EIDL Funds – If you haven’t heard of the Economic Injury Loan (EIDL), it helps small businesses affected by the COVID-19 pandemic. These loans have some of the SBA’s lowest loan rates and a 30-year repayment period. If you think your small business may succeed, you may want to consider applying for one. But before you use it, you can find out how long it will take to receive EIDL funds once approved. After all, you may not have weeks/ months to wait, as your business may still be struggling, and you may need working capital quickly.
Thus, In this article, we will deliberate the process of obtaining an EIDL loan and the expected time of the SBA loan deposit after it has been approved.
What is an EIDL Loan?
Before we delve into how long it takes to get EIDL funds, let’s look at the EIDL program. Although, Created by the Small Business Administration (SBA), this package is generally designed to help businesses (and homeowners) recover from declared disasters, such as hurricanes or floods. But due to the 2020 coronavirus pandemic, a particular loan was added to the program specifically for businesses most affected by the pandemic and its closures. The EIDL COVID-19 loan has two components: the loan itself (not a taxable loan) and two advances for which some businesses are eligible. And, The loan must be repaid, but the advances must not be refunded. The loans carry the SBA’s standard low fixed interest rates for 30 years:
- 3.75% for companies
- 2.75% for non-profit organizations
If you choose to pay off the loan early, there is no prepayment penalty.
Who should Apply for it?
The EIDL program is designed to provide funds to help businesses like yours continue to operate as usual (or as close to normal as possible) so they can get back on their feet. Thus, If your business, like thousands of other small businesses in the US, has been exaggerated by the coronavirus pandemic, you are probably in financial trouble. If you are having strain paying your bills when your business has begun to resume normal operations, you may be able to take advantage of an EIDL loan. If you’re ready to rehire and need cash in the bank to pay your payroll, EIDL loans can also help with that.
How much can you get in EIDL Funds?
The EIDL program allows qualified business owners to borrow up to $2 million. If you qualify, you can collect up to $15,000, which does not need to be repaid. And also, The SBA will calculate EIDL loan amounts for a business based on its annual revenue, how much it has lost due to the pandemic, and how many employees it has. Please note that EIDL loans over $25,000 require collateral. Programs: Target Advance and Supplementary Target Advance.
What can I use the EIDL Credit for?
Some SBA loans have specific requirements for what you can and cannot use the loan proceeds. The funds you receive from the EIDL program, whether a loan or an advance, must be used for everyday business expenses. These include the following:
- Medical benefits for employees
- Fixed debt payments
- Inventory replacement
- Early repayment of commercial debt
- Payment of federal corporate debt
Get approved for EIDL Funds
Hence, The SBA has an online application for the EIDL program. You will be prompted for the following:
- Questions about your business, including your name, address, and employer identification number (or social security number if you are self-employed)
- Annual income 12 months before the disaster.
- Cost of goods
- Number of your employees
As a general rule, you must be able to demonstrate the losses your business has suffered due to the pandemic. Also, note that from September 8, 2021, to October 8, 2021, the SBA will only consider loans of $500,000 or less. After this 30-day window, it will consider larger loan requests. After submitting your application, the SBA will review it to determine if you qualify for the EIDL loan and advances. It is essential to complete the application correctly to avoid delays in processing.
How long does it yield to Receive EIDL Funds after Approval?
As for the time from Approval to actual receipt of SBA loan funds, this is partly up to you. Although, If you are approved for an EIDL loan, an email will be sent to you with details of how much you are eligible to borrow. After signing the agreement, the loan funds will be transferred to your bank account within 5-10 business days.
When applying, correctly enter your corporate bank account number and routing number, so your funds reach your account without delay.
Here are the steps to get an EIDL loan:
Step 1: Gather information, including business and income information.
Step 2: Apply for an EIDL loan online. It can take more than two hours, so plan enough time.
Step 3: Then, Wait for the SBA to review your application. (Remember that if you request more than $500,000, your request will not be considered between September 8, 2021, and October 8, 2021).
Step 4 – Review your offer and sign the loan agreement.
Step 5: Then, Wait for the funds to be credited (5-10 business days)
Do I have to pay off the EIDL Loan?
As mentioned above, an EIDL loan has two parts.
Firstly, it is the loan itself, which can be up to $2 million. You must repay this loan. Beginning September 8, 2021, you can defer loan payments for up to two years.
The possible second part is in Advance.
There are two different promotion programs: Targeted Promotion and Additional Targeted Promotion. Both are designed to help small businesses in low-income communities. Additional Targeted Promotion is intended even for small businesses (with no more than ten employees) that have experienced a more significant drop in revenue than Targeted Promotion.
The maximum amount you can receive in the sum of the two Advance programs (if eligible) is $15,000. Although, To qualify for one or both of the Advance programs, your company must complete the following steps.
For targeted promotion
Being in a low-income community
Demonstrate a more than 30% decrease in revenue during eight weeks beginning March 2, 2020.
Have 300 or fewer employees
For additional targeted promotion
Being in a low-income community
Demonstrate a decrease in revenue of more than 50% during eight weeks beginning March 2, 2020.
Have 10 or fewer employees
If the SBA approves you to participate in one or both of these Advance programs, you do not need to repay the funds, and the money is tax-free.
Now that you know everything about applying for EIDL loans, including how long it takes to receive funds once approved, should you consider using them? If you qualify, this could be an excellent opportunity to explore as your business recovers from the effects of the pandemic.
Suppose you’re not eligible for the EIDL program or want to explore other financing options. In that situation, you can also apply for a small business loan online with Lantern by SoFi and receive multiple offers that you can compare with the click of a button.