The Small Business Administration (SBA) Program for the EIDL (Economic Injury Disaster Loan) can provide up to $ 2 million in financial support to small businesses and private non-profit organizations facing certain reported disasters. The Act on Coronavirus Aid, Relief, and Economic Security (CARES) extended the EIDL program to help borrowers facing the COVID-19 pandemic to obtain a loan. The registration process is fairly straightforward, as it is available directly from the SBA website.
An economic injury disaster loan is a loan of up to $ 2 million, with a term of up to 30 years, designed to help businesses overcome difficult times caused by a disaster, such as the COVID-19 pandemic. These funds are intended to cover salaries and other operating expenses that the company could have covered in a disaster-free economy. The funds cannot be used to refinance, borrow for other federal debts, repair physical damage, pay tax fines, or pay dividends.
Although loan amounts can vary up to $ 2 million, specific loans depend on the extent of economic damage to a business. The SBA determines this value on a case-by-case basis after application by the companies. However, recently, the SBA announced that due to increased demand, it was limiting payments to $ 15,000 for two months.
EIDL interest rates can reach 2.75% for non-profit organizations and 3.75% for businesses. The main EIDL and interest payments can be deferred for up to one year. EIDLs are generally available for non-profit organizations and private companies.
The CARES Act also provided $ 10 billion in SBA funding to provide businesses with $ 10,000 in accelerated advances. Companies that use these funds to help pay for paid time off, pay stubs, COVID-19 costs, etc. will see this advance become a concession. In this case, the company will no longer have to pay the advance received. In addition to the initial payment limit, SBA recently announced that the advance is limited to $ 1,000 per employee, which means that at least ten employees must receive $ 10,000 in advance.
EIDL emergency grants are available within three days for those applying for an SBA.
Small businesses can use donations for a variety of purposes. These include the payment of paid holidays, the payment of fixed prices, the covering of production costs, the payment of rents or mortgages in the retail space, and all that can contribute to business continuity.
To be eligible, companies must have been existing as a business entity by January 31, 2020, at the latest. These donations are available to all companies and organizations eligible for the EIDL.
In the past, EIDLs were only available to non-profit organizations and small businesses. They are also available on a case-by-case basis to companies affected by more specific business disasters in a particular state or city.
Following the COVID-19 pandemic and the CARES Acts, the EIDLs are now available for non-profit organizations, small businesses with 500 employees or less, employee stock ownership plans (ESOP), tribal companies, cooperatives, individual and independent contract holders.
There are a few things that can prevent a business from being eligible for EIDL. Applicants will be rejected if:
• They are involved in illegal activities.
• Is an Agricultural enterprise
• Earns income from representations or sexual products.
• Earns more than a third of their annual income from gambling activities.
• Is in the business of lobbying
• If you are a government entity
Applying for an EIDL is fairly straightforward. First, you need to go to the SBA website and see what type of business you are operating. So make sure that you are not disqualified for a loan according to the above eligibility criteria.
Subsequently, applicants must collect and enter basic information about their business, such as business names, contact information, income, operating expenses, and employee information. You will see if you would like to receive a grant and a list of your bank account details. It usually takes 18-21 days for the SBA to process the loan and after two or five days to pay the funds.
CARES was passed by President Trump on March 27. This project offers economic incentives in several ways, including for EIDLs. The bill allocates $ 562 million to the EIDL program. However, as mentioned above, this doesn't seem to be enough. Therefore, SBA currently limits payments to $ 15,000 for two months.
However, loans can reach up to $ 2 million, and interest rates and deferral periods remain the same. However, organizations eligible to receive an EIDL have been widely used extended.
The Paycheck Protection Program (PPP) has $ 349 billion in funds allocated under the CARES Acts. It offers eligible businesses, independent entrepreneurs, and the self-employed likely to forgo loans 2.5 times more than the average monthly cost of staff. (no taxes over $ 100,000 per employee), up to $ 10 million.
PPP will forgive businesses up to eight weeks of staff costs. It will also forgive eight weeks of non-personal expenses (for example, rent, mortgage interest, and utilities), up to 25% of the loan amount. The loan conditions include an interest rate of 1%, a two-year maturity, and a six-month deferral.
PPP is linked to the EIDL program because businesses and organizations that received EIDL between January 31, 2020, and April 3, 2020, will be able to refinance their EIDL to a PPP loan if they use EIDL to cover costs payroll. If the company has received an EIDL emergency grant, this amount will be deducted from the value of the canceled PPP loan.
The EIDL loans are designed to help businesses and organizations overcome any economic crisis or disaster. The infusion of money allows businesses to continue operating while facing an economic storm.
In the case of the global coronavirus pandemic, the EIDL program now acts as an even more robust program. The development of the advancement and delivery of emergency EIDLs, as well as the ability of borrowers to refinance their EIDLs in PPP loans, can help create a climate where more businesses can open their doors and their employees on their wages.
