Everything You Wanted to Know About the EIDL Program in 2020

The Economic Injury Disaster Loan (EIDL) is a federal economic relief program for small businesses and nonprofit organizations if the current global pandemic of COVID-19 is causing them to lose revenue temporarily. Many companies and organizations are not allowed to do business as usual, if at all. This loan program provides funds that can cover rent, utilities, health care benefits, and fixed debt payments, as well as many other types of ordinary operating expenses.

Previous COVID-19 economic relief programs, like the Paycheck Protection Program, ran out of money quickly. It could be in your best interest to talk with a Maryland business attorney at your earliest convenience to find out if you are eligible for the EIDL program and get help with the application. Please be aware that the Paycheck Protection Program is once again accepting applications, but the new deadline is August 8, 2020. 

The EIDL Eligibility Requirements

If you own a small business or an agricultural business with 500 or fewer employees and you are suffering economically because of the pandemic, you might qualify for an Economic Injury Disaster Loan (EIDL). This program offers low-interest loans through the Small Business Administration (SBA).

EIDL can provide funds for agricultural businesses engaged in:

• Food production

• The production of fiber (like cotton)

• Ranching

• Aquaculture

• Raising livestock

• Industries related to farming and agriculture

Generally, enterprises employing over 500 employees are not eligible for the EIDL program.

A Walk-Through of the EIDL Application 

The SBA estimates it will take a little over two hours to complete the loan application. Because the SBA is using a streamlined process, they do not require all of the usual verifications with the form. The applicant will self-certify the truth of the information they provide in the loan application. 

Eligible Entity

You will first need to certify that you are an eligible entity for this loan program. You will check the appropriate box for your type of business entity, for example, a sole proprietorship, independent contractor, tribal small business concern, agricultural cooperative, or another kind of business with 500 or fewer employees. Private nonprofit organizations or faith-based organizations can also be eligible for EIDL funds.

Disqualifiers

Applicants must certify that they do not fall within any category that would disqualify them for this program. Some of the disqualifiers include being engaged in lobbying or gambling enterprises, having a child support delinquency, making or selling “adult” products or services, or being a member of Congress.

Business Information

The next section of the disaster loan assistance application requires the applicant to disclose standard business information. These things include the legal and trade name of the enterprise, EIN/SSN, gross revenues, cost of operations and cost of goods sold, contact information for the business, and a description of other types of compensation the company has received because of the pandemic.

Business Owners Information

In this section of the application, the SBA requires the name, title, address, ownership percentage, Social Security number, citizenship information, date of birth, mobile phone number, and email address of the owners. You must provide this information for each:

• Proprietor

• Limited partner or else member with 20% or greater ownership interest

• General partner

• Managing partner

• Stockholder or another entity that owns at least 20% of the voting stock

The form requires additional information about the owners and the business in the next section.

Additional Information

You must certify whether the business or any disclosed owner has:

• A conviction for commission of a felony related to a riot, civil disorder, or another declared disaster

• Ever produced or distributed products or services that a court declared as obscene

• A current suspension or disbarment from Federal grants, loans, or contracts

• Is subject to formal criminal charges in any jurisdiction

• Had any felony conviction, entered a guilty plea or nolo contendre plea, or got placed on parole, probation, or pretrial diversion in the last five years.

This section of the application requests your bank name, routing number, and account number where the SBA should send the funds if your application for EIDL gets approved.

A Maryland business attorney can guide you and your company through these challenging times. Contact Steve today.