The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27th and intended to provide emergency assistance and health care response for individuals, families, and businesses affected by the coronavirus pandemic.  One provision of the CARES Act intended to deliver relief to small businesses included an expansion of the SBA’s existing 7(b) emergency loan program (Economic Injury Disaster Loans or EIDLs) to help eligible businesses and private nonprofits pay payroll and operating expenses that could have been paid had the COVID-19 public health emergency not occurred.

The program exhausted funding and the application portal closed on April 15, 2020 (reopened in May for agricultural businesses only).  The U.S. Small Business Administration has reopened the application portal.  Businesses that were not able to access the resource prior to April 15th should consider applying as soon as possible.

The EIDL program offers long-term, low interest loans designed to alleviate temporary loss of revenue from disasters or unforeseen circumstances. These loans are not intended to replace lost sales, profits, or to pay for expansion and cannot be used to pay down long-term debt. They cannot be used to consolidate debt.  Small businesses can use these loans to cover payroll, inventory, debt payments, or various other expenses.

Originally, the maximum loan amount was capped at $2 million and $200,000 for without a personal guarantee.  Because of the high demand, the SBA has capped the maximum loan amount available to $15,000—plus whatever your business qualifies for as the advance ($1,000 per employee at a maximum of $10,000).  The advances do not have to be repaid but will be deducted from the forgiveness amount of a Paycheck Protection Program loan.

The SBA will use credit scores and other factors to approve loans.  The formula is not disclosed by the SBA but they do indicate that the Administration will be a less rigorous standard than traditional SBA loan requirements.

The SBA does provide several scenarios that will result in a denial of a loan, they include the following:

  • You are more than 60 days delinquent on child support obligations;
  • You have judgments against you for federal debts and you have not worked out a satisfactory repayment plan;
  • You have federal tax liens of more than $10,000 (you could still qualify, but you must provide a satisfactory explanation and be able to repay the tax debt (it’s recommended you work out a payment plan with the IRS as soon as possible).

Interest rates for the EIDL will be 3.75% for small businesses and 2.75% for non-profits with up to a 30-year term. Eligibility also requires that your business must have been in operation before January 31, 2020.

In addition to re-opening the portal, the federal government has opened up the loan program to sole proprietors, freelancers, and independent contractors — groups that weren’t previously eligible for this type of aid after previous disasters.

Unlike the lender administered application process for the Paycheck Protection Program, businesses apply directly through the SBA for EIDLs.


Because the application volume is so high, the SBA suggests that you apply online, but if you have questions about the application or problems providing the required information, you can contact the SBA’s Customer Service Center at 1-800-659-2955 or (TTY:1-800-877-8339. Their email address is

Please reach out to with questions.

We are in this together,

Brinker Simpson & Company, LLC

Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice & cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).