The EIDL, or Economic Injury Disaster Loan, is not the same thing as the Paycheck Protection Program (PPP) financing previously offered to small business owners suffering from business disruptions caused by the COVID-19 virus. Because the loan amounts for a PPP loan and the requirements around using the funds to primarily support payroll, for many small business owners who don’t have employees and don’t compensate themselves within a traditional payroll model, the EIDL might be a better option—because the EIDL loan requirements are different. (Note that PPP is closed but EIDL loans are still available.)
The Economic Injury Disaster loan requirements are based on similar SBA disaster loan requirements that have been used in the aftermath of a hurricane, tornado, or other physical disaster, but in this case related to the economic injury caused by the COVID-19 coronavirus. I am neither an attorney nor an accountant so if you have any specific questions regarding how this might apply directly to your business, I recommend you consult with your own trusted legal advisor.
What Type of Business is Eligible for the EIDL Program?
The eligibility requirements for the EIDL are slightly different than those for the PPP and are intended to provide economic support to small businesses to help overcome a temporary loss of revenue resulting from the pandemic; and other than the grant portion described below, does not rely on payroll numbers to calculate the loan amount.
The SBA describes the program as for, “…any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organizations or 501(c)(19) veterans organizations affected by COVID-19.”
Because of the high demand for the EIDL, the SBA has capped the maximum loan amount available to $150,000—plus whatever your business qualifies for as the advance. Note the SBA later raised it to $500,000 and later raised it to $2 million for eligible businesses. Interest rates for the EIDL are 3.75% for small businesses and 2.75% for non-profits with up to a 30-year term. Eligibility also requires that your business must have been in operation before January 31, 2020.
The way the SBA determines whether or not your business is a small business is based on the average of your annual receipts or the average number of employees—usually under 500. There are businesses in certain industries that may have more than 500 employees if they meet certain SBA size requirements. The SBA offers what they call a Size Standards Tool, that will help you determine if your business will meet those size requirements if you have over 500 employees.
The EIDL Advance
As part of the EIDL an advance of up to $10,000 is available for those who apply for the EIDL. The advance portion of the loan originally was based on the number of employees in your business: $1,000 per employee, up to 10 employees (or $10,000). However, Congress later authorized Targeted EIDL Advances of up to $10,000, with an additional $5000 to certain hardest-hit businesses. Learn more about Targeted EIDL grants here.
Funds will be made available following a successful application and the loan advance does not have to be repaid.
Unlike the PPP, the EIDL advance, as well as the entire EIDL, are considered working capital loans and may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. These loans are not intended to replace lost sales, profits, or to pay for expansion. Originally they could not be used to pay down long-term debt but the SBA has modified those rules.
Read: 5 Ways You Can And Cannot Use Your EIDL Loan
The SBA has published the following credit score requirements for EIDL loans:
- $1000-$500,000: Minimum credit score 570
- More than $500,000: Minimum credit score 625
You should expect that there are credit issues that will likely disqualify you:
- You are more than 60 days delinquent on child support obligations
- You have judgements against you for federal debts and you have not worked out a satisfactory repayment plan
- You have federal tax liens of more than $10,000 (you could still qualify, but you must provide a satisfactory explanation and be able to repay the tax debt (it’s recommended you work out a payment plan with the IRS as soon as possible)
General guidelines for SBA Disaster Loans further state:
“For disaster lending purposes, satisfactory credit history is defined as a history that generally shows payments to creditors as agreed unless otherwise justified…
Generally, a history that consists of minor, isolated instances of adverse credit or late payments is acceptable. Major instances of adverse credit such as unpaid judgments, repossessions, previous foreclosures, charge-offs, and unpaid collections can be overcome provided:
- The applicant explains the lapse; and
- The applicant has other accounts with “as agreed” payment records.
“For purposes of evaluating adverse information found on an applicant’s (credit reports), the information should be considered within the totality of circumstances; for example, financial difficulties caused by one-time situations such as divorce, job loss, serious medical illness, etc.
