What is an EIDL (Economic Injury Disaster Loan)?
Learn what EIDL loans are, understand their history including the COVID-19 program, and know the current status of SBA disaster lending programs.
An Economic Injury Disaster Loan (EIDL) is an SBA disaster loan program that provides working capital to small businesses, nonprofits, and agricultural businesses that suffer economic injury from declared disasters. Unlike SBA 7(a) loans made through banks, EIDLs are made directly by the SBA.
EIDL History and COVID-19
While EIDL has existed for decades to help businesses recover from natural disasters, it became widely known during the COVID-19 pandemic:
- Pre-COVID: EIDL was available for businesses affected by hurricanes, floods, and other declared disasters
- COVID-19 EIDL: Starting in 2020, the program expanded massively to help businesses affected by the pandemic
- Scale: Over $400 billion in COVID EIDL loans were distributed to millions of businesses
- Program closure: The COVID-19 EIDL program closed to new applications in 2022
Current Status
The COVID-19 EIDL program is no longer accepting new applications. However, the SBA continues to offer disaster loans for other declared disasters like hurricanes and wildfires.
How EIDL Differs from Regular SBA Loans
EIDL is distinct from programs like SBA 7(a):
- Direct lending: The SBA lends directly rather than guaranteeing bank loans
- Disaster trigger: Available only when a disaster is declared for your area
- Working capital only: Funds can only be used for operating expenses, not expansion
- Lower rates: Fixed interest rates are typically below market rates
- Longer terms: Up to 30 years for repayment
Eligible Use of EIDL Funds
EIDL loans can be used for:
- Payroll and employee benefits
- Rent and mortgage payments
- Utilities and basic operating expenses
- Accounts payable that would have been paid without the disaster
- Other working capital needs
What EIDL Cannot Fund
EIDL funds cannot be used for:
- Business expansion or new ventures
- Repaying other SBA loans
- Payments to owners (dividends, distributions)
- Non-essential expenses
- Refinancing existing debt (with limited exceptions)
Checking for Current Disasters
To see if EIDL is available in your area:
- Visit the SBA's disaster assistance page at sba.gov/disaster
- Check for declared disasters in your state or county
- Review eligibility requirements for the specific disaster declaration
- Apply through the SBA's online portal if eligible
If you were affected by a recent natural disaster, check the SBA website promptly. There are typically deadlines for disaster loan applications after a declaration.
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Read more →Important Disclosure
Not Financial Advice: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. You should consult with qualified professionals before making any financial decisions.
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