Coronavirus Business Resources

SBA Economic Injury Disaster Loan Process

Update 6/5/2020: The Paycheck Protection Program Flexibility Act relaxes the restrictions around using PPP funds. The SBA and Treasury Department have also set a PPP application deadline of June 30, 2020. Click for more information.

Update 5/4/2020

The Small Business Administration will resume accepting EIDL applications on Monday, May 4, on a limited basis only to provide relief to U.S. agricultural businesses. Click here to read the official statement.

Update 4/25/2020

The Small Business Administration will resume accepting PPP loan applications on Monday, April 27 at 10:30 A.M. EDT from approved lenders on behalf of any eligible borrower. Click here to read the official statement.

Updated 4/15/2020

The SBA has put this program on hold, awaiting additional funding. We expect it to re-open soon, but please check back from more information. Read the official statement.

Updated 3/31/20

On March 27, 2020, President Trump signed into law the CARES Act, which provided additional assistance for small business owners and non-profits, including the opportunity to get up to a $10,000 Advance on an Economic Injury Disaster Loan (EIDL). This advance may be available even if your EIDL application was declined or is still pending, and will be forgiven.

If you wish to apply for the advance on your EIDL, please visit https://covid19relief.sba.gov/#/ as soon as possible to fill out a new, streamlined application. In order to qualify for the advance, you need to submit this new application even if you previously submitted an EIDL application. Applying for the Advance will not impact the status or slow your existing application.

Updated 3/30/20

The SBA made updates to their application process over the weekend to control application traffic to the website. At this time, the SBA has moved away from the DropBox application process discussed last week.

Please click this link to apply: https://covid19relief.sba.gov

Instructions:

In response to the novel coronavirus, COVID-19, outbreak and public health emergency, the U.S. Small Business Administration has approved disaster loans as a financing option for small businesses. On Thursday, March 19, Loudoun County businesses became eligible for these low-interest, long-term disaster loans. SBA disaster loans offer an affordable way for businesses to recover from declared disasters.

This program provides low-interest loans up to $2 million in order to help businesses overcome the temporary loss of revenue during the state of emergency.

Criteria for Loan Approval:

  • Credit History– Applicants must have a credit history acceptable to SBA.
  • Repayment– SBA must determine that the applicant business has the ability to repay the SBA loan.
  • Eligibility– The applicant business must be physically located in a declared county and suffered working capital losses due to the declared disaster, not due to a downturn in the economy or other reasons. In the case of the Coronavirus, small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan due.

The interest rates for this disaster are 3.75 percent for small businesses and 2.75 percent for nonprofit organizations with terms up to 30 years.

The SBA will determine loan amount after determining eligibility. The SBA’s goal is to disperse loan amounts of up to six months of operating expenses. Loan payments are deferred for one year, with interest beginning when loan funds are dispersed.

Other options to consider:

Ask for deferred payments to banks and creditors: Businesses should ask for a payment deferral (interest only or otherwise) before applying for additional credit (if possible).  Banks have the ability to defer SBA guaranteed loans under their unilateral authority.  The decision to defer is ultimately up to the bank.  Any business, especially those with notes, should have a conversation with their banker.  The structure of the deferment (interest only or full deferment) is up to the bank.  The payment history/status of commercial notes are not normally reported to the credit reporting agencies and most don’t unless there’s a default.

As always, proactive communication from both parties provides for better overall outcomes.

Make significant changes to your operations.  Monitor all expenditures and try to encourage receivable collections when possible.

All business owners need to remember the basic premise of business: CASH IS KING. Cash will be needed to allow the business to rebound when conditions stabilize.

Can a business receive both a Paycheck Protection Program loan and an EIDL? What are the relevant considerations for deciding which type of loan is more appropriate?

Generally, a business can apply for loans under both the Paycheck Protection Program and the EIDL program but must use the EIDL for a purpose other than covering payroll costs.

To determine whether to apply for a Paycheck Protection Program loan or EIDL, businesses should consider the following:

  • Eligibility: As described in detail in this Advisory, the eligibility requirements are somewhat different for each program.
  • Maximum Loan Amounts: Paycheck Protection Program loans are capped at $10 million, with an applicant’s limit determined by a formula tied to payroll costs; EIDLs are capped at $2 million.
  • Loan Forgiveness: Paycheck Protection Program loans may be eligible for loan forgiveness; EIDLs have no such feature. However, EIDL applicants may receive an emergency grant of up to $10,000 that does not have to be repaid.
  • Maximum Maturity: Paycheck Protection Program loans can have maturities of up to 10 years, with no obligation to make payments under the loan for up to the first 12 months. EIDLs can have maturities up to 30 years. EIDL payments can also be deferred for up to a year; however, interest accrues during deferment periods.
  • Interest Rates: Paycheck Protection Program loan interest rates are capped at 4%. The EIDL interest rates for COVID-19 are 3.75% for businesses and 2.75% for nonprofit organizations.

Still have questions ?

To talk to a Loudoun Economic Development staff member visit our Contact Us page.

The Loudoun SBDC has coaches that can help you with loan package preparation. If you have questions about the process or need assistance in gathering information or filling out application forms contact us and we will get you connected with a coach as soon as possible.

Email Loudoun SBDC or call us at (703)466-0466 to learn more.

Economic Injury Disaster Loan (EIDL) Streamlined Online Application Update 4.01.20
Presented by SBDC Loudoun

Comparison of the SBA Emergency Loans