“For purposes of disaster lending, medical collections are not considered adverse information.
“Non-medical collections or charged off accounts with an aggregate of $10,000 or less and foreclosures or deed-in lieu of foreclosures which occurred more than two years from the date of the loan application are all considered an acceptable credit risk and do not require any additional justification.”
How to Apply?
Unlike its PPP counterpart, any business applying for an EIDL will apply directly to the SBA. Because the application volume is so high, the SBA suggests that you apply online, but if you have questions about the application or problems providing the required information, you can contact the SBA’s Customer Service Center at 1-800-659-2955 or (TTY:1-800-877-8339. Their email address is DisasterCustomerService@sba.gov.
We are hearing from business owners who have shared their experiences regarding the EIDL with us that the SBA has been very helpful with questions, but that it will likely take a long time to get through and that funds distribution will likely take longer than you might otherwise expect.
Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not solely rely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs, and Financial Advisors. To review your real-time funding options with one of Nav’s lending experts, please contact us.
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69 responses to “What Are the EIDL Loan Requirements?”
Trying to ascertain if the $200,000.00 non-personal guarantee limit has also changed with the advent of these new allowances of use for an EIDL increase.
There is still a personal guarantee for loans over $200,000.
My business has a confirmed amount of $185,000 and has been in the processing stage for months. When I call they just say it’s still being processed. What can I do?
Krys – If you can’t get an answer by calling the SBA directly (first step) try reaching out to an SBA Resource Partner. You’ll find more information here.
Is there a minimum period of ownership of the company required for EIDL?
There is no time in business requirement but your business must have been in business by February 15, 2020.
Curious as to why your personal credit score determines the outcome of the loan if you are applying with a business EIN?? And what are the required score.?
The SBA generally requires “acceptable credit,” likely because if borrowers default taxpayers pick up the tab. For EIDL, the SBA checks Experian and recently they stated the following minimum credit score requirements: $1000-$500,000: Minimum credit score 570
More than $500,000: Minimum credit score 625
My credit score dropped below 600 due to the COVID and loss of work paying my bills late getting loans cause work was barley coming in I applied for the sba Loan asked me to write a letter on why it dropped explained the situation. Do they really look hard at the credit..
Yes but they may be able to use alternative verification.
I thought that in order to qualify for this loan you had to have a single quarter where you performed 30% worse than the prior year. Is that correct? Also, can I apply for the loan in order to get the advance and then repay the loan immediately?
The loan does not have that requirement. It’s the Targeted grant that does. You do not have to accept the loan to get the grant, but unless you applied in 2020 you won’t be able to apply at this time for the grant.
how do they value assets?
i have general equiptment.
20 hospital beds worth 1500 each
5 ultra sound wave machines aprrpox. 20k each
my files are valued at 20/file
not sure if i qualify
I have a tax debt wiped because of the time it ran over 10 years
Mark – My best recommendation is to apply. The SBA will calculate it themselves to don’t worry about the details.
Will I need a Schedule C for the EIDL Advance? I drive Uber and receive a 1099. I typically do my own taxes and fill out a Schedule C, however I used a “professional” tax service this time. They filed my income from Uber as nonemployee compensation on Schedule 1.
Hmmm…I’d recommend you get a second opinion from a tax professional. Self-employment income like that is typically reported on Schedule C. I don’t know how the SBA will handle this situation.
I did doorash and postmates and doordash for January and February as part time driver. I earned a total of $800 . After the pandemic hit I stopped that job and shifted to alternative job. Do I still qualify for EIDL ?
You can certainly apply and see what happens.
I applied and received a ppp loan earlier 2020. It was a really small loan because my lender wouldn’t allow me to claim my 2 new employees which was new hire in jan 2020. Will I be able to claim them this time? Also by the time I found out about the EIDL the funds were already depleted. Therefore I never applied . will I be able to recieve the EIDL this time? My community is low income, below the poverty level what effect will that have on the EIDL?
