03/28/2020
Here’s what small businesses need to know to apply for an SBA Economic Injury Disaster Loan (EIDL) for losses due to the Coronavirus (COVID-19).
Loan Size and Use
SBA’s Economic Injury Disaster Loans offer small businesses up to $2 million in assistance. These are low-interest loans to provide small businesses with working capital. Loans under $25,000 do not require collateral. Loans over $25,000 will require collateral.
Do This First!
The first thing to do is read all of the information below and then print out and fill in the forms we’ve listed under the Forms and Documents section
What are the criteria for loan approval?
Eligibility- The applicant business must be physically located in a declared area and suffered working capital losses due to the declared disaster. According to the SBA’s website, small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan due to Coronavirus (COVID-19). Online businesses, consultants and freelancers are eligible to apply in addition to bricks and mortar businesses. See below for businesses that may not be eligible for these loans.
Credit History- Applicants must have a credit history acceptable to SBA.
Repayment- SBA must determine that the applicant's business has the ability to repay the SBA loan.
What are the collateral requirements?
Economic Injury Disaster Loans over $25,000 require collateral.
SBA takes real estate as collateral when it is available.
SBA will not decline a loan for lack of collateral but requires borrowers to pledge what is available.
What other criteria is involved?
The applicant business must have a physical presence in the declared disaster area. An applicant's economic presence alone in a declared area does not meet this requirement. The physical presence must be tangible and significant. Merely having a P.O. Box in the disaster area would not qualify as a physical presence.
SBA's Economic Injury Disaster Loan (EIDLs) funds come directly from the U.S. Treasury.
Where to Apply for a Disaster Loan
Applicants do not go through a bank to apply. Instead, apply directly to SBA's Disaster Assistance Program at DisasterLoan.sba.gov.
Application Cost
There is no cost to apply.
There is no obligation to take the loan if offered.
Other SBA COVID Disaster Loan Facts
The maximum unsecured loan amount is $25,000.
Applicants can have an existing SBA Disaster Loan and still qualify for an EIDL for this disaster, but the loans cannot be consolidated.
Note: Payments on existing SBA Disaster Loans are being automatically deferred until the end of 2020.
Forms and Documents You’ll Need to Apply for Assistance
To apply for an SBA Coronavirus Economic Injury Disaster Loan, you will need these forms:
Completed SBA loan application (SBA Form 5 or Form 5C.) Note: Form 5C is for sole proprietors.
Tax Information Authorization (IRS Form 4506T)
Monthly Sales Figures form
In addition, applicants, principals, and affiliates need to provide the following:
Complete copies of the most recent Federal Income Tax Return.
Schedule of Liabilities (SBA Form 2202).
Personal Financial Statement (SBA Form 413).
Other information may also be requested.
Once you’ve completed the forms and gotten all your documentation together, you can submit your application Applications can be submitted electronically on the SBA website. Electronic submission is the preferred method. (Due to heavy traffic on the site, the site might be temporarily slow or difficult to reach.)
Important: Before You Submit Your Application
Recheck the filing requirements to ensure that all the needed information is submitted.
The biggest reason for delays in processing is due to missing information. Make sure to complete all filing requirements before submitting the application and forms.
If you need help with completing the forms or have questions about the application process, contact an SBDC, or other government assistance organization in your area. Click here to find local assistance.
If more funds are needed, applicants can submit supporting documents and a request for an increase, If fewer funds are needed, applicants can request a reduction in the loan amount.
If the loan request is denied, the applicant will be given up to six months in which to provide new information and submit a written request for reconsideration.
What are some of the businesses that are ineligible for an Economic Injury Disaster Loan?
Agricultural Enterprises - If the primary activity of the business (including its affiliates) is as defined in Section 18(b)(1) of the Small Business Act, neither the business nor its affiliates are eligible for EIDL assistance.
Religious Organizations
Gambling Concerns (Ex: Concerns that derive more than 1/3 of their annual gross revenue from legal gambling activities)
Casinos & Racetracks (Ex: Businesses whose purpose for being is gambling (e.g., casinos, racetracks, poker parlors, etc.) are not eligible for EIDL assistance regardless of 1/3 criteria above.
Key websites:
Applicants may apply online using the Electronic Loan Application (ELA) via SBA's secure website at http://disasterloan.sba.gov/ela
Disaster loan information and application forms may be obtained by calling SBA's customer service center at 800.659.2955 or [email protected].
Find free local assistance for information and help with completing your disaster loan assistance application.
