Updates to Economic Injury Disaster Loans

CURRENT AS OF APRIL 7, 2020


Key Points:

  • Under the Economic Injury Disaster Loan (EIDL) advances will start to be distributed this week.  Advances are $1000 per employee, up to $10,000 max.
  • This $10,000 grant would reduce any forgiveness a business receives, if they also apply for and receive money under the Payment Protection Program (PPP).

During the period of January 31, 2020 – December 31, 2020 there is expanded eligibility for companies that can take an economic disaster relief loan under SBA section 7(b)(2), also called Economic Injury Disaster Loan (EIDL).

Eligible Entities Include:
  • a business with less than 500 EEs
  • any individual who operates under a sole proprietorship, with or without employees, or as an independent contractor
  • a cooperative with less than 500 EEs
  • an ESOP with less than 500 EEs
  • a tribal small business concern with less than 500 EEs
With respect to 7(b)(2) loans, the SBA waives the following items that are generally required to get these loans:
  • rules for personal guarantee on advances/loans as long as they are under $200k
  • the requirement that an applicant needs to be in business for 1 year prior to disaster (as long as the applicant was in operation on or prior to 1/31/20)
  • the requirement that an applicant prove they are not able to obtain the credit elsewhere
  • Generally the SBA must determine ability to pay for the applicant prior to approving a loan, however this requirement can now be satisfied solely by reviewing credit score of applicant

One of the key changes from previous versions of the EIDL is applicants can request an emergency grant of $10,000, which is part of the maximum $2 Million loan to be paid within 3 days of application. This $10,000 is treated as a grant and does not need to be repaid, even if the loan request is denied. If a company receives this $10,000 grant and also gets a 7a loan (also known as the Payment Protection Loan under the CARES Act), the $10,000 grant will reduce any forgiveness that the company would be eligible for.  You can find more information on applying for the EIDL Loan here – SBA EIDL Information

For further questions please reach out to me at cdennis@teamdkb.com or any member of our COVID-19 Task Force at hello@teamdkb.com.