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After a disaster strikes, your small business may be derailed. But there is some help available. The US Small Business Administration (SBA) offers emergency loans when your business is impacted by a disaster. The Economic Injury Disaster Loan (EIDL) program provides loans for small businesses impacted by declared disasters. There is also a separate COVID-19 EIDL loan program. For both, the amount you borrow depends on your company’s financials as well as the maximum limits associated with each type of loan.
Related: What Is working capital & how do you calculate it?
What Is an EIDL Loan?
EIDL loans are designed to help both small businesses and nonprofit organizations when they experience revenue losses due to certain disasters. The goal is to assist businesses with their operating expenses until the period of economic impact passes. While EIDL loans have competitive terms, they’re only meant to be a last resort safety net. If you’re able to qualify for credit elsewhere, you won’t be able to get an EIDL loan.
There are currently two EIDL programs. The first is the traditional EIDL program for businesses negatively affected by declared disasters. This includes major events like wildfires and hurricanes that cause enough damage to be declared federal disasters. The second is a COVID-19 EIDL program that is available to small businesses across the country. Here’s how each one works.
Traditional EIDL Loans
The regular EIDL loan calculation is based on a maximum loan amount of $2 million. In order to apply, your business must be affected by a declared disaster. The SBA keeps an updated database of disasters so you can see if your area qualifies. You may qualify for funds for each separate disaster that affects your area.
COVID-19 EIDL Loans
COVID-19 EIDL loans are meant to help struggling businesses that are experiencing temporary revenue loss during the global pandemic. Loans may be up to 24 months of economic injury, with a maximum that was just raised to $2 million as of Sept. 8.
Businesses may apply for only one COVID-19 EIDL loan. Applications are due by Dec. 31, 2021, but an EIDL reconsideration request for a denied application may be submitted up to six months after the denial.
How Is Your EIDL Amount Calculated?
The size of your EIDL loan depends on the extent of the economic injury caused to your business by either COVID-19 or a declared disaster. The loan funds are not meant to replace lost sales but instead to help your business cover expenses and financial obligations. Part of the application process involves a comparison between your company’s previous financials and the period during which the disaster occurred.
Once the SBA extends a loan offer based on these figures, you can use an EIDL loan calculator to determine your monthly payment amount. You’ll need to enter your loan amount, interest rate, and repayment term. Then the calculator can let you know what to expect in terms of payment and how much the loan will ultimately cost with interest payments.
For regular EIDL loan applicants, the loan amount may be up to $2 million. For COVID-19 EIDL applicants, the loan amount may be up to 24 months of economic injury, up to the $2 million maximum loan amount.
How to Qualify for an EIDL Loan
Both EIDL and COVID-19 EIDL loans have size requirements. A common standard that’s used is a business with 500 employees or fewer. In addition to small businesses, sole proprietors and independent contractors are also eligible to apply for a COVID-19 EIDL loan. EIDL loan applicants must also prove economic injury due to a declared disaster. Applicants for the COVID-19 EIDL must demonstrate economic injury because of the pandemic.
How to Apply for an EIDL Loan
Both EIDL and COVID-19 EIDL loans operate differently from other types of SBA loans like the 7(a) program. Those are usually guaranteed by the SBA, but originate with private lenders. EIDL loans are directly financed by the SBA.
Applying for an EIDL Loan
Businesses may apply for an EIDL loan directly online through the SBA website. A regular EIDL loan requires a visit from an SBA inspector to assess the damage. You’ll also need to fill out IRS Form 4506-T so that the SBA may access your past tax filings.
Applying for a COVID-19 EIDL Loan
The application process for a COVID-19 EIDL loan is also completed online through the SBA website. You’ll be asked for financials that show your economic injury to prove your eligibility. You’ll receive a loan quote before you move forward with the full application process. You may accept the entire loan amount or a smaller amount. After that, your application is reviewed by a loan officer and you may need to submit more information. Then you’ll find out whether your application is approved or denied.
Once your COVID-19 EIDL is approved, you sign the loan agreement, which outlines all of the loan terms. You should receive the funds within five to 10 business days at this point.
EIDL Loan Specifications
Like other SBA loan rates, the interest rates on both types of EIDL loans are low, fixed rates.
A standard EIDL loan has a 4% interest rate and up to a 30-year repayment period. The maximum loan amount for this program is $2 million. Collateral is required for any loans over $25,000, with a preference for real estate. Funds may be used for working capital and normal expenses. The COVID-19 EIDL loan has a 3.75% interest rate for businesses (2.75% for nonprofits) and also has up to a 30-year term. The maximum loan amount was raised to $2 million in September 2021. Any business that received loans for a lesser amount before then can reapply to access more financing if eligible.
