Are you part of a small business or non-profit organization? Are you currently going through a rough financial patch as the result of the COVID-19 pandemic?
If you answered yes to both questions, it may be time to learn more about economic injury disaster loans. These are designed to provide economic relief to small businesses and non-profit organizations dealing with a temporary loss of revenue.
How to Get an Economic Injury Disaster Loan
These loans are guaranteed by the U.S. Small Business Administration (SBA), but it’s no longer accepting applications at this time.
However, this loan program may become available again in the future, at which point you’ll want to be able to take advantage should your finances call for it.
Here’s what the SBA has to say about economic injury disaster loans:
In response to the Coronavirus (COVID-19) pandemic, small business owners, including agricultural businesses, and nonprofit organizations in all U.S. states, Washington D.C., and territories can apply for an Economic Injury Disaster Loan. The EIDL program is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to coronavirus (COVID-19).
That gives you a better overall idea of what the program offers, but let’s talk about the finer details:
- Terms: 3.75 percent fixed interest rate for businesses and 2.75 percent fixed interest rate for non-profit organizations
- 30 year term
- No fees
- No pre-payment penalty
- No fees
How can you use the money?
Money from an economic injury disaster loan is to be used for normal operating expenses and working capital.
Examples include but are not limited to rent, health care benefits for employees, utilities, and fixed debt payments.
What about collateral?
All economic injury disaster loans over $25,000 require collateral.
The SBA will ask that you to sign a general security agreement (UCC) that designates specific assets as collateral, such as equipment, real estate, or fixtures.
Should You Consider an Economic Injury Disaster Loan?
Right now, the economic injury disaster loan program is not accepting new applications, but that’s not to say that things won’t change in the future.
Should that happen and you find that your small business or non-profit is hurting from the pandemic, consider applying for an economic injury disaster loan. It could give you the money you need to stay afloat during this difficult time.