Florida is no stranger to the devastation left behind by hurricanes, floods, and other natural disasters. Other disasters may have similar effects on residents and business owners. For example, the current COVID-19 public health emergency caused most businesses to shut down. Many organizations have closed or will close in the future because of the economic devastation. However, help is available to many companies through the Small Business Administration’s Economic Injury Disaster Loan program. Business owners who have not taken advantage of this program may want to consider doing so before funds for the program are depleted. Knowing more about the program itself could assist in your decision making.
The Small Business Administration (SBA) provides many types of assistance to business owners, including counseling and capital to small businesses. Economic Injury Disaster Loans are a powerful force for companies suffering because of lengthy shutdowns.
Eligibility for Economic Injury Disaster Loans
You might be wondering if your business qualifies for an SBA loan. Here’s who is eligible according to the SBA:
- Small businesses,
- Private non-profits,
- Qualified agricultural businesses
Eligibility applies to businesses located in all U.S. states and territories.
Loan Terms
Other pertinent facts about this loan:
- The interest rates generally are 3.75 for small businesses and 2.75% for non-profit organizations.
- Borrowers may have up to 30 years to repay the loan.
The SBA is approving loans quickly. However, many business owners may feel a bit shell-shocked and uncertain about applying. Favorable loan terms and interest rates should make these loans attractive to businesses suffering from COVID-19.
Uses for an Economic Injury Disaster Loan
While there is still some confusion about how you can use EIDL loans, the following general information may help:
- You can pay yourself as long as the pay is for services you provided to your business. Just try to keep your payroll disbursements in line with what you paid before COVID-19.
- You may use the money to pay some short-term debt, but usually not to pay or refinance long-term debt.
- The funds are intended to keep your current business running, but it’s unlikely you can use it to start a new business or buy a car (unless it is being used for your business).
The situation with COVID-19 economic injury disaster loans is still very confusing. It’s best to speak with an attorney about how to use your loan proceeds.
A Short Note About EIDL Advances
Due to the COVID-19 emergency, the SBA began providing business owners with an advance of $1,000 per employee up to $10,000. Unlike a loan, recipients did not have to repay the advance.
On July 11, 2020, the SBA announced that funds for EIDL advances had been depleted. Whether Congress will replenish the program in the future remains unknown.
Find Out if You Are Eligible for an Economic Injury Disaster Loan
Go to the SBA’s website for more information and to apply for a COVID-19 EIDL loan. Call us to discuss any other legal questions you have.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.