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March 25, 2020

COVID-19: SBA Economic Injury Disaster Loan Program

As a result of COVID-19, small businesses and private not-for-profits suffering economic injury in New York, New Jersey, and Pennsylvania are now being offered low-interest disaster loans for working capital through the US Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL) program.

These loans are available to small businesses, small agricultural cooperatives and businesses, and most private not-for-profits. The EIDL program includes businesses directly impacted by the disaster as well as businesses that offer services directly related to the impacted businesses. 
Additionally, other businesses indirectly related to the industries that are likely to be severely harmed by their community losses are included, such as product manufacturers, wholesalers, and retailers.

Examples of eligible small business industries include:

  • Charter boats
  • Hotels
  • Manufacturers
  • Recreational facilities
  • Rental property owners
  • Restaurants
  • Retailers
  • Souvenir shops
  • Sports vendors
  • Travel agencies
  • Wholesalers

Private not-for-profits include:

  • Associations
  • Community centers
  • Daycare centers
  • Educational facilities
  • Food kitchens
  • Museums
  • Nursing homes
  • Playhouses
  • Rescue organizations
  • Senior citizen centers
  • Shelters

The SBA details three separate criteria for loan approval: credit history, repayment ability, and eligibility. Applicants must have a credit history acceptable to the SBA and must prove they have the ability to repay the SBA loan. The applicant business must also be located in a state or territory where a disaster declaration has been made, and the applicant’s working capital losses must be due to the declared disaster rather than a downturn in the economy.

Eligible entities may qualify for loans up to $2 million at a 3.75 percent interest rate for small businesses and 2.75 percent for not-for-profits for a repayment term of up to 30 years. Loans over $25,000 require collateral, with real estate being found acceptable when it is available. Though the SBA will not decline a loan for lack of collateral, it may require borrowers to pledge what is currently available. If approved, borrowers can use the working capital loan to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. 

Entities can apply for free online or with a paper application, but please note that the SBA online Disaster Loan Assistance Portal has been experiencing technical difficulties due to the high volume of applicants. There is no obligation to take the loan if offered. There is no obligation to take the loan if offered.

Though New York, New Jersey, and Pennsylvania are the only participants at this time, upon written request from a state’s or territory’s governor, the SBA can issue an EIDL declaration under its own authority. 

Further changes may be made to the EIDL program by legislation currently being considered by the US Congress. Barclay Damon continues to monitor this fast-changing situation and will send updates as new information becomes available.

If you have any questions regarding the content of this alert, please contact Roger Cominsky, Financial Institutions & Lending Practice Area chair, at; Heather Sunser, partner, at; or Samantha Podlas, associate, at

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