve businesses affected by the pandemic. Sole proprietors, freelancers and independent contractors are among the newly eligible groups for Small Business Association (SBA) Economic Injury Disaster Loans (EIDLs). Similar to a PPP loan, EIDL loans provide funds for industries struggling to stay afloat in the wake of the coronavirus or any other qualifying disaster. An EIDL loan can be used to cover payroll and inventory, pay debt, cover increased costs due to supply chain interruption, to pay obligations that cannot be met due to revenue loss and for other uses. The interest rate on these loans is 3.75% for small businesses and 2.75% for nonprofits with up to 30 years to repay the loan, and the first payment is deferred for one year.
To qualify for an EIDL under the CARES Act, the applicant must have suffered “substantial economic injury” from COVID-19. EIDLs under the CARES Act are based on a company’s actual economic injury determined by the SBA (less any recoveries such as insurance proceeds) up to $2 million.
The loan application can be found here.
Economic Injury Loan Advances
The SBA Economic Injury Loan Advance (EIDL) of up to $10,000 provides economic relief to eligible businesses experiencing a temporary loss of revenue due to the Coronavirus (COVID-19) pandemic. The loan advance will not have to be repaid.
Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis. For agricultural businesses that submitted an EIDL application through the streamlined application portal prior to the legislative change, SBA will process these applications without the need for re-applying.
SBA resumed processing EIDL applications submitted before the portal stopped accepting new applications on April 15 and will be processing those applications on a first-come, first-served basis. On June 15, SBA began accepting new EIDL and EIDL Advance applications from qualified small businesses and U.S. agricultural businesses.
Eligible small businesses and agricultural businesses may can apply for the Loan Advance here.
Eligible businesses include:
- A business with not more than 500 employees.
- An agricultural enterprise with not more than 500 employees.
- An individual who operates under a sole proprietorship, with or without employees, or as an independent contractor.
- A cooperative with not more than 500 employees.
- An Employee Stock Ownership Plan (ESOP), as defined in 15 U.S.C. 632, with not more than 500 employees.
- A tribal small business concern, as described in 15 U.S.C. 657a(b)(2)(C), with not more than 500 employees.
- A business, including an agricultural cooperative, aquaculture enterprise, nursery, or producer cooperative (but excluding all other agricultural enterprises), with more than 500 employees that is small under SBA Size Standards found at https://www.sba.gov/size-standards.
- A business with more than 500 employees that is small under SBA Size Standards found at https://www.sba.gov/size-standards.
- A private non-profit organization that is a non-governmental agency or entity that currently has an effective ruling letter from the IRS granting tax exemption under sections 501(c),(d), or (e) of the Internal Revenue Code of 1954, or satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law, or a faith-based organization.
Agricultural businesses include businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)).