The next topic in the discussion of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) are the provisions regarding the SBAs Economic Injury Disaster Loans. The big news with this program is the addition of a $10,000 loan advance which according to SBA.gov “will not have to be repaid.”
CARES Act Economic Disaster Loan (EIDL) Expanded Provisions
SBA Disaster Loans are not new and are usually available in the event of a federally declared disaster such as a wildfire or hurricane. However, this is the first-time a pandemic event has been defined as a federal disaster, and it is the first-time businesses in every state and territory in the US are eligible to apply. EIDL loans are offered directly by the SBA and include favorable terms such as a 30-year term and an interest rate of 3.75%.
- The CARES Act signed into law on Friday included several expanded provisions for EIDLs, including:
- EIDLs can now be approved solely based on an applicant’s credit score. This means a more streamlined application process.
- EIDLs of less than $200,000 can now be approved without a personal guarantee.
- The program expands to sole proprietors or independent contractors.
- The requirement that you cannot receive credit elsewhere is waived.
- The most significant expansion of the program is the addition of a $10,000 Economic Injury Loan Advance that will not have to be repaid. These payments are also being referred to as “EIDL Grants”. According to SBA.gov:
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.
This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application. This loan advance will not have to be repaid.
- To receive the $10,000 advance, you do not need to qualify for the actual loan itself, and there does not appear to be a requirement to accept any loan proceeds beyond the $10,000 initial grant.
- Borrowers can apply for both an EIDL and a Paycheck Protection Loan. However, loan proceeds may not be used for the same purpose, and if necessary, a borrower may need to refinance an EIDL with a Paycheck Protection Loan. Furthermore, the $10,000 loan advance grant would be subtracted from loan amounts that are eligible for forgiveness under the Paycheck Protection Loan.
- As of yesterday, a streamlined online application is available at sba.gov. The online application now includes a checkbox to indicate whether you would like to be considered for the $10,000 loan advance. Click here to apply. The application process takes about five minutes. Make sure the application is for the COVID-19 Economic Injury Disaster Loan.
If you apply for this loan and the $10,000 emergency loan advance, we ask that you let us know if and when you receive funds by emailing firstname.lastname@example.org. We appreciate your help as we gather information. As we learn more, we will keep you posted.