The Economy Injury Disaster Loan (EIDL) is a financial relief program for small business owners. The EIDL is a low-interest loan of up to two million dollars with principal and interest delay at the discretion of the administrator. It is used to cater for operational costs that could have been met had their not been a disaster.
Who is eligible to apply for the EIDL?
Those eligible are the following with 500 or fewer employees:
• Sole proprietors
• Independent contractors
• Cooperatives
• Small businesses
Definition of a small business
A small business:
• Is there for profit.
• Operates in the U.S.
• Make a substantial contribution to the U.S. economy by paying taxes and using American materials or labor.
• Is privately owned and operated.
• Is not dominant in its sector on a national scale.
How do I apply for the EIDL?
• Step 1: The business owner should first determine if they are eligible for EIDL.
• Step 2: They should gather both business information and business owners’ information to submit their application.
• Step 3: Business owners should then apply for the EIDL here.
What are the EIDL rules about funds?
• For business owners to borrow more than $200,000, they need a personal guarantee.
• Approval is based on the business credit score.
• Business owners are not required to prove they could not get credit elsewhere.
• The Small Business Administration (SBA) will go through the tax records.
How do the funds get distributed?
The SBA takes 2-3 weeks to decide on a loan application. However, this may take longer when there are a large number of requests. On approval, the SBA will send loan closing documents to a business owner to sign. After signing the documents, they will disburse the first $ 25,000 in 5 days. A case manager will then help the business owner meet the loan conditions and future disbursements.
Small business owners have to provide accurate financial records for their EIDL application to be successful. Thus proper bookkeeping is needed to keep their financial information timely and accurate. With this information, business owners know procrastination and business finance do not get along. They now will be in a better position to qualify for relief during a disaster.