Since the coronavirus pandemic began, many self-employed workers have been living in a state of financial anxiety. On June 15, the Small Business Administration (SBA) announced that it was accepting new applications to its Economic Injury Disaster Loan (EIDL) program from freelancers and contractors, as well as small and agricultural businesses, impacted by COVID-19. Individual applicants could seek grants of $1,000, while businesses could apply for grants of $1,000 per employee, up to $10,000 total. Recipients aren’t expected to pay the SBA back for these grants.Although the grant portion of the EIDL program concluded earlier this month, it’s still possible to apply for a low-interest loan through it. And there’s always the chance that additional funding for further grants are allocated, but that remains up to Congress. Here’s what you need to know about the EIDL program, from what it actually covers to how to apply.
The EIDL program is different from the PPP
As Wingspan reported back in April, the EIDL program differs from the Payment Protection Program (PPP) in that its grants are considered emergency funding intended to go toward general operating expenses, such as health care costs, debt payments, and rent. You must pay back loans accessed through the EIDL program.Meanwhile, loans accessed through the PPP are specifically meant for workers’ payroll. PPP loans, if used in full to cover wages, are forgivable. The deadline to apply for a PPP loan is August 8.
How to apply for a loan
The EIDL application is relatively straightforward, though you should set aside about two hours to fill it out. You’ll be asked to share info on your business and its revenue, and you’ll have to grant the SBA permission to review your tax records. Grants are no longer being issued through the EIDL program, but the SBA is still accepting and processing loan applications. With payments deferred for one year, these loans are available at low interest rates of 3.75% for businesses and 2.75% for non-profits with up to a 30-year term.
What to expect after applying
According to Merchant Maverick, it will likely take two to three weeks for the SBA to process and approve your application. Once your application has been accepted, your loan should arrive within the next five business days. However, as ProPublica reported, some businesses have had to wait much longer than for funds to arrive, and many still have yet to receive their loans. Getting paid on time is more important than ever right now. Wingspan ensures an easy, streamlined invoicing and collections process. Sign up for a free 30-day trial here.You Might Also Like:4 Ways to Cope with Financial AnxietyHow to Find Free Productivity Apps and Tools to Supercharge Your Business10 Contract Terms That Will Help You Get Paid
