The Economic Injury Disaster Loan Program (“EIDL”) is a Small Business Administration (“SBA”) program that operates directly through the SBA. Small businesses, those with five hundred employees or less, must show that it is affected by a disaster, such as the COVID-19 pandemic, to qualify for loans.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), passed by Congress and enacted into law on March 27, 2020, expanded the EIDL Program by allowing small businesses to take out loans of up to $200,000 without having to put up collateral or make a personal guarantee. Additionally, the CARES Act established an emergency grant to allow eligible small businesses that have applied for an EIDL to request an advance on the loan of up to $10,000. Even if the business is ultimately denied an EIDL, it will not be required to repay the advance payment. Although small businesses are generally not restricted on how they use an EIDL, the cash advance must be used for specific purposes, such as to pay fixed debts, payroll, accounts payable, and other related bills.
Small businesses can receive an EIDL loan of up to $2 million, however, loan terms, including a determination of the loan amount, are made on a case-by-case basis based on an evaluation of the applicant’s financial information and each borrower’s capacity for making monthly loan repayments. The interest rate on the loan is 3.75% for 30 years. Further, applicants must have a credit history acceptable to the SBA in order to qualify for an EIDL.
Unlike the Payroll Protection Program under the CARES Act, EIDLs are not forgivable, and any loans above $200,000 require collateral or a personal guarantee.
Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Provide Guidance to Businesses Seeking Loans through the Economic Injury Disaster Loan Program.
If you own a small business, and have questions concerning the CARES Act and applying for a loan through the Economic Injury Disaster Loan Program, you are urged to contact the Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. To schedule a confidential consultation, call us today at 215-574-0600 or contact us online. Our offices are located in Philadelphia, where we represent clients in Pennsylvania and New Jersey.