Economic Injury Disaster Loan

As of May 28, 2021, the Paycheck Protection Program has run out of funding. You can learn more about the PPP with our COVID-19 resource hub.

What is the $10K EIDL Advance?

As part of the United States federal government’s response to the COVID-19 pandemic, small businesses are now eligible for a number of loan programs through the small business administration. One of the most appealing aspects of the $2 trillion economic stimulus bill, called the Coronavirus, Aid, Relief, and Economic Security (CARES) Act, that was passed by congress and signed by President Trump is the Economic Injury Disaster Loan (EIDL) $10,000 advance program, which is offered by the Treasury through the United States Small Business Administration (SBA).

This $10,000 advance is an emergency grant from the government, which is designed to provide small businesses with working capital to pay expenses like payroll costs, mortgage payments, and more, while their EIDL loan application is considered. These $10,000 advances do not have to be repaid and businesses are supposed to have access to these funds within a one week period after beginning the application process.

Since its introduction, the advance has led to a great deal of confusion among small business owners. In this article, we will discuss the details and terms of the advance, as well as how your business can take advantage of the program during this challenging economic time.

Who is Eligible for the SBA Economic Injury Disaster Loan Program (EIDL)?

To be eligible for the $10,000 loan advance, small businesses must first be eligible for the EIDL loan.

Small Business Qualifications

Businesses that are eligible for the loan must satisfy a number of prerequisites, such as size standards. These qualifications include, but not limited to, the following:

  • Businesses typically must have less than 500 employees to be considered a small business, and they must not dominate their field of business on a nationwide level.
  • The business must be for-profit. Non-profit organizations are not eligible.
  • The business must have a place of business within the United States and it must operate primarily within the United States.
  • The business must be both independently owned and operated.

There are some other factors that are considered, including your businesses total annual receipts. The website has a complete guide to understanding whether or not your business qualifies as a small business, including an interactive size standards tool. However, if your business satisfies these conditions, there is a good chance that you are eligible for an EIDL loan!

EIDL Loan Terms and Conditions

One of the great things about the CARE Act is that it has relaxed a number of the otherwise stringent standards of SBA loan programs. Some aspects and loan terms to consider are the following:

  • Businesses can get loan amounts of up to $2 million to be used for accessing working capital for various operating expenses, such as payroll costs, fixed debt obligations, insurance premiums, and mortgage obligations.
  • You must give the SBA permission to review your business’ tax returns and records.
  • Loans of over $25,000 will require collateral of some form, such as security interest, which will give the lender the right to possess certain assets if your business defaults.
  • Loans under $200,000 do not require a personal guarantee. If you are looking to take out a large loan, this is important to consider, as a personal guarantee will put your personal assets at risk should your business default.
  • Loan approval can be based on your credit score.
  • The interest rate is 3.75%, and the loan terms can stretch as long as 30 years.
  • Loans include an automatic one-year repayment deferral. Loan interest will begin accruing at the 3.75% interest rate upon disbursement.

It is also important to remember that businesses that are not sole proprietorships and which are instead owned by multiple individuals will need to provide the information of any owners who own 20% or more of the business. The information that is required is fairly standard, including their social security number and citizenship status.

EIDL Application Process

The EIDL application process is rather straightforward, and the SBA and federal government claim that it has been streamlined in response to the COVID-19 pandemic. They claim that it should take businesses approximately 2 hours or less to complete.

Once you apply, your application and your business will be assigned to a loan officer. It is important to remember that the faster you reply to additional information requests throughout the application process, the faster a decision will be made.

The $10,000 EIDL advance, or emergency grant, must be applied for during the application process. This means that when you fill out the initial loan application, you must check the box that requests for your business to be considered for the $10,000 grant. If you do not check this box, your business will not be considered.

Small Businesses Can Also Apply for the Paycheck Protection Program (PPP)

Small businesses who apply for an EIDL loan can also apply and receive a Paycheck Protection Program (PPP) loan from the SBA. PPP loans are designed to help businesses keep their employees on their payroll during the economic downturn. These loans are advantageous for both small businesses and employees. For one, the SBA will forgive them if small businesses keep all of their employees on the payroll for eight weeks. Not only will this help your employees, who are likely worried during this time of uncertainty, but the added bonus of employee retention means you won’t have to rehire and retrain workers once the virus passes.

Though businesses are eligible to receive both of these loans, they cannot use the money toward the same operating expenses. According to the FAQs released by the Treasury and the SBA, if you receive a PPP loan and use it toward payroll and mortgage interest, you cannot use the money from an EIDL loan toward these expenses. EIDL loans do not feature loan forgiveness options like their PPP counterparts, however, as noted, the $10k


Remember, not all businesses will be approved for the EIDL loan. As such, during the application process, your business should also be researching and considering other loan options and programs to shore up your cash flow. Also, while the SBA has been advertising a $10,000 emergency grant, the details state that the grant is “up to $10,000”, meaning that your business may receive a small grant depending on a number of factors, including the size of your business and the number of employees you have. If you have 10 or fewer employees, based on early reports and reviews on the loan program, there is a chance you will not be eligible to receive the full advance.

Even though the government has streamlined the process, the interest in EIDL loans has been overwhelming since the CARE Act was passed. The volume of applications has slowed down the process and led to a great deal of confusion. Obviously, each day is important when bills are due, but patience will be key during this time.

Additionally, while the EIDL loans can be applied for through December, funds are limited. This is also true for the Paycheck Protection Program (PPP), which is being offered on a first-come, first-serve basis. This means that if you think your business will need access to working capital during the COVID-19 pandemic, it is best to act sooner rather than later. As noted, there has already been a rush for these loans.

Overall, while the loan process has been a little messy on account of the massive volume of applications, the EIDL and PPP loan programs are still one of, if not the best, options for small businesses during this period of uncertainty. If you think your business qualifies for them, you might as well give them a shot. The worst that can happen is you get rejected, which means you’ll be in the same situation as you would have been had you not applied. Plus, in the case of the EIDL program, even if you are rejected you may get a few thousands dollars in free cash to support your business during this difficult time!

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