The economic impact of the COVID-19 pandemic has been harsh, particularly on smaller businesses. Fortunately, there have been a number of loan and grant programs available to small businesses to provide financial help over these tough times. One major program that has provided businesses using the working capital they have to survive the pandemic may be the Small Business Administration’s Economic Injury Disaster Loan program (EIDL).
EIDL loans and forgivable advances have helped business owners round the nation keep their businesses open through the pandemic. If you’re an entrepreneur struggling because of the pandemic, the program may be a good choice for you personally. In this article, we’ll answer some EIDL FAQs about the loans and advances program, how it’s helping smaller businesses, and when it’s a practical funding source for your business.
SBA EIDL Loan & Targeted Advance FAQs
What's An Economic Injury Disaster Loan (EIDL)?
An Economic Injury Disaster Loan (EIDL) is really a loan program through the Sba. This program provides long-term, low-interest loans to companies that have sustained an economic injury due to a disaster. An EIDL supplies a business with working capital to finance daily operations to assist the business overcome the disaster’s economic impact.
The SBA EIDL can be obtained to companies that have been impacted by the COVID-19 pandemic. Smaller businesses, agricultural businesses, and nonprofits may qualify to get a low-interest loan provided all SBA requirements are met.
What Is The Targeted EIDL Advance?
The Targeted EIDL Advance is a grant available to eligible smaller businesses as part of the COVID-19 stimulus bill signed into law on December 27, 2022. The Targeted EIDL Advance provides grants as high as $10,000 to eligible small businesses influenced by the coronavirus. These money is disbursed more quickly than EIDL loans and don't have to be repaid.
The Targeted EIDL Advance is available to companies that previously applied for the EIDL Grant in 2022. Businesses that were not funded or received only partial funding (between $1,000 and $9,000) may get an Advance. Businesses should also be located in a low-income community and also have experienced a decline of at least 30% in revenues to get the Targeted EIDL Advance.
What Is The Supplemental Targeted EIDL Advance?
The Supplemental Targeted EIDL Advance is a grant that’s available to qualified businesses even if they’ve previously received an EIDL loan, EIDL Advance, or EIDL Targeted Advance. Qualifying businesses can receive up to $5,000. The maximum you can receive all three EIDL Advance programs combined is $15,000.
What’s The Difference Between your EIDL Loan & The Targeted EIDL Advance?
The EIDL loan is a low-interest, long-term loan that must definitely be repaid during a period of up to 3 decades. Businesses impacted by the coronavirus can receive as much as six months of capital through this loan program. Applying for and finding the loan might take several weeks or longer.
The EIDL Targeted Advance is really a grant program made to provide coronavirus-impacted businesses with fast funding of up to $10,000 to satisfy immediate small business. The main difference between an EIDL Targeted Advance vs. a loan is the fact that Advance funds don't have to be repaid.
What’s The Difference From a 2022 Targeted EIDL Advance & The 2022 EIDL Advance?
The 2022 EIDL Advance allowed smaller businesses facing economic hardships due to COVID-19 to request funding of up to $10,000 included in the EIDL application for the loan process. This funding would be a grant which was not required to be repaid and was available to small businesses that met the SBA’s requirements.
The 2022 Targeted EIDL Advance also provides up to $10,000 in funding to eligible smaller businesses affected by the COVID-19 pandemic. However, this round of funding is only available to applicants that previously requested the EIDL. In this round of funding, eligible businesses must meet one of these simple conditions: they either didn't get an advance as a result of lack of program funding or didn't receive the full $10,000.
Additionally, businesses should also be located in a low-income community to qualify for a Targeted EIDL Advance. Qualifying businesses must also show a reduction in income of a minimum of 30%.
The SBA will contact companies that qualify to receive the Targeted EIDL Advance. No additional borrower application is needed at this time.
How do i Make use of the EIDL Loan & Advance?
Your EIDL loan and advance can be used for a number of business purposes. Funds are for use to pay for your business’s day-to-day expenses. Your loan or advance can be used working capital to cover numerous business expenses, including although not restricted to payroll and benefits, utilities, rent, and fixed debt payments. There are a number of restrictions surrounding how EIDL funds are spent. You can’t use funds for dividends or bonuses, expanding facilities, relocating, or acquiring fixed assets.
One thing to note is that there is are further restrictions for those who have received financing with the Paycheck Protection Program (PPP). If you have a PPP loan, “double-dipping” is not allowed should you also provide an EIDL loan or advance. That means you can’t use the funds from your PPP and EIDL for the similar purpose. For example, if you are using your PPP funds to cover payroll expenses, you can’t make use of your EIDL for those same payroll expenses.
Unsure of methods to spend your EIDL funds? Take a look at all of the methods for you to (and can’t) spend your loan.
Will i Need A Business Bank account To Get An EIDL?
Since EIDL loans go directly with the SBA rather than a lender, there’s no reason to have a business bank account. However, some applicants have reported issues where there would be a mismatch in information between their personal accounts and also the information they gave to the SBA.
Will the SBA Take a look at My Credit After i Obtain a EIDL?
According to the SBA, an applicant might be declined to have an EIDL loan according to “unsatisfactory credit history,” so you should assume that they’ll be looking at your credit. That said, there’s no specific credit rating that’s cited at the very least.
There Are Errors In My Application. What Can I actually do?
Given that you’re coping with an overburned, slow-moving government organization, we recommend you double- and triple-check your applications for errors before submitting them.
