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What to know about the SBA Emergency Economic Injury Disaster Loan (EIDL) program

The Small Business Administration already had an Economic Injury Disaster Loan (EIDL) program in place before 2020. But the CARES Act passed in March 2020 augmented that program. Nonprofits that could not access the PPP may find this program a lifesaver.

We urge you to review the side-by-side comparison of the features of the Paycheck Protection Program vs. the EIDL program. That will give you a good overview of the EIDL program’s features.

Below are some key terms of the EIDL emergency program, which is allows for both a $10,000 advance and loans (a) for up to $2 million (b) at 2.75% interest (c) amortized over up to 30 years.* The initial payment can be deferred for up to 12 months, though interest will accrue during that deferral period.

  1. Open to businesses and private nonprofits with 500 or fewer employees (not limited to Section 501(c)(3) or 501(c)(19) nonprofits). Faith-based organizations are eligible to apply.
  2. Covered period runs from January 31, 2020, to December 31, 2020.
  3. Waives personal guarantee rules, amount of time applicant needs to be in business, and requirement that applicant be unable to obtain credit elsewhere.
  4. Principal amount is generally capped at $2 million. (As of April 7, 2020, we heard that the SBA may be limiting EIDLs to only $25,000 – apparently because of strong demand for this program. We will update as we hear more.)
  5. Borrowers can get a $10,000 emergency advance within three days after applying, which may be used to pay sick leave, maintain payroll, pay increased costs to obtain unavailable materials, make rent or mortgage payments, and repay obligations that cannot be met due to revenue losses. If you are later denied for an EID loan, you do NOT have to return the $10,000 advance. You can treat it as a grant!
  6. Section 501(c)(3) and 501(c)(19) nonprofit organizations may apply for an EIDL loan in addition to a loan under the PPP, as long as the loans are not used for the same purpose.

*Note that you can easily estimate your monthly payment on a 30-year loan at 2.75%. Just divide the principal amount by 1,000 and then multiply by $4.08. So a $100,000 loan would have a monthly payment of approximately $408.)