The time period for calculating payroll has changed. You’ll see more details in this new PPP article.
As for EIDL you may be able to get the grant this time around. I have updated this article with the latest information.
I applied for the EIDL and was denied for credit. I was offered opportunity for reconsideration if my score improved and it did. Then they asked for all kinds of tax documents and I replied I had none to submit. They then offered the option the qualification by credit. I opted for that since my score improved. They then said they would still need the tax documents. They rescinded on the credit option.
I’m so sorry! If you didn’t get the full $10,000 EIDL grant you MAY be eligible. Get more information here.
Do insurance sales qualify for EIDL?
Can I Eligible for Eidl disaster loan, my immigration stats (last 17 year, on work Authorization) my business last 13 year as ,LLC Company in New jersey.
The only way to know for sure is to apply. You may want to do so while it’s still open.
Will you help me with all honesty because I’ve been trying and haven’t seen any results and I own Three LLC’s and have future ideas with purchasing an INC Also. I’m with the job creations thing and I’m tired of what I think may be happening with the transferring ideas and not being on my behalf but for the gain to whom I’m sharing my ideas with and I’m still left behind in the poor house sitting with ideas and new ones entering my mind set with no gain from anything at all. Just please help me everyone will gain success from what I think are good business perspectives. Right?
Mark – I would encourage you to make an appointment with your local SCORE chapter or SBDC office. Use the SBA local assistance locator to find help in your area. They provide free help to entrepreneurs.
I got a email on 7/1 it said I was getting EIDL but haven’t received it yet ?
I read somewhere that the form of ” Loan Forgiveness Application Revised June 16, 2020 ” is for both PPP program and EIDL. Is it correct? and Where should I submit this form to? What is the address of SBA to mail the form to? Thank you.
EIDL does not have a forgiveness component. You must repay an EIDL loan. You apply for PPP forgiveness through the lender that gave you the PPP loan.
I’m having a difficult time figuring out what specific expenses the $1,000 advance portion of EIDL can be used for.
When I applied I noticed penalties will occur if the money isn’t spent appropriately, but the guidelines defining what is appropriate or not are as clear as mud. Vague. Help?
Hi Dave – This new article we just published might help: 5 Ways You Can and Can’t Use Your EIDL Loan
How does EIDL help homeowners and renters? Isn’t it only for small businesses?
Am I missing something?
EIDL is for small businesses. There are disaster loans for homeowners but to my knowledge they apply in physical disasters like hurricanes.
When is the due date lean to apply for sba EIDL,and what is the minimum credit score to get approved,thanks so much,
There is no specific minimum credit score requirement – acceptable credit is required. At the moment you can still apply at SBA.gov.
If we got $130K loan, and pay the payments + interest… is the SBA really going to ask us how we spent the $130K ? A few people I know have already taken the full amount and purchased stocks, and some put into a CD account.
They may audit some loans.
Does student loan affect my qualification?
Not specifically unless you are in default on your student loan. (There is also a personal credit check.)
today my loan was approved for 7300.00 but I would like to know what type of expenses can I include to demonstrate that EIDL was solemnly necessary for my company ?
This article may help: 5 Ways You Can and Can’t Use Your EIDL Loan
isn’t the max loan amount $150,000? not $15,000?
Yes, thank you. It’s been fixed.
How about if you are a new started 8/2019 no revenue from new business self as the employee with an LLC entity. Had plans to launch opening on this past February 2020. But all business papers were started and finish in 2019. Can I apply for ppp or eidl? Business is an event company.
You can try.
Do you know if you can use an EIDL loan for purchasing a work van?
This article may help answer your question.
Hi, I want to know if I can use the money from the EILD loan to pay another loan that I have?
You’ll want to read this article and consult the SBA with individual questions.
