The U.S. Small Business Administration's (SBA) recently expanded COVID-19 Economic Injury Disaster Loan (COVID EIDL) program, which offers long-term, low-interest loans of up to $2 million to small businesses impacted by the pandemic, presents a financing tool that most eligible businesses should consider.

We described the expansion of the COVID EIDL program in a recent article. The below chart provides a high-level summary of the SBA's guidance related to the program, including the economic terms, eligibility requirements, and documentation required to obtain a COVID EIDL loan. Notably, for the COVID EIDL program, the SBA appears to have dispensed with its usual requirement that borrowers demonstrate "substantial economic injury" to be eligible for a disaster loan. 

The SBA is accepting COVID EIDL applications here. The program will end on the earlier of December 31, 2021, or the date funds are exhausted.   

Economic Terms

Loan Term

  • 30 years

Loan Amount

  • Up to $2 million
  • The SBA will begin approval of loans over $500,000 on October 8, 2021
  • Corporate groups cannot borrow more than $10 million in the aggregate
  • Maximum Loan Amount (up to $2 million) is calculated by the SBA on a borrower by borrower basis
  • The formula for most borrowers is 2019 gross receipts or sales minus 2019 costs of goods sold multiplied by two, or $500,000, whichever is less
  • For loans greater than $500,000.00 SBA will determine the maximum loan amount by reviewing cash flow and existing debt obligations of the borrower

Interest Rate

  • For-Profit Businesses – 3.75 percent fixed
  • Not-For-Profit Organizations – 2.75 percent fixed

Deferral Period

  • Payments deferred for 24 months
  • Interest will accrue during the deferral period
  • Deferred interest to be paid over 28-year loan term following deferral period

Use of Proceeds

  • Allowed: Working capital to make regular payments for operating expenses, including payroll, rent/mortgage, utilities, and other ordinary business expenses, and to pay business debt incurred at any time
  • Allows pre-payment of non-federal debt and regular payments to be made on federal debt
  • Prohibited: Expanding business, prepaying federal debt, starting a new business


  • No collateral required for loans of $25,000 or less
  • Loans of $25,001 - $500,000 require that the SBA will file UCC-1 covering the borrower's business assets
  • Loans of $500,001 - $2 million require that the SBA will (i) file UCC-1 covering the borrower's business assets and (ii) obtain a best available mortgage on real estate owned by the borrower

Personal Guaranty

  • Required for loans over $200,000
  • Full guaranty required from:
    1. All individuals or entities owning 20 percent or more of the applicant business
    2. For sole proprietorships, the proprietor
    3. For independent contractors, the contractor
    4. For General Partnerships, all general partners
    5. For Limited Partnerships, all general partners and any limited partner who owns 20 percent or more of the partnership
    6. For Limited Liability Entities, the Managing Member and any member who owns 20 percent or more of the entity
    7. For Corporations, any individual or legal entity who owns 20 percent or more of the voting stock
    8. If no single owner owns 20 percent or more, then at least one individual or entity must provide a full guaranty



  • A business that, together with affiliates, has not more than 500 employees
  • A business that, together with affiliates, has more than 500 employees and

(a) is assigned a NAICS code beginning with:

  • 61 Educational Services;
  • 71 Arts, Entertainment, and Recreation;
  • 72 Accommodation and Food Services;
  • 213 Support Activities for Mining; Industry group;
  • 3121 Beverage manufacturers;
  • 315 Apparel Manufacturing;
  • 448 Clothing and Clothing Accessories Stores;
  • 451 Sporting Good, Hobby, Book, and Music Stores;
  • 481 Air Transportation;
  • 485 Transit and Ground Passenger Transportation;
  • 487 Scenic and Sightseeing Transportation;
  • 511 Publishing Industries (except Internet);
  • 512 Motion Picture and Sound Recording Industries;
  • 515 Broadcasting (except Internet);
  • 532 Rental and Leasing Services; and
  • 812 Personal and Laundry Services;

(b) employs not more than 500 employees per physical location; and

(c) has no more than 20 locations (this includes the number of locations that your affiliates have, if any)


  • "Affiliate" means any business in which a borrower: (i) owns at least 50 percent; (ii) has a right to profit distributions of at least 50 percent; or (iii) has the contractual authority to control the direction of the business
  • Affiliate status measured as of January 31, 2020

Credit Score

  • Loans of $500,000 or less require a minimum credit score of 570
  • Ability to repay determined by credit score only
  • Loans greater than $500,000 require a minimum credit score of 625 
  • Ability to repay determined by (i) cash flow analysis conducted by the SBA and (ii) existing debt obligations of the borrower
  • Loan amount determined in part by the ability to repay

Immigration Status

  • For-profit businesses other than sole proprietorships: The business must have a valid IRS-issued tax identification number (TIN). Each owner, member, partner, or shareholder of 20 percent or more of the business must be a U.S. citizen, non-citizen national, or qualified alien with a valid SSN
  • Sole proprietorships: U.S. citizens, non-citizen nationals, and qualified aliens with a valid SSN are eligible

Ineligible Entities (non-exhaustive list)

  • Businesses not in operation on or before January 31, 2020
  • Businesses engaged in illegal activity at federal, state, or local level (including cannabis businesses)
  • Businesses primarily engaged in lobbying or political activities
  • A business that is a debtor under chapter 7 of the Bankruptcy Code or under another chapter of the Bankruptcy Code but a plan of reorganization has not been confirmed 

Required Documentation


  • 2019 Federal Income Taxes, including all schedules, for the applicant business
  • 2020 Federal Income Taxes, including all schedules, for the applicant business (if available)
  • If the most recent Federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year
  • IRS Form 4506-T
  • Board resolution or certificate of authority providing authority to commit the business to the loan
  • Copy of government-issued photo identification of each principal owning 20 percent or more of the applicant business
  • Current year-to-date profit-and-loss statement
  • For loans less than or equal to $500,000: Schedule of Liabilities listing all fixed debts

For Loans )$500,000

  • SBA Form 2202 – Schedule of Liabilities
  • List of real estate owned
  • SBA Form 413 – Personal Financial Statement for general partners, managing members, and all owners of 20 percent or more of the applicant business


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.