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Economic Injury Disaster Loans (EIDL) & Emergency Economic Injury Grants (EEIG)

Topics: Small Business

COVID-19 has caused thousands of businesses across the country to close their doors, and those that remain open are facing difficult decisions about continuing operations and maintaining staff. The Department of Labor reported that as of the week ending March 28, 6.6 million U.S. workers filed for their first week of unemployment benefits. Meanwhile, Coresight Research believes there could be more than 15,000 store closures announced by retailers in 2020.

In response, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It is the largest economic relief bill in the nation’s history and is set to provide $2.2 trillion in financial support to individuals and businesses (including nonprofits and other employers) affected by the outbreak and its devastating economic impact. Included within this financial support are Economic Injury Disaster Loans and Emergency Economic Injury Grants.

Let’s take a closer look at these financial support options and what they mean for small businesses.


Economic Injury Disaster Loan (EIDL)

What is an EIDL?

EIDLs are meant to help businesses with the inability to pay their employees’ wages, rent and other business expenses due to COVID-19. According to GovLoans.gov, this program can provide up to $2 million of financial assistance (actual amounts are based on the amount of economic injury) to small businesses and nonprofit organizations.

Ultimately, the goal of the EIDL is to provide relief from economic injury and allows small businesses to maintain a reasonable working capital position during the period affected by COVID-19.

What are the specifics of the loan?

According to the Small Business Administration (SBA), the loan’s interest rate is 3.75% for businesses and 2.75% for nonprofits with a 30-year term available. The first payment is not due for a full year (there is an automatic one-year deferment); however, it does begin to accrue interest at the time of disbursement.

Who is eligible?

If your organization has less than 500 employees, it may qualify for a loan. This includes many sole proprietorships, independent contractors and employee-owned companies. Nonprofit organizations may be eligible for the loan as well.

The Benefits.gov website provides a helpful checklist tool to determine whether your business is eligible.

How do I apply?

The SBA has set up a website for businesses to apply online. You can also call 1.800.659.2955 or email DisasterCustomerService@sba.gov. You will need your six-digit North American Industry Classification Code (NAICC) and your three-year average annual revenue.


Emergency Economic Injury Grants (EEIG)

What is an EEIG?

EEIGs are an advance of up to $10,000 that can be issued within three days of applying for an EIDL, and it does not need to be repaid. This grant is extremely helpful for small businesses that need immediate financial relief.

Who is eligible?

Determining eligibility is simple: If your small business qualifies for an EIDL and you’ve been in operation since January 31, 2020 (the date the when the public health crisis was announced), you may be entitled to receive an EEIG.

An important reminder for small business owners: The grant money is first-come first-served – which means that when the appropriation has been depleted, no more grants will be distributed.

How do I apply?

Small businesses that wish to apply for an EEIG can start the process here.


Other SBA Loan Options

Your small business may be eligible for some other SBA loans as well, including the Paycheck Protection Program (PPP). This program provides assistance with cash flow to help your small business keep its payroll during the pandemic. And if you are successful in maintaining your payroll, the loans may be forgiven. The PPP can help your small business not only retain its employees, but also help it bounce back quickly once the pandemic subsides.

The PPP loan has several advantages and is retroactive to February 15, 2020 – meaning workers who may have already been laid off can be brought back onto payrolls.

Unfortunately, as of April 16, 2020, the SBA announced that the initial $349 billion Congress allocated for PPP loans had been depleted. However, Congress passed a new bill on April 24, providing an additional $310 billion in relief for small businesses with $60 billion set aside for small lenders, another $60 billion in SBA disaster loans, $75 billion in grants for hospitals, and an additional $25 billion to increase testing for COVID-19. The funds are available on April 27.

Regardless of whether you’ve received an EIDL (and the EEIG), you are also eligible to receive a PPP loan. Visit the SBA website for more information on COVID-19 related guidance and financial relief options.


AmTrust is Here for Our Small Business Insureds

We’ve created a library of resources regarding the coronavirus and funding resources to help your small businesses, agents and others stay informed, safe and healthy. For more information about our small business insurance solutions, please contact us today.


This material is for informational purposes only and is not legal, tax or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is accurate, appropriate or suitable for any specific business, tax or legal purpose. Readers seeking resolution of specific questions should consult their business, tax and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.
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