SBA EIDL Advance Part 2

For all small business owners who have applied for an EIDL advance grant, you will be eligible for up to $10,000.  The SBA emergency grant is one of the temporary programs that is designed to offer financial relief as part of the CARES Act. As of June 15, 2020, the SBA is accepting new applications for the EIDL advance grant and loan applications. Business owners don’t have to be approved for a loan to be eligible for the EIDL advance grant. 

On top of that, this loan advance doesn’t need to be repaid, it is 100% forgivable. However, it is important that you understand that if you’re approved for an EIDL loan, the amount of the loan advance you received will be deducted from the total loan. If you have suffered financial hardship due to the coronavirus, there are multiple coronavirus relief options offered by the SBA. These programs are designed to assist small businesses struggling from the economic disruptions due to the ongoing pandemic. 

The CARES Act (Coronavirus Aid, Relief, and Economic Security) was passed in late March and is the largest economic bill in U.S. history. As one of several temporary programs, the SBA emergency grant provides much-needed help to get business owners back on their feet during these uncertain times. This EIDL grant includes an emergency advance of up to $10,000. 

What is an EIDL Advance Grant?

In response to the coronavirus pandemic, small business owners in all U.S. States, Washington D.C., and territories are able to apply for an Economic Injury Disaster Loan (EIDL) Emergency Advance of up to $10,000. This advance will provide economic relief to businesses that are currently struggling with a temporary loss of revenue. Funds will be made available upon approval of your application, and the good news is that this loan advance doesn’t need to be repaid. 

This EIDL advance grant provides an emergency advance to small businesses that have been harmed by COVID-19. To access the advance, you first apply for an EIDL and request the advance right on the application. The advance may be used to keep employees on the payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations (including debts, rent, and mortgage payments). 

The funds to support the SBA programs and loans will continue to go fast, so it is best that you don’t delay. Unlike the Paycheck Protection Program (PPP) where you need to work with an SBA-approved lender, the SBA manages the Economic Injury Disaster Loan (EIDL) program directly. We also provide answers to some of the most common questions pertaining to the Economic Injury Disaster Loan. 

How Do I Apply for the EIDL Grant?

You can apply for the EIDL grant online on the SBA website. The application can take a few hours to complete, so be sure to check the box to request the EIDL grant before you submit the application. On the application you must ensure to check the box to be considered for an advance before your loan is finalized. You will need to provide a bank routing number and account number to have the loan advance deposited, upon approval of your application. 

Who Is Eligible for the EIDL Advance Grant?

All businesses who apply for an EIDL loan are eligible to apply for a fast $10,000 advance on their loan. The SBA will determine how much loan advance they will give you, and when they will send the loan advance. The loan advance is up to $10,000, but it may be less, depending on your business. 

What is Covered Under the Economic Injury Disaster Loan (EIDL)?

You can use the advance and loan for payroll, fixed debts, accounts payable, and other expenses that you are unable to pay directly due to the COVID-19 impact. For example:

  • Paid sick leave to employees unable to work due to the direct effect of the COVID-19 
  • Maintaining payroll to retain employees during business disruptions or substantial slowdowns 
  • Meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains.
  • Making rent or mortgage payments 
  • Repaying obligations that can’t be met due to revenue losses 

Do I Have to Pay Back the Economic Injury Disaster Loan (EIDL)?

Yes. The loan itself isn’t forgivable. However, you can qualify for up to $10,000 available as an SBA emergency grant, upon approval. If you receive a loan advance, this grant won’t need to be repaid. These are the terms, fees, and interest for this loan:

  • Interest rate of up to 3.75% per year
  • Principal and interest payments can be deferred for up to one year
  • Term length is up to 30 years
  • Loan amount based on amount of economic injury, up to $2 million 
  • No collateral if loan is $25,000 or less 
  • No personal guarantee if loan is $200,000 or less 

Remember, the loan itself isn’t forgivable. Your loan approval documents will specify how loan proceeds can be spent. 

Who Qualifies for the Economic Injury Disaster Loan (EIDL)?

This program is for any small business that has less than 500 employees. This includes sole proprietorships, independent contractors, and self-employed, along with private non-profit organization or 501(c) (19) veterans organizations affected by COVID-19. The eligibility requirements include:

  • Any business with up to 500 employees and sole proprietors
  • The business was in operation on January 31, 2020
  • Creditworthiness 
  • Past earnings, projected cash flow, and future prospects
  • Ability to repay and potential for long-term success 
  • However, the SBA may approve an applicant based solely on credit score of the applicant 
  • No majority owner is more than 60-days delinquent on child support
  • No legal gambling businesses, lobbying companies or pornography

To apply for the COVID-19 Economic Injury Disaster Loan and Advance, you should submit your application online now. 

Understanding the SBA’s Economic Injury Disaster Loans (EIDL) and Advance Programs for COVID-19

After restricting new applicants for a time to only U.S. agricultural businesses, the Small Business Administration (SBA) is now taking new Economic Injury Disaster Loan (EIDL) and EIDL Advance applications from all eligible small businesses. The SBA is also processing on a ‘first-come, first served basis’ EIDL applications that were submitted before April 15, when the portal had closed. 

