COVID-19: Business Implications Series — Economic Injury Disaster Loans (EIDL)

The U.S. Small Business Administration (SBA) has designated COVID-19 as a qualifying event for the provision of Economic Injury Disaster Loans (EIDL).

Small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan due to COVID-19. An EIDL might be the best option to bridge your working capital requirements over the next 60–120 days or longer. Below are answers to the most commonly-asked questions about EIDL that BlueWater Partners has received.

What is an EIDL?
An EIDL is a low-interest, fixed-rate loan that can provide up to $2 million in assistance for small businesses severely impacted as a direct result of a declared disaster, such as COVID-19.
  • Administers vital economic support to help overcome temporary loss of revenue.
  • Helps meet necessary financial obligations (fixed debts, payroll, accounts payable, and other bills) that your business could have met had COVID-19 not occurred.
  • Prevents having to go through a bank to apply for a loan.
  • Fixes the interest rate at 3.75% for small businesses without credit available elsewhere.
  • Offers loans with long-term repayments (up to 30 years) in order to keep payments affordable.
  • Currently, initial repayments are deferred for four months.
What is the first step?
Perform an assessment of your business to determine the impacts of COVID-19 with a primary focus on your cash flow.
  • Determine the potential for delayed payments from your customers.
  • Understand the impacts of idle inventory due to production slow-downs or stoppages.
  • Prioritize payroll, benefits, and taxes, and take a close look at your current vendor obligations.
Is your business eligible to apply for an EIDL?
If your small business suffers substantial economic injury as a direct result of COVID-19, you may be eligible for EIDL financial assistance. EIDLs are available to small businesses that meet certain SBA size standards, which vary by industry.
What are EIDL’s lending criteria?
  1. Applicants must have a credit history that is acceptable to the SBA—extenuating circumstances include recent bad credit that’s shown to be caused by COVID-19.
  2. You will need to prove that you have the ability to repay the loan.
  3. When applying for loans greater than $25,000, your business will likely have to pledge collateral for the loan.
    • SBA requires borrowers to pledge what is available; they prefer real estate.
    • Loans under $25,000 can be unsecured.

Please know that BlueWater Partners is committed to supporting you during this unprecedented time. If you have questions, concerns, or would like assistance with your EIDL application, please email or call us. We’ve been through the application process and we’re here to help.