QA: Economic Injury Disaster Loans (EIDL)

Answers are interpretations of RDG + Partners CPAs and are not meant to be one-size fits all for every business. We recommend you consult with a member of the RDG team to apply guidance to your specific situation. We also expect further guidance to be issued by the SBA related to the questions below in the near future, especially as it relates to the forgiveness of the loans. The answers below are based on what guidance has been issued to date and are subject to change once further guidance is issued.

If you have additional questions that have not been addressed below reach out to RDG + Partners CPAs at (585) 673-2600 or at covid19@rdgandpartners.com. If you have a contact at the Firm, reach out to them directly.

How much loan can I borrow?

Originally, SBA noted the borrowed amount would be based on economic injury incurred, up to a maximum of $2M.  For those who got their application in the first day the EIDL was announced prior to the application being changed, you should have already received the funding or should receive it soon. Those of you (which represent the majority) that applied under the new streamlined, quick application process for up to a $10k advance, the SBA is processing those on a first-come, first-served basis. Once the SBA processes the remaining $10k advance applications they may re-open the full loan application, but that is uncertain at this time.

My business has over 500 employees. Does that mean we are not eligible for the loan??

No, it does not. If the Company meets the SBA’s industry size standard based on revenues, it would be eligible. For more information and to check if your business meets this standard, click: SBA Size Standards.

What information do I need in order to apply for the $10k advance?

You will need the following information as part of the application process:

- Business legal and trade name

- EIN

- Organization type

- Gross revenue and cost of goods sold for the 12 months ended January 31, 2020

- Date business established

- Number of employees at January 31, 2020

- Ownership information, including date of birth and place of birth of owner

What is this I keep on hearing about the EDIL grant being up to $10,000?

SBA has indicated that those who apply for the EIDL loan will receive an advance of up to $10,000. It was further clarified that the advance will be limited to $1,000 per employee, up to a maximum of $10,000.This $10,000 is not required to be repaid out of the entire loan balance.

I applied for the $10,000 advance over a week ago. I thought it was supposed to be sent within 3 business days? When should I expect to receive it?

Correct, it was SUPPOSED to be sent within 3 business days,but that never happened.  The amount received may be less than $10,000 based on the number of employees you have (see question above). The SBA is continuing to process applications submitted prior to on a first-come, first-serve basis.

Is there a personal guarantee or any collateral required?

No.  For the EIDL loan, the SBA has waived personal guarantee requirements for loans under$200,000.

What are the loan terms on the loan that has to be repaid?

The maximum loan period is 30 years with an interest rate of 3.75% for for-profit businesses and 2.75% for non-profit organizations.

What is the loan to be used for?

The loan is to be used for working capital purposes,including fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster impact.

Can I apply for both the EIDL and Paycheck Protection loans?

Yes, you can apply for both.   However, see question below.

Will the receipt of the EIDL advance impact the Paycheck Protection loan?

Yes, the amount of the advance received (up to $10,000)under the EIDL Loan will reduce the amount of forgiveness under the PPP loan by the same amount.

Is the EIDL loan worth applying for?

If the application re-opens, that is a case by case basis.If for any reason you have decided not to apply for the PPP loan, then applying for the EIDL is worth it for the advance received.   If you have also applied for and received the PPP loan, then the advance will ultimately reduce the amount forgiven under that loan and will need to be paid back over 2 years.   If you are a business that can use the loan,then it may be worth applying for it.  If you have access to other low interest financing through your bank,that may be an option instead.

Is the application process cumbersome?

No, not at all.  The application for the $10k EIDL advance is simple and not time consuming.   If applications for the complete loan open up, then that application is more comprehensive and will include business and personal financial documents.

How do I apply for a loan?

If the application re-opens, you apply at the SBA’s website. You can find the application at this link: SBA COVID-19 Relief.