Helpful tips

Is it worth applying for an EIDL loan?

Is it worth applying for an EIDL loan?

If your business has been hurt by COVID-19, it may be worth applying for an EIDL loan. While taking out any loan requires serious consideration, an EIDL loan offers good repayment terms, a low interest rate, and an easy application process. Like any loan, there are disadvantages to obtaining an EIDL loan]

What can the EIDL advance be used for?

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.

Do you need to read the EIDL contract?

This issue over the personal guarantee language in the EIDL contract may seem like splitting hairs, but it illustrates how important it is to read small business loan contracts before you sign them. It’s not always easy or enjoyable, but it is vital. Not a legal expert?

What does EIDL do for a small business?

EIDL provides the necessary working capital to help small businesses impacted by a disaster survive until normal operations resume. EIDL assistance is available only to small businesses when SBA determines they are unable to obtain credit elsewhere.

What are the limits on an EIDL loan?

EIDL terms Unlike PPP loans, disaster loans — which carry a term of 30 years and a 3.75% interest rate — require a personal guarantee and are backed by collateral for loans exceeding $25,000. Loans are capped at $150,000. (The SBA recently reduced that from a $2 million cap.)

What are the rules for the EIDL advance program?

New Targeted EIDL Advance Program: Eligibility Rules 1 An entity must apply during the covered period (January 31, 2020 to December 31, 2021), and this includes an entity that applied for funding prior to December 27, 2020. 2 The entity is located in a low-income community. 3 The entity has suffered an economic loss of greater than 30%.

Can you get loan forgiveness on an EIDL loan?

Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan. Must demonstrate “substantial economic injury”. Without the PPP rollover, no loan forgiveness is available. You may apply for up to $2,000,000 of disaster-related relief.

Can a PPP loan be used for an EIDL loan?

If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.