This article was last updated 4-20-2020 at 11 am.

As of March 21, 2020, all small business owners in the U.S. are currently eligible to apply for a low interest loan due to COVID-19.

The U.S. Small Business Administration (SBA) is offering designated states and territories low interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID‐19).

Q. What businesses are eligible to apply?
  • SBA’s Economic Injury Disaster Loans (EIDL) are available to small businesses, small agricultural cooperatives, small aquaculture businesses and most private nonprofit organizations.
  • This includes:
    • Businesses directly affected by the disaster
    • Businesses that offer services directly related to the businesses in the declaration
    • Other businesses indirectly related the industry that are likely to be harmed by losses in their community
Q. What are the criteria for a loan approval?
  • Credit History–Applicants must have a credit history acceptable to SBA.
  • Repayment–SBA must determine that the applicant business has the ability to repay the SBA loan.
  • Eligibility–The applicant business must be physically located in a declared county and suffered working capital losses due to the declared disaster, not due to a downturn in the economy or other reasons.
Q. How much can I borrow?
  • Eligible entities may qualify for loans up to $2 million.
  • The interest rates for this disaster are 3.75 percent for small businesses and 2.75 percent for nonprofit organizations with terms up to 30 years.
  • Eligibility for these working capital loans are based on the size (must be a small business) and type of business and its financial resources
Q. How can I use the loan funds?
  • These working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or for expansion.
Q. What are the collateral requirements?
  • Economic Injury Disaster Loans over $25,000 require collateral.
  • SBA takes real estate as collateral when it is available.
  • SBA will not decline a loan for lack of collateral but requires borrowers to pledge what is available.
Q. What kinds of small businesses can apply?
  • Examples of eligible industries include but are not limited to the following: hotels, recreational facilities, charter boats, manufactures, sports vendors, owners of rental property, restaurants, retailers, souvenir shops, travel agencies, and wholesalers.
Q. What are some of the businesses that are ineligible for an Economic Injury Disaster Loan?
  • Agricultural Enterprises ‐ If the primary activity of the business (including its affiliates) is as defined in Section 18(b)(1) of the Small Business Act, neither the business nor its affiliates are eligible for EIDL assistance.
  • Religious Organizations
  • Charitable Organizations
  • Gambling Concerns (Ex: Concerns that derive more than 1/3 of their annual gross revenue from legal gambling activities)
  • Casinos & Racetracks (Ex: Businesses whose purpose for being is gambling (e.g., casinos, racetracks, poker parlors, etc.) are not eligible for EIDL assistance regardless of 1/3 criteria above.
Q. What other criteria is involved?
  • The applicant business must have a physical presence in the declared disaster area. An applicant’s economic presence alone in a declared area does not meet this requirement. The physical presence must be tangible and significant. Merely having a P.O. Box in the disaster area would not qualify as a physical presence.
Q. What are the basic filing* requirements?
  • Completed SBA loan application (SBA Form 5 or 5C)*
  • Tax Information Authorization (IRS Form 4506T) for the applicant, principals and affiliates
  • Complete copies of the most recent Federal Income Tax Return
  • Schedule of Liabilities (SBA Form 2202)
  • Personal Financial Statement (SBA Form 413)
  • Other Information may also be requested

*Although a paper application and forms are acceptable, filing electronically is easier,
faster and recommended.

Interested in a consult on the SBA’s Economic Injury Disaster Loans, call us at (888) 388-1040.