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Economic Injury Disaster Loans (EIDL) and 7(a) Payroll Protection Plan

The CARES Act dramatically increased the role of the Small Business Administration (SBA) in efforts to assist U.S. businesses impacted by the COVID-19 crisis. The two main vehicles for these relief efforts are the SBA 7(b)(2) loans – Economic Injury Disaster Loans – and the SBA 7(a) loan program. Both loans are available to businesses with 500 or fewer employees that have been negatively impacted by the crisis.

Emergency Economic Injury Disaster Loan (EIDL) Grants (Section 1110)

Businesses with 500 employees or fewer, including sole proprietors, independent contractors, and cooperatives are eligible for Economic Injury Disaster Loans (EIDL) during the covered period of January 31st to December 31, 2020 in response to COVID-19.

The business must show hardship due to the Coronavirus.

The Economic Injury Disaster Loans are available for up to $2 million dollars for businesses, however: SBA loan counselors are now advising applicants that they may be capped at $15,000.

SBA loan counselors are now advising applicants that they may be capped at $15,000. During the covered period, SBA can determine loan eligibility based solely on the applicant’s credit score or use of an alternative appropriate method for determining an applicant’s ability to repay.

The SBA must waive any personal guarantee on loan advances or loans under $200,000.

Legislation provides $10 billion in funding to provide an emergency advance of up to $10,000, which is forgivable debt, to small businesses that disburses ahead of the full Economic Injury Disaster Loan (EIDL).

As of April 10, the SBA released an update to EIDL advance grant applicants that advance grant amounts will be based on the number of employees at a business - $1,000 per employee, capped at $10,000. This change in policy is due to high demand and a concern that funding will run out. NAR has advocated for renewed funding for the program by Congress to ensure that the SBA can meet the demand for these loans and provide relief to more small businesses.

Economic Injury Disaster Loans may be used for the following: Paid sick leave to employees impacted by COVID-19 Payroll Rent/Mortgage Payments Debt obligations due to loss revenues Increased costs for due to chain supply disruptions and materials.



SBA 7(a) Payroll Protection Program (Section. 1102 & 1106)