PLEASE NOTE: as of the time of this publication, the PPP is not accepting new applications, and COVID EIDL is no longer accepting new applications but will continue to accept requests for increases, reconsideration, and appeals.
In this article:
- How to apply for SBA disaster funding
- What is the SBA economic injury disaster loan (EIDL) program?
- Is the EIDL program currently open?
- Should I apply for PPP loans instead of EIDL?
- What is the EIDL advance, and “targeted EIDL advance” from SBA?
- Is the SBA accepting new applications for the EIDL advance?
- How do I find out if my area or small business qualifies?
- Who can I contact for more information?
Due to the continuing effects of the coronavirus pandemic, Congress approved an additional $900 billion in relief in 2021. The economic relief package contained roughly $284 billion to replenish the Paycheck Protection Program (PPP), and an additional $20 billion for the EIDL (Economic Injury Disaster Loan) program, in addition to allowing new types of businesses access to these funds.
PLEASE NOTE: NEITHER THE PPP NOR THE THE EIDL PROGRAM ARE CURRENTLY OPEN FOR NEW APPLICATIONS.
The U.S. Small Business Administration has disaster assistance to help businesses during times of crisis and national emergencies. We’ll walk you through how this assistance can help your business as well as going over step-by-step how to apply (when the SBA starts allowing new applications).
What is better: a PPP loan or an EIDL advance/loan?
The PPP loan (when available) was fully forgivable if used on approved expenses, so we recommend EVERY small business, sole proprietor, independent contractor, and self-employed individual apply for a first or second draw PPP loan if the program again becomes available. The latest application deadline was May 31, 2021. Depending on your revenue and the specifics of your situation, you might qualify for far more funding under the PPP loan than you would get in an EIDL advance.
In addition, as noted above, the SBA is not accepting any new EIDL applications currently, so if you didn’t already apply AND you don’t meet the SBA’s criteria for a “targeted EIDL advance,” your chances of getting funding are very low at this time.
What’s the difference between an EIDL loan, an EIDL advance, and a “targeted EIDL advance”?
The SBA has offered both loans and “grants” or advances under the EIDL program, including a “targeted EIDL advance” in December, 2020.
A TARGETED EIDL ADVANCE was intended to provide businesses “located in low-income communities with additional funds to ensure small business continuity, adaptation, and resiliency.”
This targeted EIDL advance applied only to applicable businesses located in low-income communities who already applied for and previously received an EIDL Advance for less than $10,000, or those who applied but received no funds due to lack of available program funding. If you don’t fit into this category, you don’t qualify for a “targeted EIDL advance.” The SBA reached out to businesses who qualified.
The SBA first reached out to businesses that already received a partial EIDL Advance (between $1,000-$9,000). Applicants were contacted directly by the SBA via email with instructions to determine eligibility and submit documentation.
Applicants may have qualified if they were located in a low-income community AND could demonstrate more than 30% reduction in revenue during an 8-week period beginning on March 2, 2020, or later.
Next, the SBA reached reach out to those who applied for EIDL assistance on or before December 27, 2020, but did not receive an EIDL Advance due to lack of program funding. These applicants may have received an email from SBA with instructions to determine eligibility and submit documentation. Applicants may have qualified for a Targeted EIDL Advance if they met the above criteria (low-income location and reduction in revenue) AND had 300 or fewer employees.
An EIDL ADVANCE is not currently available. For background, in case the EIDL advance program is reinstated at some point: after the SBA completes their assessment of people eligible for “targeted EIDL advances” discussed above. An EIDL Advance is a forgivable advance of up to $10,000 that was originally calculated based on the number of employees indicated on an applicant’s COVID-19 EIDL application: $1,000/employee, up to a maximum of $10,000.
- EIDL Advance does not have to be repaid.
- Recipients do not have to be approved for an EIDL loan to receive the EIDL Advance.
- The amount of the loan Advance was deducted from total EIDL loan eligibility.
