Economic injury disaster loan emergency advance application

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The Economic Injury Disaster Loan and Loan Advance (EIDL) program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Small businesses can access a $10,000 loan advance that is not repaid.

Can I apply directly with an SBA-approved lender for an EIDL or Emergency EIDL (cash advance grant)?

You must apply for both the EIDL and the emergency EIDL directly online with the SBA at https://disasterloan.sba.gov/ela or you can also reach out to your local SBA District Office.

What are the basic filing requirements for applying for an EIDL and Emergency EIDL?

Small businesses must submit:

• SBA Loan Application (SBA Form 5 or 5C)
• Tax Information Authorization (IRS Form 4506T)
• Complete copies of the most recent federal income tax return
• Schedule of Liabilities (SBA Form 2202)
• Personal Financial Statement (SBA Form 413)

Additional information that may be requested:

• If the most recent federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year
• Current year-to-date profit-and-loss statement
• Additional Filing Requirements (SBA Form 1368) providing monthly sales figures

What is considered “substantial economic injury”?

Substantial economic injury generally means a decrease in income from operations or working capital with the result that the business is unable to meet its obligations and pay ordinary and necessary operating expenses in the normal course of business.

How long will it take my loan application to be approved and for me to receive money?

Once a borrower applies for an EIDL, approval timelines can vary depending on volume. Typically, a decision is made within 21 days of application, and disbursement of money within five business days. Borrowers are assigned individual loan officers for servicing the loan.

For the Emergency EIDL (cash advance grant), upon the successful application, the SBA will disperse the money within three business days.

Is there loan forgiveness for either the EIDL or the Emergency EIDL?

There is no loan forgiveness for the EIDL. However, the $10,000 Emergency EIDL cash advance is not expected to be repaid, if it is used for:

• Payroll and other costs
• Increased costs due to supply chain interruption
• Mortgage or lease payments
• Obligations that cannot be met due to revenue loss and for other uses

The emergency loan is also forgivable even if the grantee is subsequently denied an EIDL.

What can I not use the EIDL or Emergency EIDL for?

Small businesses cannot use an EIDL or Emergency EIDL cash advance for any of the following purposes:

• Dividends and bonuses
• Disbursements to owners, etc., except when directly related to performance of services
• Repayment of stockholder/principal loans, except when the funds were injected on an interim basis because of the disaster and nonrepayment would cause undue hardship to the stockholder/principal
• Expansion of facilities or acquisition of fixed assets
• Repair or replacement of physical damages
• Refinancing long-term debt
• Paying down (including regular installment payments) or paying off loans provided, or owned by another federal agency (including SBA) or a Small Business Investment Company
• Payment of any part of a direct federal debt, (including SBA loans)
• Except IRS obligations
• Relocation

If I receive an EIDL, can I apply still for a PPP loan?

Small businesses can take advantage of multiple SBA programs. However, loans must be used for different purposes. For instance, both the EIDL and PPP may be used to assist with salaries, but you cannot “double-dip.” So, for the eight-week period of the PPP, the EIDL could cover the salary “gap” for employees who make over $100,000 or for a different time period.

Are any normal requirements for an EIDL waived at this time?

For any EIDL application resulting from COVID-19, the following requirements are waived:

• requests for personal guarantees on loans of not more than $200,000, between January 31, 2020 and December 31, 2020;
• applicant must have been in business for the 1-year period before the disaster; however, the CARES Act still requires the business have been in operation as of January 31, 2020;
• applicant is unable to obtain credit elsewhere;
• applicant provide the lender with tax returns; the lender may approve based solely on the applicant’s credit score or other appropriate methods; and
• business must be located in a state or county that received an economic injury disaster declaration from the SBA.

If I need assistance with my application, who should I contact?

We recommend speaking with your accountant or financial advisor. SBA offers work with local partners to provide assistance to small businesses, and you find a local partner here.

Read more about both SBA Loan programs from APMA’s outside law firm Foley & Lardner, LLP. Additional information on SBA assistance and small business resources are provided by APMA’s health policy consultants Hart Health Strategies.