The Covid-19 pandemic has hit us in more ways than we can think. It hit us physically, emotionally, mentally, and financially, and it especially took a hit on small businesses. If you have been hit by the pandemic and are struggling to get working capital, then Economic Injury Disaster Loan (EIDL) may come in handy.
What Is the EIDL Loan?
EIDL is an Economic Injury Disaster Loan acronym that was created by the Small Business Administration (SBA). EIDL is meant to assist small businesses in recovering from declared disasters such as floods, hurricanes, or Covid-19 (current scenario disaster). Due to the pandemic, EIDL has added a unique loan facility for businesses hit by Covid-19 resulting in shutdowns.
The EIDL for COVID-19 has two components:
- The loan itself is not taxable.
- The loan must be repaid but not the advances. These loans have low fixed interest rates for 30 years.
Getting Approval for EIDL Funds
The EIDL program has an online application, and here is all that you’ll be asked for:
- In the case of a sole proprietorship, business-related questions must be mentioned, including firm name, address, and Social Security number.
- Annual revenues for up to a year before the disaster.
- The number of employees.
- Cost of goods.
Time Required to Receive Funds after EIDL Approval
The time between the loan getting approved and when you receive your SBA loan funds somewhat depends on you. Once approved for the loan, you’ll be sent an email stating all the details, like how much you’re eligible to borrow. The loan proceeds shall be deposited into your bank account within five to 10 business days of signing the agreement. Here are the steps to get your EIDL loan:
- Collect your information, including business details and revenues.
- Plan enough time to apply for the EIDL loan online as it may take more than two hours.
- Wait for SBA to review your application.
- Review the offer made by SBA and sign the loan agreement.
- Wait for 5-10 business days for the funds to be deposited.
What Can an EIDL Loan be used For?
Certain SBA loans have particular requirements about how and for what the loan proceeds can be used. The funds received from the EIDL program must be used for operating business expenses, such as:
- Healthcare benefits for employees
- Fixed debt payments
- Replacing inventory
- Prepaying commercial debt
If the effects of the pandemic have hit you, this is a great option to explore while your business recovers. Now that you know about applying for EIDL loans and how long it takes to receive the funds post-approval, you may consider using one!