The Economic Injury Disaster Loan (EIDL) Program, administered by the U.S. Small Business Administration (SBA), provides business loans to businesses and non-profit organizations in communities affected by disasters declared by the President. Business owners access these loans via banks and other private lenders.
Businesses can use them to repair or replace real estate, machinery, equipment, inventory, furniture, and fixtures damaged or destroyed due to the disaster. You can also use funds to pay off debts incurred by the disaster that remain unpaid after insurance payments, or other disaster assistance has been received and spent on repair and replacement efforts.
The EIDL Program provides financial assistance to businesses of all sizes and types that suffer economic injury due to a natural disaster, such as floods, tornadoes, earthquakes, hurricanes, and severe storms. In addition, businesses located in certain states are also eligible for an EIDL loan if impacted by terrorist attacks or mass violence.
Is my Business Eligible for EIDL Loans?
According to Lantern by SoFi, the location of an eligible business must be in an area affected by a state or federally declared disaster. The loan recipient must have incurred economic injury as a direct result of the disaster and continue to suffer from those injuries as of January 1, 2020. In addition, you must have been unable to obtain credit elsewhere to compensate for your losses. Last but not least, you must have been able to demonstrate some sort of financial hardship as a result of the pandemic.
How Much is an EIDL Loan Worth?
In some instances, small businesses can qualify for up to $2 million of financial assistance from EIDL loans. If you apply for an EIDL loan, just remember that if your business does get enough coverage to qualify for reimbursement, you still have to pay back what you borrowed. It’s better to overestimate than underestimate when it comes to how much money your business needs, so err on taking out more than you think.
What does the Application Process Entail?
There are two steps to apply for an EIDL loan. The first step in applying for an EIDL loan with SBA is to submit a completed application package that meets all of our requirements. Next, financial institutions will make an eligibility determination based on your business size, financial condition, repayment ability, and collateral value. If you are found eligible, you will receive a conditional commitment letter detailing the terms of repayment.
If Approved, How Do I Get my EIDL Loan Funds?
After you’ve submitted your application and supporting documents, the appropriate government departments will review them. If approved, you will receive a check for 50% of your total losses from NFIP within ten business days. Institutions may issue additional amounts upon review of further documentation from your local government.
The SBA disaster loan approval process generally takes four to six weeks, although loan approvals can take up to a month or longer. However, if you have an urgent financial need after a disaster, you may be able to access SBA’s interim lending program within a week. This program gives you a quick injection of cash so that you can keep your business running while waiting for your full loan amount to be approved.
In summary, these funds can help with business expenses such as rent, inventory, payroll, and more. If you’re interested in applying for an EIDL loan or would like additional information about program requirements and how it works, contact a disaster mitigation specialist at your local SBA office or visit SBA’s website.