1 1 (March 18, 2020)

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               Researh Sevice

SBA Economic Injury Disaster Loans for


Updated March 18, 2020

The current COVID- 19 pandemic may have significant economic implications for businesses and
nonprofit organizations, including negative impacts on imports, global supply chains, and tourism.
Furthermore, if COVID-19 becomes increasingly widespread or prolonged it may slow global growth,
and some businesses may be forced to furlough or lay off workers. One potential form of assistance to
small businesses is Small Business Administration (SBA) economic injury disaster loans (EIDLs).

EIDL Overview

EIDLs provide eligible small businesses and nonprofit organizations up to $2 million to help meet
financial obligations and operating expenses that could have been met had the disaster not occurred. Loan
proceeds can only be used for working capital necessary to enable the business or organization to alleviate
the specific economic injury and resume normal operations. Interest rates for EIDLs are statutorily set at
4% per annum or less and can have maturities up to 30 years. Collateral is generally required for loans
over $25,000 if it is available, though SBA will not decline loans for a lack of collateral.
EIDLs are available only to businesses and private and nonprofit organizations that are located in a
declared disaster area, have suffered substantial economic injury, are unable to obtain credit elsewhere,
and are defined as small by SBA size regulations. Small businesses in declared counties (and contiguous
counties) apply directly to the SBA for EIDLs.

SBA Declaration Activity

On March 6, 2020, Congress passed P.L. 116-123. In addition to providing supplemental funding to
several agencies, the act deemed the coronavirus disease (COVID-19) outbreak a declarable disaster
under the Small Business Act. The amendment allows the Small Business Administrator to issue disaster
declarations that make SBA EIDLs available to eligible small businesses.
On March 16, 2020, the SBAAdministrator began issuing declarations for SBA EIDLs in response to
states seeking SBA disaster assistance for small businesses. SBA EIDL declarations are not automatic,

                                                               Congressional Research Service

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