I received SBA EIDL loan and but confused about spending that money for business but what and where can I use this money in terms of business expenses??? Please advice me. Thanks.
We’ve written this article to help address those questions.
Hello, I needed a little info please. So I received my targeted Eidl , and my eidl advance for the 10,000 and 5,000 grant. Now I’m in the process of them reviewing the last documents. For my EIDL advance loan side. Already gave them proof of old depts paid as well as the agency that’s helping me restore my credit. As well letters and so on. My credit is even sufficient enough for the 1000 to 500,000 amount. So the only thing now is sba is waiting for my transcripts for my taxes for 2017 to 19. Guess they need to see if we revenue income those years. Even though we’ve been in business since 2014. So I need to know once they received what’s needed. With the transcripts. Should I be ok with getting help? Because it will surely help us get back on our feet with the business. Or will there be additional approval guidelines for the loan. Basically can I still be denied.? And what are they looking for to be qualified? If there even is any additional info? And if I am approved how do I even have an idea of what you could be qualified for? Meaning Do they base you on your gross income though out 2017 to 2019. Basically also will they deny you if your gross income is not a certain amount? Or do it even matter about the revenue throughout the years? As long as you have proof that you were in business for the years needed from the transcripts there requesting?. Thanks in advance.
Eddie – If you need more assistance with your EIDL application the best place for you to get help – for FREE – is through an SBA Resource partner like SCORE or your SBDC. They can help you for free with questions about these programs. Find your local offices here.
My apologies I was trying to give a rating of five star by clicking each one but once a star is clicked you cannot add more stars
They gave me a pretty large amount for the eidl loan, can i take that money to invest or pay off my other debts?
Anna – please read this article and contact the SBA with further questions.
If I qualify for an SBA loan can i use the EIDL as a capital to open another restaurant..my lease is ending soon 2 years and would like to open the same business or other venture with cheaper rent in a different location ..so my question is since i am responsible for that loan am I able to spend it on other venture.
EIDL may not be used for relocation. I’d recommend you ask the SBA for guidance.
Can the EIDL be used to pay a business credit card?
That’s likely considered a short-term debt which is probably acceptable use of funds. But we can’t speak for the SBA so you will want to ask them.
I applied for the EIDL on April 5th. I was given a confirmation number and then heard nothing. On May 5th, money was direct deposited into my account. 1k per employee, I’m a tiny business and have 3. So yes, it did work, but they don’t email or tell you anything.
Will the EIDL loan be forgivable if used toward payroll ?
Brian you are thinking of PPP loans. This article describes the difference between the two: COVID Relief Loans: Economic Injury Disaster Loans Vs. Paycheck Protection Loans
I am self employed I drive yellow cars.tell me if I am eligible for EIDL loan and do I have to pay back and how much I can get loan and what is required for.
Mohammad – We wrote a very comprehensive article about it here. I’d suggest you read that and then go to the Disaster Loan portal (linked in the article.) I don’t know how much you may be eligible for but I encourage you to check out the application and apply soon if you want to try to get this funding.
Fake news. They denied me and my business everything, including the $1,000 EIDL advance. They sent a letter today that simply said the decision was based on credit rating. So if you had trouble keeping up before the crisis, you are definitely doomed now. Thanks SBA
Teddy>>> You have the opportunity to request reconsideration up to three times> i suggest getting a financial need document created to submit documentation showing your need due to the effects of covid19 and how your business would benefit by receiving an eidl loan and how you would be more than able to adhere to the repayment of the loan. Just a suggestion and although it is not guaranteed to work>It will afford you another chance at it> ALL HOPE IS NOT LOST ON A SINGLE LOAN DENIAL>
Same thing happened with my business. Applied the end of March when forced to shut down my business. The same day they received my application, they denied everything including the $1000 grant stating credit rating.
My small sole proprietor business which has been open for 39 years in the same town Was denied? No help? From the government who forced me to close? I’m dumbfounded.