COVID-19 Update: How to Apply For the U.S. Government’s Economic Injury Disaster Loans and Loan Advances

There are about 30 million small businesses in the United States. Together, they employ almost one-half of the private workforce. The federal government established two loan programs for companies who employ fewer than 500 people and satisfy other criteria to help alleviate the economic pain caused by the COVID-19 pandemic. The Economic Injury Disaster Loan program is one of them. The other is the Paycheck Protection Program.

Both programs are administered by the U.S. Small Business Administration (SBA) but the loans will be distributed via SBA-approved banks. A business owner cannot obtain funds from both loan programs, so it’s best to figure out which program meets your needs the best. However, you can apply for both programs. Then, if you qualify for both, you can decide on which loan to close.

Loan Details

Small business owners who are directly affected by the COVID-19 pandemic, have suffered or are likely to suffer substantial economic injury, and who meet other eligibility requirements, may apply for an Economic Injury Disaster Loan advance of up to $10,000 and working capital loans of up to $2 million. The $10,000 loan advance will not have to be repaid. The working capital loans are long-term, low interest rate loans with a maturity of up to 30 years. The interest rates for the disaster loans are 3.75% for small businesses and 2.75% for nonprofit organizations. The application period for the Economic Injury Disaster Loans runs through December 2020.

The working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred, but they cannot be used to pay down long-term debt. The program is part of the federal government’s effort to overcome the temporary loss of revenue small businesses are experiencing as a result of the pandemic.

Details about eligibility and other information can be found here.

How to Apply

The loan programs launched on Friday, April 3, 2020, but there are news reports about problems caused by the fact that most banks’ computers don’t sync with the SBA’s computers. And, the demand for these loans greatly exceeds SBA’s historic operations. But, President Trump reported on Saturday that the SBA had processed over 28,000 loans in the first 24 hours of the program.

The loans will be underwritten and administered by SBA-approved lenders. We have heard that banks are asking small businesses to submit their application via an online portal on the bank’s website. A banker then speaks with the applicant by telephone.

In the meantime, the SBA’s step-by-step guide to the application process can be found here. The required forms can be found here.

How to Get Your Questions Answered

In addition to talking to your bank, the SBA sponsors Small Business Development Centers (SBDCs) throughout the United States that can provide advice and recommendations on the loan

applications and answer questions. Some offer on-demand video information. The SBDCs also provide no-cost consulting, low-cost training and workshops for business owners. The SBDCs often are co-sponsored by and located at a local Chamber of Commerce. Contact information and other news about these SBA programs can be found at