Designed to assist businesses affected by declared disasters, the Economic Injury Disaster Loan (EIDL) has been around for years. It is distinct from the new loan programs created for small businesses to lessen the negative revenue impact of the COVID-19 global pandemic.
However, like the Paycheck Protection Program (PPP) loan created by the recently passed CARES Act, the EIDL is administered by the U.S. Small Business Administration (SBA). While recent legislation did not create the EIDL program, it allocated additional funds to the program, which was expanded to help businesses affected by COVID-19.
EIDL Loan Advance – Repayment Not Required
The additional money allocated to the EIDL program was designed to provide an immediate advance of $10,000 to loan applicants to get cash into the hands of struggling business owners quickly. Approved loan applicants who receive the advance will not be required to repay it. However, the remainder of the low-interest loan, which could be up to $2 million, will have to be repaid over a term determined by the SBA.
EIDL Program Status
Despite the requirement for the SBA to provide the EIDL advance within three days of the application, many businesses reported waiting much longer. Problems with the program included the overwhelming number of loan applications for PPP and EIDL, considerably more than the SBA was staffed to accommodate, and a lack of funds despite the recent additions to the program.
While both the EIDL and PPP were frozen for a time due to lack of funding, the SBA is once again taking applications for the PPP loan. The EIDL loan applications remain closed. SBA’s EIDL Emergency Advance web page now states, “SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.”
The SBA has reported it will continue to process existing EIDL applications on a first-come first-served basis.
Resources
- U.S. Small Business Administration Coronavirus Relief Options
- U.S. Small Business Administration Economic Injury Disaster Loan Emergency Advance
- April 15, 2020, Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Protection Program and Economic Injury Disaster Loan Program
- Inova Payroll’s COVID-19 resources for employers
This post was updated April 20, 2020.
