SBA EIDL Funding: A Complete Guide Including Timeframes

EIDL loans, or Economic Injury Disaster Loans, provide working capital to help businesses recover from various disasters.

The best part is that these disaster loans have extremely low-interest rates, making them ideal for all types of businesses.

Table of Contents

  • About EIDL loan
  • Economic Injury Disaster Loan Eligibility
  • Loan Limit of Eligible Business
  • Ineligible Businesses for EIDL
  • Processing Time for Targeted EIDL Amount
  • Economic Injury Disaster Loan Conditions
  • Acceptable Applications for EIDL Loans
  • Loan Amount Calculation

About EIDL loan

Smaller companies and other qualified candidates may complete an application for up to $2 million in working capital loans under the EIDL provisions of the CARES Act.

Borrowers can use the funds to pay fixed debts, cover payroll, and pay other bills that would otherwise be unaffordable due to the coronavirus’s economic impact. Business owners may also complete an application for a $10,000 EIDL emergency advance.

Even if the business’s application for an EIDL loan is denied, they can still receive the emergency advance.  These funds will be available very quickly and do not require repayment.

Eligibility for Economic Injury Disaster Loans

Small companies in all 50 US states and territories are qualified to apply, as defined by the Small Business Administration (SBA).

The businesses that may be approved for EIDLs have also been increased due to recent changes to the EIDL program. The updated list includes:

  • Non-profit organizations
  • Agricultural and farming cooperatives
  • Sole proprietors
  • Independent contractors
  • Cooperatives and tribal businesses with under 500 workers
  • ESOP businesses that are stock ownership plans for employees
  • SMEs with less than 500 employees 

All of these mentioned above can now participate in the program.

The Loan Limit for Eligible Businesses

Businesses that meet the criteria can borrow up to $2 million in working capital.

Debtors can apply for an EIDL urgent ahead of time of up to $10,000 pending application approval, and the funds are not required to be repaid even if the business’s EIDL application is denied.

Ineligible Businesses for EIDL

  • Companies that do not match the qualifying conditions specified above.
  • Businesses that engage in unlawful activities as specified by federal regulations.
  • Companies that make more than one-third of their overall yearly income from legal gambling.
  • Businesses owners with a share above 50% who are offenders of child support payments for above 60 days.
  • Businesses that engage in obscene sexual displays, either directly or indirectly.
  • Agricultural enterprises are other than aquaculture firms, an agricultural cooperative, or nurseries, such as farms or ranches.
  • Loan packagers are individuals or firms that engage in lending, speculation, or investing in multilevel sales.
  • Lobbyists.
  • Members of Congress or “Government” entities.

Pros

  • Low-interest rates
  • Long repayment terms
  • Moderate borrower requirements
  • No fees or Payment Penalties

Cons

  • Long funding times
  • No loan forgiveness
  • Limited uses
  • Credit scores matter

Processing Time to Receive Targeted EIDL Amount

How long will it take for my targeted EIDL loan to be granted?

This is dependent on several things, as the SBA is taking an innovative approach to award processing. As of present, one cannot apply for Targeted EIDL funding at all.

So, what exactly is going on? The SBA began issuing email invites to firms that received EIDL of less than $10,000 on February 1, 2021.

There was no news about whether the initiative would be expanded after the high-priority groups had been covered.

Economic Injury Disaster Loan Conditions

This SBA loan program is made to help firms meet financial commitments and operating expenditures that might have been fulfilled if the disaster had not happened.

But there are limits to how much a company can obtain and the payback conditions.

Rates of Interest: EIDL loans have interest rates as well.

  • 3.75 percent (fixed) for corporations
  • 2.75 percent for NGOs (fixed)
Maximum Loan Amounts and Loan Terms:
The maximum loan amount for enterprises with 24 months of economic damage is $500,000 with a payback time of 30 years.

Acceptable Applications for EIDL Loans

This money can be utilized for regular operational expenditures and working capital. To offer some instances, the SBA lists the following costs.

  • Health-care benefits will be maintained.
  • Utilities Rental
  • Consistent debt payments

EIDL loans have no fees or prepayment penalties.

Acceptable uses for COVID-19’s EIDL money have been broadened to include prepaying commercial debt and paying federal company debt as of September 8, 2021.

If a person receives an invitation letter from the SBA, the schedule for completion is comparable to that of EIDL loans. The SBA predicts that his case will be processed in around 21 days.

Loan Amount Calculation

To calculate monthly payment, enter the principal amount into a loan calculator and enter a 3.75 percent interest rate (or 2.75 percent for a charity) and a 30-year term.

If a person does not intend to make payments during the first year, keep in mind that interest will accumulate and be added to the principal amount of his loan after the first year.

Account Deposit and Processing

The SBA text indicates that money should be available within five days after approval. However, several companies noticed greater delays during the program’s final phase.

An EIDL emergency advance is up to $10,000 and does not require repayment. However it is important to not that unlike PPP loans and the EIDL advance, EIDL loans not forgivable and must eventually be repaid with interest.

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