The Economic Injury Disaster Loans (EIDL) was established by the United States Small Business Administration for small businesses with less than or approximately 500 employees across the country. Due to the Covid-19 pandemic, a lot of small businesses suffered substantial economic injury. We also have small agricultural cooperative and most private nonprofit organizations who are also victims of the pandemic. However, the U.S. Small Business Administration opened a way of escape to these small business owners by providing an Economic Injury Disaster Loan (EIDL) for them to build back their businesses.
Economic Injury Disaster Loan (EIDL)
The EIDL loan is a low-interest loan of up to $2 million given to Small Businesses that are experiencing temporary loss of revenue due to Coronavirus pandemic. Meanwhile, the deadline for these loans is December 3, 2020. The Federal Assistance Loan is used to provide important economic support for Small Businesses for rebuilding and rebuilding the private sector disaster losses.
The loan helps to provide relief from economic loss caused by the disaster and allows you to maintain a reasonable working capital position during the disaster period. However, applicants can apply for an “advance” emergency grant up to $10,000 that does not need to be repaid. The EIDL loan applications will be processed during the Advances program funding. The loan interest rates are 3.75% for small businesses and 2.75% for not for profits.
EIDL Eligibility
There are several businesses that are eligible to apply for EIDL:
- Small agricultural cooperatives
- Small businesses
- Tribal businesses
- Cooperative
- Small aquaculture businesses
- A sole proprietorship business
- Nonprofit companies
Requirements for EIDL loan application
The eidl loan requirements requires you to provide certain information about your business to the SBA.
- Social security number or Federal Tax ID
- Business legal name
- “doing Business As” name
- Gross revenues for the 12-months prior to the date of the disaster (January 31, 2020)
- Entity type (independent contractor, sole proprietor, LLC, S Corp, C Corp, or partnership)
- Date business purchased
- Date business established
- Number of employees
- Amount in U.S. Dollars of Estimated Loss
- Banking information (routing and account numbers)
- Business activity
- Cost of goods sold for the 12-months prior to the date of the disaster
- Rental properties
- Compensation from other sources received as a result of the disaster like PPP
How to Apply for EIDL
- To apply for your Economic Injury Disaster Loan (EIDL), you can apply online using the Small Business Administration website.
- Once the application is completed and submitted, the Small Business Administrator will send an inspector to estimate the cost of damage.
- You will also complete, sign and date IRS Form 4506-T with your application. This grants permission for the IRS to provide SBA your tax return information.
Other Requirements for Documentation
To complete your SBA documentation when you want to borrow a certain amount of money. SBA might ask for more documents for approval of your loan. This is to notify SBA that your documents meet the requirement of state incorporation.
- Projected Financial Statements
- Ownership and Affiliations
- Current Profit and Loss (P&L) Statements
- Business Certificate/License/Permits
- Schedule of Liabilities (SBA Form 2202)
- Income Tax Returns
- Corporation documents
- Statement of Good Standing with the state
- Articles of incorporation
- A statement designating the person or persons by name and title authorized to sign the SBA loan closing documents
- Meeting minutes showing Board approved EIDL application
- Employer Quarterly Tax Form 941