The March 31, 2020, announcement came as welcome news to small businesses facing short-term funding issues and other economic disruptions caused by the COVID-19 pandemic. The EIDL program will ultimately offer businesses up to $2 million in emergency low-interest loans.
The SBA says businesses may receive the $10,000 cash advance in as few as three days. The advance does not need to be repaid if spent on maintaining payroll or operating expenses. According to the SBA website:
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.
This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application. This loan advance will not have to be repaid.
It is unclear how much time the full EIDL program will require to start delivering payments to small businesses struggling with the impact of COVID-19. In the interim, the $10,000 cash advance may provide a modest but valuable source of working capital.
The SBA is offering a streamlined application process and encouraging businesses to participate. COVID-19 related EIDL loans are available to small businesses in all U.S states and Washington D.C. A small business is generally defined as any for-profit enterprise employing 500 people or less. Tax exempt private non-profit organizations may also be eligible if they are designated under sections 501(c), 501(d), or 501(e) by the Internal Revenue Service.
More information on the application process can be found on the SBA’s website.
The Coronavirus Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as the COVID-19 situation develops.
Author Matthew McDonald is a partner in the Corporate & Securities Department at Klehr Harrison.