On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law following its approval by both chambers of Congress. The CARES Act is aimed at reducing the economic impact of the novel coronavirus 2019 (COVID-19) pandemic. The CARES Act expands the Small Business Administration’s (SBA) long-standing Economic Injury Disaster Loan Program (EIDL). The EIDL program was created to assist businesses, renters, and homeowners located in regions affected by declared disasters.
WHO IS ELIGIBLE?
According to the SBA all of the following entities that have suffered substantial economic injury caused by COVID-19 (provided they were in existence on January 31, 2020):
• Businesses with fewer than 500 employees (see below on how to count accurately)
• Cooperatives, ESOPs, and tribal small businesses with fewer than 500 employees
• Sole proprietors
• Independent contractors
• Most private nonprofits
HOW DO I CALCULATE HOW MANY EMPLOYEES I HAVE?
According the regulations provided by the SBA, you should calculate the number of employees by counting all individuals employed on a full-time, part-time, or other basis. You can find out more on this regulation from Cornell Law School.
HOW MUCH CAN I GET FROM THE EIDL?
Currently, the maximum loan amount is $2 million and the actual loan amounts are based on your company’s “actual economic injury” that is determined by the SBA.
WHAT CAN I USE THE LOAN FOR?
You can use the money for payroll, rents or mortgages, or other business operational costs.
DO I HAVE TO REPAY THE LOAN?
Yes, this is unlike the Paycheck Protection Program. The EIDL has no upfront fees and the interest rate is is 3.75% for small businesses and 2.75% for nonprofits.
HAS ANYONE IN TEXAS RECEIVED APPROVAL YET?
As of 4/20/20, the SBA Disaster Assistance Update states that 1,243 loans have been approved in Texas, equalling $263,469,600. See how other states compare by clicking here.
CAN I APPLY FOR BOTH THE EIDL AND THE PPP?
In short, yes. If you have already received an EIDL loan (between January 31, 2020, and April 3, 2020), you can still apply for a PPP loan so long as you use them for different expenses.
HOW DO I APPLY?
Apply online at SBA.gov/disaster
With the additional funding provided by the new COVID-19 relief package, SBA will resume processing EIDL Loan and Advance applications that are already in the queue on a first come, first-served basis. The interim legislation will allocate $310 billion to replenish the SBA’s Paycheck Protection Program (PPP), $75 billion for hospitals and $25 billion for COVID-19 testing. The bill also includes additional funds for the Economic Injury Disaster Loan (EIDL) program.