The Small Business Administration (SBA) COVID-19 Economic Injury Disaster Loan (EIDL) program was established to support small business owners, including agricultural businesses, and nonprofit organizations in all U.S. states, Washington D.C., and territories to meet financial obligations and operating expenses that could have been met had the COVID-19 disaster not occurred. The EIDL program provides both loans and "advances" to eligible businesses.
Economic Injury Disaster Loans (EIDL)
Small business owners and qualified agricultural businesses in all U.S. states and territories are currently eligible to apply for a low-interest rate loan due to COVID-19. Loans are for 30 years, have fixed interest rates of 3.75% for businesses and 2.75% for nonprofits, and have no pre-payment penalty or fees.
Economic Injury Disaster Loan (EIDL) Advance
Applicants for the COVID-19 EIDL may be eligible to receive up to $15,000 in funding from the SBA that does not need to be repaid. Applicants for COVID-19 Economic Injury Disaster Loans are eligible for the advance if their business meets specified criteria.
The Targeted EIDL Advance provides funds of up to $10,000 to applicants who are in a low-income community and can demonstrate more than 30% reduction in revenue during an eight-week period beginning on March 2, 2020, or later, and have 300 or fewer employees. Business entities normally eligible for the EIDL program are eligible to apply including sole proprietors, independent contractors, and private, nonprofit organizations. Agricultural businesses are not eligible.
The Supplemental Targeted Advance provides a supplemental payment of $5,000 that does not have to be repaid. Eligible businesses may receive both the EIDL Advance in the full amount of $10,000 as well as the Supplemental Targeted Advance if the criteria are met. To receive the Supplemental Targeted Advance, a business must be located in a low-income community, prove more than a 50% economic loss during an eight-week period beginning on March 2, 2020, or later, compared to the same period of the previous year, and have 10 or fewer employees. Supplemental Targeted Advances are available to sole proprietors, independent contractors, private, nonprofit organizations, and others that usually qualify for the EIDL program and meet the above criteria. Agricultural businesses are not eligible.
Funding for the COVID-19 EIDL Program
The Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES) provided $10 Billion for EIDL Advances. The Paycheck Protection Program and Health Care Enhancement Act (PPPHCE) of 2020 provided $10 billion for EIDL Advances and $50 billion for the Disaster Loans Program Account. The Consolidated Appropriations Act (CAA) of 2021 provided $20 billion for Advances. The American Rescue Plan Act of 2021 (ARPA) provided an additional $10 billion for Targeted EIDL payments and an additional $5 billion for Supplemental Targeted EIDL.
Treatment in the National Income and Products Accounts (NIPAs)
In the NIPAs, SBA loans with standard terms are classified as financial transactions and have no direct impact except for administrative costs and interest flows. EIDL advance payments that do not need to be repaid that are made to businesses are recorded as subsidies, while these types of payments made to nonprofit institutions serving households (NPISHs) are recorded as social benefits to persons.