Relief Loans for Businesses > Federal Programs

SBA Economic Injury Disaster Loan (EIDL)

Minnesota and North Dakota businesses are now eligible for the Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL) Program. Below you will find details on what you need to know before applying.

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Contact Our SBA Team ›         Attend a Webinar ›         Training Video ›

Who May Apply?

  • Any small business, small agricultural cooperatives, and private non-profit organizations that have suffered a substantial economic injury due to COVID-19 may apply
  • Substantial economic injury means the business is unable to meet its obligations and to pay its ordinary and necessary operating expenses
  • All Counties in Minnesota and North Dakota are eligible to apply.  It is expected all 50 states will be eligible.  You can check on eligibility for other states here

 

Loan Amounts and Uses

  • Up to $2 million to a borrower and its affiliates
  • Loan amount will be based on the actual economic injury a company’s financial needs
  • Each business entity should apply separately from affiliated entities
  • Businesses are advised to keep good track of where the funds were used for 3 years in case audited by SBA
  • You will be contacted by an SBA loan officer; ask questions if uncertain about uses of loan proceeds or any other part of the loan program

 

Eligible and Ineligible Uses of Proceeds

ELIGIBLE USES
  • Any type of working capital
  • Pay expenses:  Rent, utility
  • Pay fixed debt payments including SBA loans
  • Pay bridge loans (short term!)
  • Pay entire amount of short term debt due
  • Pay off credit cards and other financing if original purpose was related to COVID-19
  • Payments on IRS Obligations (SBA prefers you request a deferral of the monthly payment from IRS)
INELIGIBLE USES
  • Paying Bonuses
  • Distributions/payments to owner (except typical in lieu of salary type)
  • Cannot repay stockholder loans
  • Purchase Fixed Assets
  • Expand business
  • Make repairs
  • Debt Refinance of long term debts
  • May not pay off debts with EIDL financing
  • May not pay any part of a direct federal debt

 

Eligibility and Terms

  • EIDL assistance is available only to small businesses when SBA determines they are unable to obtain credit elsewhere.
  • Loan terms up to 30 years
  • COVID-19 loans will be set with an 11-month deferment so first payment 12 months after the loan date
  • No prepayment penalty
  • Interest rate of 3.75% /2.75% for non-profits
  • There is no cost to apply except pass-through costs to file mortgages etc.
  • Packagers and those that assist you may charge a fee (typically will be under $2500)
  • These are direct loans made by the SBA.  Banks may not make these loans at this time.

 

Collateral and Personal Guaranty Requirements

  • Any loan of over $25,000 will require collateral
  • Collateral may be business assets or personal assets
  • Real Estate is SBA’s preferred collateral
  • Loans over $25,000 will require collateral even if there is no equity in the collateral
  • Loans will not be denied for lack of collateral
  • Personal Guarantees will be required from owners with 20% or more ownership in the applicant business

How to Apply

  • Click the “Apply Now” button below to visit the SBA Application website
  • If you are unable to view the site, you may need to clear your browser’s cache. This can be done by completing the following steps:
    • Internet Settings > Privacy and Security > Clear Browsing Data > Cached Images and Files > Clear Data
  • Click here to view the Application Guide
Apply Now

 

What is the Approval Process and when will I get Funds?

  • Approval will be between 3 – 21 days from the time all documents are submitted
  • Once approved – documents sent to SBA legal team to send to borrower electronically
  • Borrower signs and returns documents
  • Funds are deposited electronically to borrower’s checking account
  • Anticipate 30 days or more to get funds
  • Talk to your banker if you have concerns over the timing

 

If your question is not addressed here, please contact our SBA Team. We will continue to add to this, as we receive questions and updates from the SBA.

Can Choice Bank make EIDL Loans?  

No. These are direct loans made by the SBA. We are here to help – if you have questions or need assistance completing your application, contact us.

May a borrower request more than one EIDL Loan?  

No. A borrower may have more than one disaster loan but only one loan per declared disaster.

Borrowers that have applied for and received disaster funds in the past for other disasters may still apply for an EIDL.

What if I request a $25,000 loan and later realize that I need more?  