- Contrary to how it originally worked, businesses who received an EIDL Advance in addition to the Paycheck Protection Program (PPP) loan will no longer have the amount of the EIDL Advance subtracted from the forgiveness amount of their PPP loan.
An EIDL LOAN is a non-forgivable, low-interest loan available to small business owners and qualified agricultural businesses in all U.S. states and territories impacted by economic disaster. This loan has a relatively low interest rate, but it must be repaid. To learn more about non-forgivable SBA EIDL loans, read their FAQ.
What are SBA Economic Injury Disaster Loans (EIDL loans)?
While the EIDL advance or grant is a forgivable loan advance of up to $10,000, the SBA’s Economic Injury Disaster Loans offer up to $2 million in non-forgivable, low-interest Disaster Relief Lending assistance per small business. These are loans and must be repaid, but they can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing during this global crisis.
- IMPORTANT NOTE: as of the time of this publication, COVID EIDL is no longer accepting new applications but will continue to accept requests for increases, reconsideration, and appeals.
Who can I contact for more information about SBA disaster loans?
Please contact the SBA disaster assistance customer service center via phone at 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail firstname.lastname@example.org for more information about Economic Injury Disaster Loans during this time.
How do I determine if my small business qualifies for SBA assistance?
Not all businesses are eligible for disaster assistance from the SBA. Eligible businesses must meet the following criteria:
- Your business must be located in an area within a state or territory declared as a Disaster Incident for Coronavirus (COVID-19) (search here)
- Businesses with credit available elsewhere are not eligible
These loans must be used to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact. The funds can not be used for other purposes.
How do I apply for SBA Economic Injury Disaster Loans?
Again, note that as of the time of this publication, COVID EIDL is no longer accepting new applications but will continue to accept requests for increases, reconsideration, and appeals.
When the SBA is accepting new EIDL applications, if you are in a qualified location and would like to apply for disaster assistance from the SBA, follow these steps.
Visit https://disasterloan.sba.gov/ela/ and click “Eligible Disaster Areas.”
Find your state in the dropdown and click “Filter” to determine if your area has any SBA declared disasters. Confirm that your location is declared as a Disaster Incident for Coronavirus (COVID-19).
Here’s an example from California:
Apply Online at disasterloan.sba.gov. Log into your account. If you don’t already have one, proceed to Step 4. If you already have an account, proceed to Step 5.
If you do not have an existing account, you must first register to create one.
Click “Register” and fill out at least the required fields in Part 1 of the registration form:
- First and last name
- Social security number
- Date of birth
- Address, City, State, and Zip
- Primary phone number
- Check the acknowledgment box
Click next to fill out Part 2.
On Part 2, create your username and password and set up security questions for your account. Enter the code that you are provided and click “Next.”
Once registered, you can start the workflow required before applying for your Economic Injury Disaster Loan.
When you are logged into your account you’ll land on the dashboard. From here, click “Apply Online.”
Next, choose “Businesses and Non-Profits.”
Choose the type of legal organization that is appropriate for your business and then select Economic Injury (EIDL).
Choose the location of your business. Note that this should then display your location and CORONAVIRUS (COVID-19) as the Disaster Name.
Then click “Next” and on the following pages, click the checkboxes to certify that you agree to the terms.
Now you’re ready to actually start the application process! In your dashboard, click “Start” next to “Complete the Disaster Business Loan Application.”
Step 7: Apply for your loan
Now it’s time to fill out the application. You’ll have three pages of information to fill out. Answer honestly and to the best of your knowledge for each question. This is where you’ll fill out information about your business, the owners, and what the loan is for.
Click “Next” and save your application.
That’s all there is to it! The SBA will be in touch with you to let you know the status of your application and whether you’re approved.
Again, note that as of the time of this publication, COVID EIDL is no longer accepting new applications but will continue to accept requests for increases, reconsideration, and appeals. If the EIDL program is reopened again on a national level, we'll be sure to let you know!
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