We at Fox & Moghul have been getting an increased number of queries from small business owners concerning the Trump Administration’s decision to inject some emergency liquidity into the economy to save distressed businesses. Given the increasingly uncertain environment these days, the U.S. Small Business Administration (SBA) has initiated the Economic Injury Disaster Loan program (EIDL) to assisted distressed businesses with much needed financial assistance during this time. These funds are to be disbursed directly from the Federal SBA to eligible applicants.
WHO QUALIFIES FOR EIDL LOANS?
Those eligible for EIDL loans include small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes that cannot meet their financial obligations as a direct result of the economic injury caused by the Coronavirus (COVID-19).
EIDL LOAN TERMS
· Interest rates will be determined by certain formulas and will be fixed rates for a maximum of 3.750% for the life of the loan (for non-profits, it is 2.75%);
· The term of the loan could be up to 30 years;
· The maximum loan amount will be $2,000,000, with some exceptions to waive the statutory limit.
· Credit History – Applicants must have a credit history acceptable to SBA.
· Repayment – Applicants must show the ability to repay the loan.
· Collateral – Collateral is required for all EIDL loans over $25,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.