EIDL Grants No Longer Available But You May Still Get a Loan

EIDL Grants No Longer Available But You May Still Get a Loan

EIDL Grants No Longer Available But You May Still Get a Loan

The Small Business Administration has announced that it will no longer be making EIDL advances to new applicants because the program has allocated the $20 billion authorized by Congress. The Economic Injury Disaster Loan advances are grants that do not have to be repaid. However, small businesses may still apply for a low interest rate loan under EIDL. 

By way of background, the CARES Act authorized grants of up to $10,000 to certain small businesses, which the SBA administered as $1000 per employee. As of July 3, 2020, the SBA reported it had disbursed advances to nearly 5 million businesses (4,946,997 to be exact). These grants have been popular with small businesses because they don’t have to be repaid. 

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However, some issues with the program have been identified:

  • Some borrowers were approved for a loan but did not receive a grant, with no explanation as to why not. 
  • Applicants reported they were turned down for the grant based on credit, although the grant does not have to be repaid. 
  • Business owners were upset that the SBA arbitrarily limited the amount of the grant to $1000 per employee in contradiction to The CARES Act. (A lawsuit has been filed over the discrepancy.) 
  • The IRS has not issued guidance about whether these grants are taxable.
  • There is a great deal of confusion as to whether (and when) self-employed individuals receiving Pandemic Unemployment must report EIDL grants to their state unemployment agency. 

Nevertheless these small grants have helped many small business owners, and many have eagerly anticipated the deposit of the grant into their bank accounts. Thousands have shared their successes in the Facebook group: 

Business Loan Insight Financing Hub – PPP, EIDL and More on Facebook

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Economic Injury Disaster Loans Still Available

Small business owners and the self-employed who have not applied for an Economic Injury Disaster loan may still want to do so, even though the grant is not available. These loans carry an interest rate of 3.75% (2.75% for non-profits), a 30-year repayment period and a year of payment deferral, though interest accrues. The CARES Act waived the personal guarantee for loans of less than $200,000 and no collateral is required for loans of less than $25,000. 

There will be a personal credit check through Experian for all EIDL applicants, and larger loans may also check business credit through Dun & Bradstreet (D&B). There is no minimum credit score required but acceptable credit is required to qualify. (Rea

Unlike Paycheck Protection Program loans which require you to apply through a participating lender or agent, the only place to apply for an EIDL is directly with the Small Business Administration (SBA). The application process is fairly straightforward, though a bit confusing because you don’t request a loan amount. Instead, the SBA will calculate it for you based on economic injury. 

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Although the EIDL loan is currently not forgivable the way a PPP loan may be, a small business may be able to qualify for both EIDL and PPP. The two programs may be complimentary. In particular, EIDL funds may be used for a wide variety of working capital needs while PPP loans must be spent primarily on payroll in order to be fully forgiven. 

There is an effort in Congress to lower the interest rate on EIDLs to 1%—the same as the interest rate on PPP loans—and to increase funding for EIDL advances. U.S. Senators Brian Schatz (D-Hawaii) and Catherine Cortez Masto (D-Nev.) have introduced the Small Business Disaster Loan Enhancement Act of 2020, which would also require the SBA to provide the full $10,000 advance and offer a $25,000 grant for some of the hardest hit businesses. 

This article was originally written on July 13, 2020.

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Gerri Detweiler

Gerri Detweiler

Education Director for Nav

Credit expert Gerri Detweiler is Education Director for Nav. She has more than three decades of experience in consumer credit education, has been interviewed in more than 3500 news stories, and answered over 10,000 credit questions online. Her articles have been widely syndicated on sites such as MSN, Forbes, and MarketWatch. She is the author or coauthor of five books, including Finance Your Own Business: Get on the Financing Fast Track. She has testified before Congress on consumer credit legislation.

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10 responses to “EIDL Grants No Longer Available But You May Still Get a Loan

  1. I need help I was denied the loan but did not receive the $1000 grant for pself or employees either.need credit repair help also.

    1. Marvin – Unfortunately we have heard that some applicants did not get the loan or the grant. We don’t know why that is; you’ll have to reach out to the SBA Disaster Assistance hotline at 1-800-659-2955. (You can ask to be reconsidered.) Regarding your question about credit repair help, Nav does not provide credit repair services but you can use a free Nav account to check and monitor both personal and business credit. You can sign up for a Nav account at Nav.com.

  2. Somebody should write about the amount of fradulant claims that the SBA handed out without any review. The amount exceeds $100 million dollars. This has been reported internally, but no action was taken. Hundreds of people claimed the maximum $10,000 and the funds were automatically sent out.

  3. Thank You for all your Help, your Team will be remembered Highly. Expanding would like larger restaurant space, where can I purchase a template for a Projection and Financial Plan. Thank You wonderful team.

    1. Two suggestions: 1. Nav has partnered with a couple of services that can help, including Wise Business Plans and LivePlan. You’ll find more information about both here. We’d also recommend you make an appointment to talk with a Small Business Development Center advisor and/or a SCORE mentor – both offer free help to small business owners. Locate your local offices at SBA.gov/tools.

    1. Hi Tracy – if you’re talking about an EIDL loan, you can apply at SBA.gov. For other types of financing I’d suggest you get a free Nav account so you can learn about your financing options.

  4. This is a nightmare i was turned down because of my personal credit history , nothing is consistent with the sba .

    1. So sorry to hear that Dexter. You can request reconsideration, though I don’t know how quickly they are processing those requests. You may want to reach out to your Senators and Representative in Washington. They have staff who are assigned to help constituents who are having trouble with federal programs like this.