What Are the Most Common Reasons for Applying for A Disaster Loan?

The Economic Injury Disaster Loan (EIDL) program is an important disaster recovery option that can provide small businesses with access to much-needed capital when they are unable to secure commercial credit. These loans are the only source of small business funding available through the Small Business Administration (SBA) for many types of businesses following natural disasters. The loans must be repaid whether or not recovery occurs.

For those small businesses affected by covid 19, the EIDL program may be an option for filling funding gaps and helping to keep their doors open.

What Is Economic Injury?

Economic injury happens when a business’s ability to generate income has been directly and negatively impacted as a result of a declared disaster, resulting in financial loss. In order to qualify, a business must meet the following three requirements of a small business development fund:

1. The disaster caused an interruption of at least 30% of their average annual income.

2. It is likely that the business will not be able to return to normal operations or generate enough revenue without additional capital, and

3. That additional capital must not be available from other sources.

Not only does this program provide small business opportunity fund with access to much-needed capital during periods of economic injury, but it also helps communities rebuild stronger than before by supporting those who help them thrive and grow as part of the local fabric and ecosystem after a disaster strikes. EIDLs are typically provided for up to $2 million per qualifying small business loan application.

EIDL Loans are Different

Having the option to access capital is critically important for small business funding, but EIDL loans are not like most other forms of financial assistance.

The loans must be repaid in full, whether or not recovery occurs. So, while these loans may help small businesses recover after covid – 19 passes through, repayment of any funds received will still be expected. Recovery is how small businesses keep their doors open and repay existing debt, but they cannot use this money to do both at once. If a business does not generate enough revenue to repay the loan. They won’t have any opportunity to re-pay it until after recovery has occurred.

Even though the application process can seem confusing and complicated, there are many resources available to help.

 The best way to start is by speaking with a small business development center (SBDC) in the area. AMP Consultant to provide expert advice and access to resources for disaster survivors. You can find the location of your closest SBDC here:

Small Business Development Fund Application Process

If you believe you qualify, contact your local SBA Disaster Field Office or apply online, if possible. Keep in mind that applying does not necessarily mean you’ll be approved. Though it will go a long way toward establishing initial eligibility. If an EIDL application is already submitted but no decision has been made within 30 days of submission. Then additional information should be requested through your assigned loan specialist.

  Once an application is submitted and eligibility is established, the SBA will offer preliminary approval. This step is critical because it allows small businesses to access small business opportunity fund as needed during times of economic injury. However, before any loan funds are released by the SBA. You must provide documentation to show that your business meets certain criteria, such as:

– Listed as a place of business on the National Register of Historic Places;

– A key economic indicator has been downgraded or is lower than at least one year ago; or

– The area has experienced unemployment rate increases over the past 12 months.

 After this documentation is provided and initial eligibility has been approved. You’ll be contacted by an individual from your assigned Disaster Field Office for further information regarding your application.

 It’s important to note that just because you apply for an EIDL loan doesn’t mean you’ll qualify. These loans are reserved only for the most serious of situations, so speak with your SBA representative today to see if this funding may be right for you and your small business.

Disaster survivors interested in applying for a COVID-19 Economic Injury Disaster Loan can find more information here.  You can also contact a small business development center.