In addition to threatening the health and safety of people across the United States and the world, the coronavirus (COVID-19) outbreak has already had a significant impact on many small businesses and non-profit organizations. As part of the federal response to these economic stresses, Congress passed the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123) (the “Act”), which was signed into law on March 6, 2020. The Act includes, among other things, a provision for the U.S. Small Business Administration (the “SBA”) to offer Economic Injury Disaster Loans (“EIDLs”) to small businesses and non-profit organizations facing economic losses related to COVID-19.
The EIDL program is not, itself, new (the SBA has been making disaster loans since 1953). The Act, though, classifies COVID-19 as a “disaster,” bringing resulting losses under the program’s approximately $7 billion coverage, and allowing state and territory Governors to request that EIDLs be made available in their jurisdictions. Once a request has been received and the applicable state or territory has been declared eligible for relief, the SBA activates its EIDL program, making low-interest federal disaster loans available to be used for working capital, payment of fixed obligations, payroll, and other ordinary operating expenses that can’t be paid because of COVID-19’s impact.
Below are some important points to note under the current EIDL rules. This is not intended to be comprehensive guidance on the EIDL program – only an introduction and suggested resources. As COVID-19 evolves, federal policy may also change to respond to that evolution in a variety of ways. We are, of course, happy to answer questions or discuss directly anything mentioned here in greater detail.
As the COVID-19 outbreak unfolds, we urge you to be safe, and we wish for the very best of health and outcomes for all. We also understand that protecting your business will be critical for you during this uncertain time, and Smith Anderson will continue to provide updates on potential sources of relief, as well as other COVID-19–related topics. Small business or non-profit owners may also wish to visit the SBA’s COVID-19 assistance website for additional guidance and resources.