Time is running short for small businesses impacted by the COVID-19 pandemic to apply for long-term, low-interest economic injury disaster loans (EIDL) of up to $2 million from the U.S. Small Business Administration.
Loan applications for initial loans, increases to previously approved loans and associated targeted EIDL advances and supplemental EIDL advances must be processed by SBA by Dec. 31 or when funds are exhausted, whichever occurs first. Accordingly, SBA urges small-business owners to apply for loan increases and advances without delay.
COVID-19 EIDL loans
Under SBA’s COVID-19 EIDL program, small businesses can qualify for up to a $2 million working capital loan to pay expenses that they would have been able to pay had the pandemic not occurred. Under the program, the maximum loan amount for which a business is eligible is the product of its 2019 revenue subtracted by its cost of goods sold times two. EIDL loan proceeds may be used for expenses like credit card payments, increased wages, accumulated rent and increased cost of goods sold. EIDL borrowers get a long term of 30 years to repay the loan with a fixed, low interest rate of 2.75% for nonprofits and 3.75% for small businesses.
EIDL targeted advances and supplemental targeted advances
Small businesses that apply and are eligible for COVID-19 EIDL loans can also qualify for the agency’s targeted and supplemental targeted advance grants, even if those businesses do not ultimately get approved for or accept the EIDL loan itself. The targeted advance provides funds of up to $10,000 for working capital and normal operating expenses that does not have to be repaid. Similarly, SBA’s supplemental targeted advance provides qualifying program applicants additional working capital/normal operating expense funds up to $5,000, which also does not have to be repaid.
Once a business applies for a COVID-19 EIDL, SBA emails the applicant an invitation to apply for one of the EIDL advances — the targeted advance and the supplemental targeted advance. As detailed below, both programs require that applicants be located in a low-income area, which can be determined by using SBA’s online mapping tool.
To qualify for a targeted advance, a business must:
To be considered for the supplemental targeted advance, a business must have applied or apply for the targeted advance. To qualify for the supplemental advance, a business must:
These programs are much-deserved good news for America’s small businesses. To take the next step to secure an EIDL loan, increase and/or advance for your small business, visit SBA’s Economic Injury Disaster Loan Portal application.
John Fleming is the director of the Delaware District of the U.S. Small Business Administration.
