Stimulus Package: Eidl Loans Included Or Excluded?

The COVID-19 pandemic saw governments worldwide scrambling to put together economic relief packages to support struggling businesses and households. In the US, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided economic impact payments of up to $1,200 per adult and $500 per child under 17 for eligible individuals. The Small Business Administration (SBA) also offered Economic Injury Disaster Loans (EIDL) to help small businesses recover from the pandemic's economic impacts. With the ongoing distribution of COVID-19 vaccines, Congress passed an additional $908 billion stimulus bill in December 2021, which includes further funds for the Paycheck Protection Program, direct payments to households, extended unemployment benefits, and support for airlines. This new stimulus package also grants $20 billion for EIDLs, and it is important to note that the SBA is no longer processing applications for new COVID-19 EIDLs or advances as of January 2022.

EIDL funding types

The COVID-19 Economic Injury Disaster Loan (EIDL) program was created to provide small businesses with the working capital they need to withstand the effects of the pandemic. The EIDL program offered two types of funding: loans and advances.

The loans feature a 30-year term and a fixed interest rate of 3.75%. The proceeds can be used for any normal operating expense, including payroll, rent or mortgage, utilities, and other ordinary business expenses. The SBA has limited entities that are part of a single corporate group to a combined total of no more than $10 million in COVID-19 EIDL loans. Applicants must be physically located in the United States or a designated territory and have suffered working capital losses due to the COVID-19 pandemic.

The EIDL Advance funds were awarded to existing COVID-19 EIDL applicants who met certain criteria. Advances are like grants, but without the typical US government grant requirements. For the hardest-hit businesses and private nonprofits, the SBA offered two kinds of advance EIDL funding that did not need to be repaid. Businesses located in low-income communities, with no more than 300 employees, and that suffered more than a 30% reduction in revenue may qualify for a targeted advance of up to $10,000.

EIDL eligibility

The Economic Injury Disaster Loan (EIDL) is a federal small business loan program that supported small businesses' recovery from the economic impacts of the COVID-19 disaster. The EIDL grant includes an emergency advance of up to $10,000. Small business owners in all U.S. states, Washington D.C., and territories were able to apply for this advance. This loan advance did not have to be repaid.

The EIDL program was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in late March 2020 and is the largest economic bill in U.S. history. The CARES Act temporarily expanded eligibility for impacted entities to access low-interest loans due to COVID-19 through the EIDL program. This expansion in eligibility included farms and agricultural businesses, which do not typically have access to disaster assistance resources offered by the U.S. Department of Agriculture during physical disasters.

As of January 1, 2022, the Small Business Administration (SBA) stopped accepting applications for new COVID-19 EIDL loans or advances. As of May 6, 2022, the SBA is no longer processing COVID-19 EIDL loan increase requests or requests for reconsideration of previously declined loan applications.

To apply for an EIDL, you must first apply for a loan and request the advance on the application. The advance may be used to keep employees on the payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent, and mortgage payments.

PPP loan forgiveness

The $908 billion stimulus package, passed by Congress in December 2020, included further funding for the Paycheck Protection Program (PPP) and other small business relief initiatives. The PPP was created in haste during the early days of the COVID-19 pandemic to prevent businesses from collapsing. The loans were simple to obtain, with companies needing to pledge that the economic threat of the pandemic made the funding necessary.

The Treasury will fully forgive PPP loans if businesses spend at least 60% of the funds on payroll during the covered period, which is either eight or 24 weeks, as chosen by the recipient. This second round of PPP will utilise a simplified one-page loan forgiveness application for loans under $150,000. Businesses need only list the loan amount, number of employees, and estimated total payroll.

Borrowers can apply for forgiveness at any time up to five years from the date that the Small Business Administration (SBA) issued the loan number. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender. Applications can be submitted through the SBA's direct forgiveness portal or directly to the lender.

The SBA form 3508S PPP Loan Forgiveness Application does not require borrowers to provide additional documentation upon forgiveness submission. However, borrowers should be prepared to provide relevant documentation if necessary. This includes payroll tax filings, bank account statements, and tax forms.

An NPR analysis found that, nearly three years after the rollout of PPP, the vast majority (92%) of loans have been granted full or partial forgiveness.

EIDL applications

The \$908 billion stimulus package passed by Congress in December 2021 includes $20 billion for Economic Injury Disaster Loans (EIDL). The EIDL program, administered by the Small Business Administration (SBA), provided loans and advances to help small businesses recover from the economic impacts of the COVID-19 pandemic.

As of January 1, 2022, the SBA stopped accepting applications for new COVID-19 EIDL loans or advances. The SBA is also no longer processing loan increase requests or requests for reconsideration of previously declined loan applications. The COVID-19 EIDL portal is now closed.

Prior to its closure, the COVID-19 EIDL program offered two types of funding: loan funds for working capital and other normal operating expenses, and advance funds for existing COVID-19 EIDL applicants who met certain criteria. The SBA also offered two kinds of advance EIDL funding that did not need to be repaid for the hardest-hit businesses and private nonprofits.

For those who received EIDL loans, the SBA provides resources to monitor loan status, make payments, and request servicing actions through the MySBA Loan Portal. COVID-19 EIDL Customer Service can be reached by phone, email, or through the MySBA Loan Portal message function during business hours.

EIDL advances

The Economic Injury Disaster Loan (EIDL) Advance program was introduced by the CARES Act in March 2020 to provide funding to help small businesses and private nonprofits recover from the economic impacts of the COVID-19 pandemic. The program offered two types of funding: EIDL loan funds and EIDL Advance funds. The EIDL Advance funds were awarded to existing COVID-19 EIDL applicants who met certain criteria and did not need to be repaid.

The EIDL Advance program provided advances of up to $10,000 and was completely forgivable, making it a grant. To qualify for the full $10,000 targeted EIDL grant, a business must be located in a low-income community, have suffered an economic loss greater than 30%, and employ not more than 300 employees. The funds could be used as working capital to cover a number of business expenses, including payroll and benefits, utilities, rent, and fixed debt payments.

The EIDL Advance program was initially set to expire on December 31, 2020, but it was extended into 2021. However, as of January 1, 2022, the Small Business Administration (SBA) stopped accepting applications for new COVID-19 EIDL loans or advances. As of May 6, 2022, the SBA is no longer processing COVID-19 EIDL loan increase requests or requests for reconsideration of previously declined loan applications.

A poll conducted in May 2021 found that 6% of respondents had been funded for all three types of EIDL Advances (original Advance, Targeted, and Supplemental), while 24% had been funded for two types. Millions of business owners and individuals across the US have received EIDL Advances, and millions more are still waiting for EIDL loan increases and Targeted and Supplemental EIDL Advances.

Frequently asked questions