Many businesses are still suffering from the pandemic shutdown. To meet this need, business owners were able to apply for money from the Paycheck Protection Program (PPP) but many business owners discovered that they needed even more money. Some other business owners found that they could not use the money from the PPP in the necessary way to be able to get loan forgiveness so they did not take the money.
Another source of money from the Small Business Administration (SBA) has been reactivated to help small businesses get emergency financial help. The SBA has opened the door for money to be available through an Economic Injury Disaster Loan. This money is available to any small business having economic problems as a result of COVID-19.
The Purpose of the Loan
The loan does not have very specific purposes that it must be used for like the PPP loan. The money can be used for any business need. This lets you use the money for bills, salaries, inventory, supplies, and more. There are two types of loans and even if you do not qualify for the EIDL, it is still possible to get the EIDL Advance.
Two Types of Loans Available
The loans are separate and one of them may be more beneficial to your business than the other one. They include:
- Economic Injury Disaster Loan (EIDL) – this loan is made available because of the coronavirus pandemic and the economic damage it has caused. It will have to be repaid.
- Economic Injury Disaster Loan (EIDL) Advance – this grant is available for small businesses and agricultural businesses that have less than 500 employees. The advance will provide up to $10,000 for businesses that have lost revenue because of the pandemic. It is a grant and does not need to be repaid.
When to Apply
The EIDL loans are available to any small business in the United States or any of the territories. This includes sole proprietors. The loans were available before coronavirus as disaster loans but were made available for businesses suffering from economic disasters from COVID-19. Applications were accepted at first and then no longer received after April 15th of this year.
The SBA is ready to start accepting new applications for these loans as of June 15th. Any applications that were submitted before April 15th that has not yet been filled are still active and will be filled in the order that they were received. A new application does not need to be submitted.
The terms of this loan are very favorable for businesses of any size. The terms are much more lenient than they are with the PPP, making it an excellent source of emergency funds for your business.
Helping you through a rough period in your business, the SBA allows payments to be spread out over a maximum period of 30 years. The interest rate on the loans is low, making it easier to repay. Small businesses have a set rate of 3.75% and non-profits have a lower rate of 2.75%.
Money Still Available for Salaries and Business Expenses
Money is also still available for small businesses in the Paycheck Protection Program if you need money for salaries and basic monthly expenses. Applications for this program are being accepted up until June 30, 2020. This money is forgivable if 60% of it is used for salaries and the remaining portion used for normal business expenses.