For agricultural businesses that submitted an EIDL application through the streamlined application portal prior to the legislative change, SBA will process these applications without the need for re-applying. These disaster loan programs were extended early in the pandemic to businesses and nonprofits including charitable organizations like churches and private universities impacted by COVID-19. Businesses can qualify regardless of whether they have suffered property damage, and can use the funds to help meet working capital needs and cover operating expenses as they recover from the pandemic’s impact. 

Eligible business owners can also apply for EIDL advances up to $10,000 ($1,000 per employee), which don’t have to be repaid and can be granted even if the business is not approved for an EIDL. 


Your business must be experiencing a business loss related to COVID-19. The business receiving the loan must be deemed a small business based on North American Industrial Classification System (NAICS) code, annual receipts, and the average number of people employed per pay period. Per the updated application, types of eligible applicants include:

  • Businesses, agricultural enterprises, cooperatives, Employee Stock Ownership Plans (ESOPs), and tribal small business concerns with 500 or fewer employees.
  • Sole proprietors (with or without employees) and independent contractors.
  • Small businesses and agricultural cooperatives that have more than 500 employees but otherwise meet the SBA size standards 
  • Most private nonprofits, regardless of size 

According to the SBA’s guide to size and affiliation rules, when calculating the size of your business, you must include the annual receipts and employees of domestic and foreign affiliates, regardless of whether the affiliates are organized for profit. Applicable affiliation rules from the guide include:

  • Affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. 
  • Control can be established through ownership, management, or other relationships or interactions between parties. 
  • Both affirmative and negative controls are considered. Negative control includes when a minority shareholder has the ability under charter, by-laws, or a shareholder’s agreement to prevent a quorum or block action by the board of directors or shareholders. 

Current SBA loans will not preclude an applicant from being eligible for Disaster Relief Loans, however, businesses need to be in good standing with the SBA. Applicants may not be eligible if they have not complied with the terms of previous SBA loans. The SBA must find that applicants have an acceptable credit history. For loans made before September 30, 2020, the SBA has waived the usual EIDL requirements that recipient businesses must have been in business for a year before the disaster declaration, along with the ‘credit elsewhere’ provision. 


  • Usage 

Funds made available must be used for certain purposes. Acceptable purposes include working capital, paying fixed debts, payrolls, accounts payable, and paying other bills that could have been paid had the disaster not occurred. It is not acceptable to use loans to replace lost sales, enhance profits, refinance long-term debt, or fund expansion opportunities. Also EIDL funds can’t be used to cover expenses already covered by a PPP loan. 

  • Loan Limitations

The statutory limit of SBA loans is $2 million, but as reported by numerous news outlets and publications in May 2020, the SBA has set a new $150,000 limit due to high number of applications. The amount of each loan is further limited to the economic injury determined by SBA after subtracting business interruption insurance, and other capital recoveries up to the administrative lending limit. The SBA will also consider potential contributions that are available from the business and its owners. 

  • Interest Rate 

The interest rate for small businesses is 3.75% and for private nonprofit organizations is 2.75%. 

  • Maximum Loan Term

The maximum term is 30 years; however, terms are determined on a case-by-case basis based on each borrower’s ability to repay. 

  • Collateral 

The SBA requires collateral for all loans over $25,000. Real estate is acceptable as collateral. The SBA has said it will not decline a loan for lack of collateral, but it will require the borrower to pledge collateral that is available. The CARES Act waived rules related to personal guarantees on advances and loans of not more than $200,000.

  • Economic Injury

If applying for disaster declarations related to the coronavirus outbreak, only select ‘Economic Injury’ when inquiring about your business losses. 

Required Documents 

As listed on the application, the SBA is going to require the following documents to be submitted:

  • The application (SBA Form 5), completed and signed
  • Tax Information Authorization (IRS Form 4506T) completed and signed by each applicant, each principal owning 20% or more of the applicant business, each general partner or managing member, and any owner who has greater than 50% ownership in an affiliate business. 
  • Complete copies, including all schedules, of the most recent federal income tax returns for the applicant business; an explanation if not available 
  • Personal Financial Statement (SBA Form 413) completed, signed, and dated by the applicant, each principal owning 20% or more of the applicant business, and each general partner or managing member 
  • Schedule of liabilities listing all fixed debts (SBA Form 2202 may be used) 

Additional financial information may be required if requested, including:

  • Complete copy, including all schedules, of the most recent federal income tax return for each principal owning 20% or more, each general partner or managing member, and each affiliate when any owner has more than 50% ownership in the affiliate business. 
  • If the most recent federal income tax return hasn’t been filed, a year-end profit and loss statement and balance sheet for that tax year.
  • Additional Filing Requirements providing monthly sales figures will generally be required when requesting an increase in the amount of economic injury.