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Home > Disaster Planning > Economic Injury Disaster Loans

If your small business has suffered substantial economic injury, regardless of physical damage, and is located in a declared disaster area, you may be eligible for financial assistance from the U.S. Small Business Administration.

Small businesses and small agricultural cooperatives that have suffered substantial economic injury resulting from a physical disaster or an agricultural production disaster designated by the Secretary of Agriculture may be eligible for the SBA's Economic Injury Disaster Loan Program. Substantial economic injury is the inability of a business to meet its obligations as they mature and to pay its ordinary and necessary operating expenses.

An EIDL can help you meet necessary financial obligations that your business could have met had the disaster not occurred. It provides relief from economic injury caused directly by the disaster and permits you to maintain a reasonable working capital position during the period affected by the disaster.

The SBA provides EIDL assistance only to those businesses we determine are unable to obtain credit elsewhere. The SBA can provide up to $1.5 million in disaster assistance to a business. This loan cap includes both economic injury and physical damage assistance. Your loan amount will be based on your actual economic injury and financial needs.

The interest rate on EIDLs cannot exceed 4 percent per year. The term of these loans cannot exceed 30 years. Your term will be determined by your ability to repay the loan. (See SBA publication No. DA-2, Physical Disaster Business Loans.)

Federal law required SBA to determine whether credit needed to accomplish full recovery is available from non-government sources without creating an undue financial hardship to the applicant. The law calls this credit available elsewhere. Generally, SBA determines that over 90 percent of disaster loan applicants do not have sufficient financial resources to recover without the assistance of the Federal government. Because economic injury loans are taxpayer subsidized, Congress intended that applicants with the financial capacity to fund their own recovery should do so and therefore are not eligible for EIDL assistance.

Credit Requirements: SBA's assistance is in the form of loans, as such SBA must have a reasonable assurance that such loans can and will be repaid.

Collateral Requirements: Loans of $5,000 or less do not require collateral. Loans in excess of $5,000 require the pledging of collateral to the extent that it is available. Generally the collateral will consist of a first or second mortgage on the business property. In addition, personal quaranties by the principals of the business are required. The SBA will not decline a loan for lack of collateral, but you must pledge available collateral.

Interest Rate: Interest rates are determined by formulas set by law and are recalculated quarterly. The maximum interest rate for this program is 4 percent.

Loan Term: The law authorizes loan terms up to a maximum of 30 years. SBA determines the term of each loan in accordance with the borrower's ability to repay. Based on the financial circumstances of the borrower, SBA determines an appropriate installment payment amount, which in turm determines the actual term.

Loan Amount Limit - $1,5000,000. The actual amount of each loan, up to this maximum, is limited to the actual economic injury as calculated by SBA, not compensated by business interruption insurance or otherwise, and beyond the ability of the business and/or its owners to provide. If a business is a major source of employment, SBA has authority to waive the $1,500,000 statutory limit.

Insurance Requirements: To protect each borrower and SBA, SBA required borrowers to obtain and maintain appropriate insurance. Borrowers of all secured loans (economic injury loans over $5,000) must purchase and maintain full hazard insurance for the life of the loan. Borrowers whose collateral property is located in a special flood hazard area must also purchase and maintain flood insurance for the full insurable value of the property for the life of the loan.

EID Loans Frequently Asked Questions

*All of the SBA's programs and services are provided to the public on a nondiscriminatory basis.