If you earn an error, you’ll need to get in contact with the SBA. First, you’ll wish to check up on the status of the application (see below). You’ll then want to contact the SBA’s Disaster Assistance Processing and Disbursement Center. Explain your circumstances for them by telephone or email. Be aware that you may have to be persistent and patient given the volumes of applicants the SBA is dealing with.
How Do I Look into the Status Of My EIDL Application?
There are several methods to look into the status of the EIDL application including by phone, email, and through the SBA’s Economic Injury Disaster Portal or SBA Assistant. Should you mailed the application the old-fashioned way, you need to contact the SBA by telephone, while you won’t possess a username and password for that online tools.
Shall we be held Qualified For that EIDL Loan?
If you’re an entrepreneur that has suffered economic hardship because of a tragedy, you may qualify for an EIDL loan. Including businesses affected by the coronavirus pandemic. Small businesses, agricultural businesses, and nonprofits might be qualified if SBA requirements are met.
Businesses must meet the SBA’s size requirements to receive an EIDL. Typically, which means that the company should have 500 or fewer employees. Businesses in certain industries, such as government-owned businesses or businesses engaged in illegal activities, won't qualify.
There are no specific credit rating requirements, but a borrower must have a good credit rating and history to qualify. Additionally, borrowers must show that they've the ability to repay the loan. If you’re considering the EIDL, learn more about borrower requirements and what to expect throughout the application process.
Am I Qualified For that Targeted EIDL Advance?
The Targeted EIDL Advance is really a program that launched following the passage of the Consolidated Appropriations Act in December 2022. Under this law, additional funds were allotted to provide EIDL advances to qualifying smaller businesses.
To entitled to the Targeted EIDL Advance, you must have submitted an application throughout the first round of EIDL advance funding. Your business must also maintain a low-income community (more on that later), and you must show your revenue was reduced by a minimum of 30% during any eight-week period on or before March 2, 2022.
The SBA will first provide grant funding to eligible applicants that received an incomplete EIDL Coming of $1,000 to $9,000. Next, the SBA will give you grants to eligible companies that submitted an EIDL application but didn't get an Advance due to a insufficient program funding. In addition to the other requirements, these applicants must also have 300 or fewer employees to qualify. Learn how the Targeted EIDL Advance works and when you qualify.
How Can I Tell If I’m Inside a Low-Income Community?
A business should be located in a low-income community to get an EIDL Advance. A low-income community is definitely an area which has a poverty rate of 20% or more. Rural businesses must have a median family salary of 80% or a smaller amount of the statewide median family income. Businesses in suburban and urban areas should have a median family income of 80% or less of the metropolitan area’s median family income.
To determine if you’re in a low-income community, you'll use census data. One of the easiest ways to determine if you be eligible for a an EIDL Advance is to use the government Financial Institutions Examination Council’s geomap tool. Find out more about using this tool and qualifying for that EIDL advance.
My company Isn't Inside a Low-Income Community. Can there be In whatever way I'm Entitled to A Targeted EIDL Advance?
Technically, no, however, many businesses have reported otherwise. The SBA now has their own tool will find out if your area is eligible. The convenient aspect of the Targeted EIDL Advance is that it’s by invitation only. If the SBA invites you to definitely get a Targeted EIDL Advance, then there’s a good chance you’ll qualify for one. Otherwise, you won’t be able to get one.
I Requested The Targeted EIDL Advance But I Haven't Heard Anything Since. How Do I Look into the Status Of My Application?
If you received an invite from the SBA and subsequently applied, you should check the status of your Targeted EIDL Advance with the SBA’s Economic Injury Disaster Portal.
Can I Apply For The EIDL Loan Twice?
If you previously applied for the EIDL and were denied, you might submit a reconsideration request as much as six months after applying.
If you received an EIDL and need additional funding, you may be permitted to modify the loan and get an increased amount.
If you have multiple businesses, you might submit an EIDL application for every eligible business.
Finally, if you requested the EIDL Advance in 2022 and were unable to receive one due to a lack of program funding, you might certainly be eligible to receive funding. However, you do not need to submit a second application. Instead, the SBA will contact you regarding eligibility.
What Is The EIDL Funding Timeline?
Most EIDL applicants will get a funding decision within 21 days. If you’re approved, you need to get a disbursement inside a week of approval. Read more about the procedure in our SBA EIDL Funding Timeline: What to anticipate During Application, Approval, & Processing.
Is The EIDL Loan Forgivable?
EIDL loan forgiveness isn't an available option, so you'll have to repay it in full. Fortunately, though, repayment terms are extremely favorable — as much as 30 years at a fixed APR of 3.75%. You won’t find those kinds of terms with just lenders.
If you received an EIDL Advance or Targeted Advance, they are grants and are forgivable. In other words, if used properly, these funds do not have to be repaid.
What Happens To My EIDL Debt Basically Get ill Or Die?
Both death and illness are circumstances that could result in you defaulting in your EIDL loan. Debt obligations can vary depending on how much you’ve removed, whether you’ve signed a personal guarantee, and any available business assets the SBA could liquidate to pay for your debt.
When coping with settling estates, it’s better to speak to a lawyer regarding your options and speak to the SBA about any possible deferments or relief.
How do you Report My EIDL And Advance On My Taxes?
Neither EIDL loans nor EIDL Advances are considered taxable business income. Additionally, qualified expenses that are taken care of with EIDL funds can still be written off your taxes.
