The Economic Injury Disaster Loan (EIDL)

The Economic Injury Disaster Loan (EIDL)

The CARES Act includes a $10,000 advance (the Emergency Economic Injury Grant) within three days of applying for an EIDL. To access the advance, you must first apply for an EIDL and then request the advance.


The advance does not need to be repaid. See page 28 of the CARES Act.

What is an EIDL Grant? The CARES Act appropriates $10 billion for emergency EIDL Grants.  While a business’s application for an EIDL Loan is pending, the applicant may apply for a grant of up to $10,000 (EIDL Grant), which shall be paid within three days of application. Awarded EIDL Grants will not need to be repaid, even if the business’s application for an EIDL Loan is denied.

Who is the lender? The Small Business Administration (SBA)

When can I apply? RIGHT NOW.

Who can apply? A business with not more than 500 employees; sole proprietors; independent contractors.

What is the maximum amount of the loan? $2 million.

What is the interest rate? 3.75% for businesses.  2.75% for non-profits.

What is the term? Up to 30 years.

When is the first loan payment due? 1 year after loan origination date. (interest is accused during the deferment).

What can we use the loan for?  Prior to the CARES Act, EIDL Loans could be used for working capital necessary until resumption of normal operations and expenditures necessary to alleviate economic injury, but not beyond that which the business could have provided had the injury not occurred.  The CARES Act expands these uses to include paying sick leave to employees unable to work due to the direct effect of COVID-19; maintaining payroll to retain employees; meeting increased costs to obtain materials unavailable from the business’s original source because of supply chain issues, rent or mortgage payments; and repaying certain obligations that cannot be met due to revenue losses.

Is there a loan forgiveness program? No, although the $10,000 cash advance does not need to be repaid!

What collateral is required? SBA will place a lien against the assets of the business.

Is a personal guarantee required? Yes, for loans above $200,000. Owners of > 20% of the business, managing members of LLCs, managing partners of LPs. However, no liens will be taken against real estate owned by the guarantor

Where do I apply? See:

Interplay of EIDL with Paycheck Protection Program Loans?  If a borrower has received an EIDL Loan unrelated to the COVID-19 outbreak, it may apply for a Paycheck Protection Loan due to COVID-19. Borrowers that have received an EIDL Loan in connection with the COVID-19 outbreak may not receive a Paycheck Protection Loan for the same purpose, but they may refinance their existing EIDL Loan with a Paycheck Protection Loan if they meet the eligibility requirements. EIDL Grants awarded under the EIDL Program would be subtracted from amounts ultimately forgiven under the Paycheck Protection Loan Program.

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