You may request an INCREASE to your existing loan. You may not apply for a 2nd EIDL

What type of businesses are ineligible for EIDLs?

The following Businesses are ineligible for this loan program:

  • Agriculture *
  • Religious
  • Charitable Organizations
  • Ag industry
  • Casinos
  • Racetracks
  • Gambling Organizations**

*Businesses that provide services to the Agriculture industry are eligible

**If gambling is more than 1/3 of gross revenue

I am a Delaware corporation – should I request my loan in Delaware?

No. You apply in the state and county your business is physically located

I have more than one restaurant.   Should I request a different loan for each?

Yes. Each entity should apply. The maximum loan to all affiliated businesses is $2 million.

Must I use the available credit on my line of credit before requesting an EIDL?

No.  You do not need to advance your available credit before requesting the EIDL.

If I can borrow from a bank, am I still eligible for SBA assistance?

Private credit sources must be used as much as possible to overcome economic injury. Obtaining credit via SBA may be difficult for many industries impacted during the COVID-19 crisis.

What happens if I can’t access my tax returns and bank financials? 

Work with your SBA loan officer and share the challenges. They may issue the loan without this information in some cases.

 

 

 

 

 

FORMS

Below is a list of forms that may be required during the application process. We recommend reviewing and gathering this information ahead of time,  but begin the application process BEFORE completing the forms.

Forms and information needed to complete the application:
  • Federal Tax Returns – 1 year for applicant business and affiliate businesses
  • Business debts: Form 2202 >
  • Personal financial information: Form 413 >
  • Information needed for Disaster Loan application Form 5 > 
  • Supporting Information: Form P-019 >
Other Forms and Information
  • Form 1368 > This information is not requested for the online application.  This information may be requested by your SBA loan officer as needed and especially if you are seeking a large loan.  If your request is in excess of $500,000, have this form information ready to submit should SBA request it.
  • Form 4506T >  Will be downloaded, printed and scanned as part of the online application.  There is no reason to print this at this time unless you are submitting your application on paper (not recommended). This form is sent in to the IRS to verify the accuracy of the tax returns provided.
  • Personal Federal Tax Returns –  for all owners of applicant business with 20% ownership or more.

IMPORTANT: BEFORE YOU APPLY

Please note that borrowers must apply for this loan program directly with the SBA. Our team of SBA experts is available to answer questions. Here is what you need to know about the application process:

  1. We strongly encourage you to follow the steps below to be best prepared for the application process:
    • Download the SBA Application forms in this section.
    • There is no need to complete the forms, simply use them as a guide as to what will be requested on the electronic online application.
    • We DO NOT RECOMMEND submitting a paper form of the application, as paper applications require transcription by the SBA and will take significantly longer to process.  you complete the forms and send them in on paper.
    • If you have questions during the application process, please contact us.
  1. SBA will not process any of your application until 100% of your application is submitted.
  2. Due to the high volume of traffic – there will be delays and systems issues. Save your application often, in case the system crashes.
  3. Use peak hours to gather information and apply during non-peak hours if possible (6:00PM – 6:00AM CST).

FORMS

There is no need to fill out these forms for your application – HOWEVER – having this information ready to complete these forms online is necessary. Without this information, your application will be delayed.

Form and information needed to complete the application:
  • Federal Tax Returns – 1 year for applicant business and affiliate businesses
  • Personal Federal Tax Returns –  for all owners of applicant business with 20% ownership or more
  • Business debts: Form 2202 >
  • Personal financial information: Form 413 >
  • Information needed for Disaster Loan application Form 5 > 
Other Forms
  • Form 1368 > This information is not requested for the online application.  This information may be requested by your SBA loan officer as needed and especially if you are seeking a large loan.  If your request is in excess of $500,000, have this form information ready to submit should SBA request it.
  • Form 4506T >  Will be downloaded, printed and scanned as part of the online application.  There is no reason to print this at this time unless you are submitting your application on paper (not recommended). This form is sent in to the IRS to verify the accuracy of the tax returns provided.

 

Contact

We are here to help! If you have questions regarding the EIDL Loan Program or other SBA Programs that might be available to you, contact us at:

sba@bankwithchoice.com

763.398.5815