Does my business qualify for an economic disaster loan?
U.S. small businesses, farm businesses, and nonprofits affected by Covid-19 are eligible for a low-interest economic disaster loan and EIDL advance of up to $ 15,000 and an EIDL advance of up to $ 10,000. To be eligible, companies had to be in operation before January 31, 2020.
Loans made through the Small Business Administration’s EIDL program differ in size, use and forgiveness from those made through the Paycheck Protection Program, says lawyer Chris Armstrong of Holland & Knight in Washington, DC. PPP loans are meant to cover salary costs, mortgage interest, rent and charges. The entire loan can be canceled if the conditions of the SBA are met. EIDLs, on the other hand, help small businesses and nonprofits with fewer than 500 employees pay for “general operating expenses that might otherwise have been covered if the disaster, in this case the Covid-19 pandemic. , had not happened, ”says Armstrong. These loans can be up to $ 15,000 and must be repaid. Businesses that are behind on existing Small Business Administration loans or any other federal agency loans are not eligible for EIDL.
Businesses can apply for both EIDL and PPP loans, but they cannot be used to cover the same expenses. For example, if a company uses their PPP loan to cover payroll and mortgage interest, they cannot use their EIDL funds to pay for that as well.
When applying for EIDL, a business can apply for an EIDL advance using the same application. The SBA limits the EIDL advance to $ 1,000 per employee, up to $ 10,000. If a business receives an advance, the amount of the advance is deducted from its total loan eligibility. These loan advances do not have to be repaid, even if the business is denied an EIDL.
Companies that have already applied to EIDL are screened on a first come, first served basis. Farm businesses that applied through the SBA’s streamlined application portal before June 15 do not need to reapply. Applications for EIDL are open until December, although funds are limited and may run out before then.
This article has been updated to reflect recent changes to the EIDL program.
Editor’s Note: The Paycheck Protection Program resumed accepting claims on July 6 in response to the Paycheck Protection Program Extension Act. The new deadline to apply for a Paycheck Protection Program loan is August 8.
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