COVID-19 Update on Reopening of Economic Injury Disaster Loans
Economic Injury Disaster Loans Application Reopening for Ag Businesses
The recent CARES Act provided additional emergency funding through Small Business Administration (SBA) for businesses who are facing losses due to COVID-19. This included making the SBA’s Economic Injury Disaster Loans (EIDL) available to farms for the first time.
If you are an agricultural business and were unable to take advantage of the SBA EIDL Loan and Advance Program, there is good news. The loan portal reopens today, May 4, for agricultural businesses that were previously ineligible for the program. New non-agricultural business applications will not be accepted.
Agricultural businesses are defined as those businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)). SBA is encouraging all eligible agricultural businesses with 500 or fewer employees wishing to apply to begin preparing their business financial information needed for their application.
The portal will be opened for a limited period, and it is recommended that you apply as soon as possible. If you have already applied under the streamlined application (March 30 to program closure), there is no need to re-apply.
EIDL is the SBA’s primary disaster assistance program to businesses. It provides low interest loans (3.75%) for working capital that are intended to help a business keep going during a period of business interruption due to a disaster. Businesses can apply for up to $2 million. The terms for repayment of the loan can be quite long (up to 30 years) with the intention that the repayment costs are low enough to help the business stay economically viable after the disaster.
The CARES Act also added the ability for businesses applying for EIDL Loans to receive up to $10,000 as an advance to “provide economic relief to business experiencing a temporary loss of revenue.” The Advance does not have to be repaid and businesses that receive the advance, but ultimately are turned down for the loan, do not have to return or repay the advance if they were otherwise eligible to apply for EIDL and the purpose of the loan was eligible.
If you are unfamiliar with the EIDL program, more information can be found in a recent fact sheet from Cornell Cooperative Extension.
For more grants, loans or legal support to help farmers through this pandemic, check out our “Financial Resources, Grants and Other Support to Build Resilience” resource post.