An economic injury disaster loan is a small business loan program that you may apply for in the event of private sector disasters or losses. So, for example, if your business is located in a disaster area and you’ve suffered damages in light of a flood, hurricane, or some other event, you can apply for EIDL loans to help repair or restore your property.
There are a variety of EIDL loans for which you can apply. An example is a Business Physical Disaster Loan. A Business Physical Disaster Loan covers losses incurred during a disaster that are not covered by your insurance. There’s also a Covid EIDL loan. If your small business has been significantly impacted by Covid and has suffered economic losses, you may be eligible for this specific loan. There is even an EIDL specifically for military reservists. This loan will help cover losses incurred due to an essential employee getting called away to active duty because they are an army reservist.
Who is Eligible for EIDL Loans?
Depending on the exact type of EIDL loan assistance for which you apply, there are specific criteria that need to be met. First off, it is available to those small businesses that cannot otherwise get financing or credit elsewhere. You must also have suffered significant economic loss, and generally speaking, you must be located in a disaster area. You can check the SBA‘s website to see whether or not you do fall into a qualified disaster area.
Among some of the other financing requirements are:
- Credit score. Ideally, your credit score will be at least 620 or higher to qualify for this loan type. The SBA and your lender may consider other factors, however.
- Your ability to repay the loan. If you have an EIDL grant, you may not be required to repay some or all of the funds. Usually, though, repayment is required. A lender will check your debt-to-income ratio and your cash flow statements to ensure that you can repay the loan within the stipulated amount of time.
- Whether or not you have collateral. Collateral is property or assets you are willing to risk to procure the loan. Depending on the loan amount, you might be required to put down collateral on an EIDL. If you default on your loan, the lender can then seize the collateral and attempt to sell it to recoup its losses.
Why Apply for an EIDL Loan?
There are advantages to this loan type. For example, the process generally goes pretty quickly because it is geared toward a disaster area business. The SBA and lender understand that you need money to continue your business endeavors. Funding can be as short as five days from your application.
There are also long-term repayment options with EIDL loans. Usually, there is a 30-year repayment plan. If you do choose to pre-pay early, there is no penalty associated. The loan can also be used for whatever you need for your business. You name it, from working capital to cover payroll, repairs, rent, or utilities, and the loan proceeds can be applied toward your specific needs. Keep in mind that with EIDL loan money, you cannot refinance new debt, buy new capital assets such as vehicles, or use it for dividends and bonuses.
Suppose you are located in a disaster area and currently struggle because of financial losses. In that case, you may want to consider looking into EIDL loans to help keep your business afloat during an otherwise difficult time.
First Union Lending is Here for You
We work with a variety of small businesses across the country. And we understand how challenging it is right now. That is why we want to help you quickly get the cash you need. Most of our clients are funded within 2 to 3 business days from their application. With short-term loans, merchant cash advances, and EIDL loans, among other financing types, we have the resources to help. Call today.