The Small Business Administration (SBA) announced June 15th it is reopening up its Economic Injury Disaster Loan (EIDL) loan program. The EIDL loans come on a first come, first serve basis.
The President declared a national state of emergency in response to the Coronavirus (COVID-19) pandemic. Because of this, small business owners in all U.S. states, Washington D.C., and territories are able to apply for an EIDL advance of up to $10,000. This advance is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue. This loan advance will not have to be repaid.
The CARES Act originally allocated $10 billion to help small businesses with emergency funds if they we impacted by the COVID-19 pandemic. The loan amounts were up to $10,000 and could be processed in three days. However, those funds ran out on April 16, 2020. Congress passed and the President signed a second relief bill adding an additional $10 billion to the program. This was designed to meet the needs of applications already in the system as well as those businesses who still have the need but had not yet applied.
Requirements for the Economic Injury Disaster Loan (EIDL)
The following businesses and individuals are eligible for an EIDL:
- Businesses with less than 500 employees
- Individuals who operate under a sole proprietorship, with or without employees
- Independent contractors
- Cooperatives with no more than 500 employees
- Employee Stock Ownership Plans (ESOPs) with no more than 500 employees
- A tribal small business concern with less than 500 employees
- Businesses, including agricultural cooperatives, aquaculture enterprises, nurseries, or producer cooperative, categorized as a small business according to the SBA size standards
- Private, nonprofit organizations
In addition, the SBA will look to see if you were in business on January 31, 2020. Businesses opened after that date are not eligible.
Guidelines for use of funds
- Providing paid sick leave to employees unable to work due to COVID-19
- Maintaining payroll to retain employees during business disruptions or slowdowns
- Meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains
- Making rent or mortgage payments
- Repaying obligations that can’t be met due to revenue losses
- Supplies to combat the spread of COVID-19 in the workplace
Important Note if you already received a Paycheck Protection Program (PPP) Loan
If you received a Paycheck Protection Program loan, you can’t use your EIDL funds and paycheck protection funds for the same purposes. For example, if you use your paycheck protection loan for payroll costs, you can’t use your EIDL funds for those same expenses. But, you could use your EIDL funds to purchase supplies to prevent the spread of COVID-19 in the workplace (masks, hand sanitizer, etc.). In addition, Your loan forgiveness amount under the Paycheck protection program will be reduced by the amount of the loan advance you receive under the EIDL program up to $10,000. If you did not receive a PPP Loan the entire EIDL loan amount is forgiven.
*This document simplifies complex Acts as it is understood by Time Equipment Company. It is not to be taken as legal advice. The regulations for this program are changing. For further information about the Economic Injury Disaster Loan please visit www.sba.gov or www.coronavirus.gov
