Economic Injury Disaster Loan Advance (EIDL)

What are they?

EIDL

Economic Injury Disaster Loans are usually made available by the Small Business Administration (SBA) to businesses that suffer substantial economic injury as a result a declared disaster. In response to the Covid 19 pandemic this program has been expanded. Small business owners in all US states can now apply for an EIDL loans.

EIDL $10,000 Grant

Small business owners can request on their EIDL application an advance of up to $10,000 which will be made available within three days of a successful application. This loan advance will not have to be repaid.



Do I qualify?

Requirements for eligibility:

  • Applicant can be an sole proprietor or independent contractor (self employed) with or without employees

  • Applicant must be a small business as defined by the SBA. To determine this:

    • Go to the SBA Size standard tool via this link.

    • Click Start

    • Type keywords related to your business to search for the NAICS code that relates to you. For example, our office would type Accounting to get code 541211

    • Click the result that matches your business when it comes up

    • Click Next

    • Enter the average of your last three years receipts/revenue (how much your business made before expenses) make a best estimate, don’t worry about being exact.

    • Click See Results

    • The form will display if you are a small business according to SBA. Note that annual revenue standard next to the green check mark. If it’s much higher than your guess of your annual revenue, you don’t need to worry about getting any more exact.

  • Applicant cannot have a 50% or greater owner who is more than 60 days late on child support obligations

  • Applicant cannot be a farm or other agricultural enterprise other than an aquaculture enterprise, agricultural cooperative, or nursery

  • Applicant cannot have more than 500 employees

How do I apply?

Application is an online process through the SBA. Here is the link to begin your application. By applying you are applying for an SBA loan. However, you can get the $10,000 advance and turn down the loan the SBA offers. We recommend you do not accept any SBA loan offer prior to comparing it to an available PPP loan.

What other information will I need to apply?

  • Your EIN or social security number

  • Gross revenues for the period Feb 1, 2019 through January 31, 2020.

  • Cost of Goods Sold for the period Feb 1, 2019 through January 31, 2020.

  • Rents lost due to Covid-19 (if applicable)

  • You will need to answer yes or no to the following questions:

    • In the past year has the business or an owner been convicted of a criminal offense

    • Is the applicant or a listed owner suspended or disbarred from contracting with the Federal Government

  • You will need to supply banking information

What can I spend this advance on?

Guidance at the moment suggests that the grant must be spent on:

  • Payroll

  • Paid sick leave,

  • Rent or mortgage payments

  • Other obligations you cannot meet due to Covid-19 related revenue losses.

How does this compare/connect with the Paycheck Protection Program (PPP)?

You can apply for both. Any PPP loan amounts forgiven will be reduced by any EIDL advance received (this just prevents double counting). Current guidance seems to suggest that you can’t use proceeds from PPP for the same purpose as other SBA loans. The optimum strategy as we currently recommend it is to apply for the EIDL and request the up to $10,000 advance, and then when you receive an SBA loan offer wait and compare it to your PPP options before accepting.