SBA Economic Injury Disaster Loan

Important: These Loans Are NOT Available through EDF and We Cannot Help you fill out your application.  

On March 19th, SBA held a conference call with its lending partners and provided additional detail on the SBA Economic Injury Disaster Loan Program and highlighted parameters they have established for the business working capital loans now available relating to Corona Virus COVID-19. All businesses in the State of Michigan are now eligible to apply online at https://disasterloan.sba.gov/ela . These will be direct loans from SBA and will be repaid directly to SBA.

Loan Details:

  • Loan amounts will be up to $2.0 million for a business applicant and all its affiliates.
  • SBA will use credit scores in their decisions for approval.
  • Rates for businesses will be 3.75% fixed for 30 years.
  • All loans will have a repayment term of 30 years. Payments can be deferred for the first 12 months.
  • In a Phase I application (which will be most businesses) the maximum loan amount will be 50% of their gross profit from their last completed tax returns –  Sales – Cost of Goods Sold = Gross Profit x 50% = Maximum Loan Amount.
  • Larger businesses can proceed to a Phase II application that will require additional documentation if they need more than $500,000.
  • Loans will be collateralized if over $25,000 if collateral is available with real estate being the preferred collateral.
  • All 20% or more owners will fully personally guaranty the loan. Changing ownership prior to application to lower an individuals ownership to avoid a personal guaranty could jeopardize eligibility.
  • Proceeds may be used for working capital for business expenses only.  Please see list below.
  • No debt consolidation will be allowed. The exception would be temporary or interim loans that were taken out since the crisis started for operational expenses may be refinanced. The business can pay regular monthly debt payments as they become due
  • Non-profits can apply but not churches, agriculture production, gambling, or sin businesses.
  • Timeline is expected to take less than a week for approval using the scoring system after a business applies directly online (they will use tax return transcripts as well to verify applications). Targeting 30 days to close.
  • They expect 300,000 to 500,000 applications depending on the length of the Corona Virus Crisis and encourage patience.
  • Businesses will be required to retain receipts and evidence of what they spent the proceeds on for a period of 3 years and may be subject to SBA Audit to insure only eligible business expenses were paid.
  • Everyone is encouraged to apply online. (Be aware with peak times the site may be difficult loading. If this happens check back at off peak times).

Eligible and Ineligible Use of Funds:

  • Working capital
  • Payroll
  • Accounts Payable
  • Pay fixed debts
  • Pay monthly mortgage (may NOT payoff a mortgage)
  • Short term notes may be paid, along with lines of credit
  • Can make payments on IRS deferments but would rather IRS give more of a deferment
  • Cannot replace sales or profit
  • Cannot payoff fixed debt loans
  • Cannot repay stockholder loans
  • Cannot buy fixed assets
  • No bonuses can be paid
  • Interim Bridge Loan- If you receive an SBA Micro Loan or Express Bridge Loan from the bank, then the disaster loan can pay off this loan

For more details on the EIDL program, click here.

If you have questions while filling out your application or need assistance, please call:

Brian Picarazzi
Senior Area Manager

Michigan District Office
U.S. Small Business Administration
(616) 456-5512
Cell  (616) 648-0737

[email protected]