Collateral is also required for loans over $25,000 but for COVID-19 EIDL loans, the SBA will use a general security agreement rather than requiring a personal residence to secure the loan. Additionally, a personal guarantee is required of COVID-19 EIDL loans over $200,000. COVID-19 EIDL loan payments are deferred for the first two years, although interest will accrue during this time. You can start making payments immediately if you prefer.
The Takeaway
EIDL and COVID-19 EIDL loans can help your small business when it’s affected by a disaster. But it’s wise to be aware of the eligibility requirements and the funding limits for these loans. It may take several types of financing to help your company move forward after a disaster.
Learn More:
This article originally appeared on LanternCredit.com and was syndicated by MediaFeed.org.
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Lantern by SoFi:
This Lantern website is owned by SoFi Lending Corp., a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612; NMLS number 1121636. (www.nmlsconsumeraccess.org)
All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each provider’s discretion. There is no guarantee you will be approved or qualify for the advertised rates, fees, or terms presented. The actual terms you may receive depends on the things like benefits requested, your credit score, usage, history and other factors.
*Check your rate: To check the rates and terms you qualify for, Lantern conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender(s) you choose will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
All loan terms, including interest rate, and Annual Percentage Rate (APR), and monthly payments shown on this website are from lenders and are estimates based upon the limited information you provided and are for information purposes only. Estimated APR includes all applicable fees as required under the Truth in Lending Act. The actual loan terms you receive, including APR, will depend on the lender you select, their underwriting criteria, and your personal financial factors. The loan terms and rates presented are provided by the lenders and not by SoFi Lending Corp. or Lantern. Please review each lender’s Terms and Conditions for additional details.
Personal Loan:
SoFi Lending Corp. (“SoFi”) operates this Personal Loan product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lenders/partners receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and Disclosures, Terms of Service, and Privacy Policy.
Student Loan Refinance:
SoFi Lending Corp. (“SoFi”) operates this Student Loan Refinance product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lender’s receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and Disclosures, Terms of Service, and Privacy Policy.
Student loan refinance loans offered through Lantern are private loans and do not have the debt forgiveness or repayment options that the federal loan program offers, or that may become available, including Income Based Repayment or Income Contingent Repayment or Pay as you Earn (PAYE).
Notice: Recent legislative changes have suspended all federal student loan payments and waived interest charges on federally held loans until 01/31/22. Please carefully consider these changes before refinancing federally held loans, as in doing so you will no longer qualify for these changes or other future benefits applicable to federally held loans.
Auto Loan Refinance:
Automobile refinancing loan information presented on this Lantern website is from MotoRefi. Auto loan refinance information presented on this Lantern site is indicative and subject to you fulfilling the lender’s requirements, including: you must meet the lender’s credit standards, the loan amount must be at least $10,000, and the vehicle is no more than 10 years old with odometer reading of no more than 125,000 miles. Loan rates and terms as presented on this Lantern site are subject to change when you reach the lender and may depend on your creditworthiness. Additional terms and conditions may apply and all terms may vary by your state of residence.
Secured Lending Disclosure:
Terms, conditions, state restrictions, and minimum loan amounts apply. Before you apply for a secured loan, we encourage you to carefully consider whether this loan type is the right choice for you. If you can’t make your payments on a secured personal loan, you could end up losing the assets you provided for collateral. Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on the ability to meet underwriting requirements (including, but not limited to, a responsible credit history, sufficient income after monthly expenses, and availability of collateral) that will vary by lender.
Life Insurance:
Information about insurance is provided on Lantern by SoFi Life Insurance Agency, LLC. Click here to view our licenses.
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Small business grants for veterans
After serving in the military, many veterans turn to small business ownership. The appeal of creating something from scratch and doing what they love has attracted millions of vets to become entrepreneurs in the United States. But as you know, running a business typically has a hefty price tag attached to it.
Funding one can include small business loans for veterans as well as small business grants for veterans. There are pros and cons to both types of funding, and small business owners may rely on a combination of the two. We’ll cover information to help you better understand small business grants for veterans, including:
- What small business grants for veterans are
- Where to find small business grants for veterans
- How to get a small business grant for veterans
- General eligibility requirements
- Other funding options for veteran business owners
- Additional training and resources for veterans
Drazen Zigic / istockphoto
When it comes to finding money to help you launch or grow a business, you have a few options. One is a business loan, which needs to be paid back over time. You can also seek investors who, in exchange for giving you capital, will typically then own a piece of equity in your business. Your third option is a small business grant.
Unlike a loan, a grant doesn’t usually have to be paid back. It is essentially debt-free financing that allows you to have the capital you need to start or grow a business. Almost any business can apply for a grant, but there are some grants specifically geared toward veteran-run businesses. Given the amount of competition the average federal grant sees, you may have more of a fighting chance of getting one if the pool is limited to only veteran business owners.
Grants provide capital that can be used for many purposes in a business, from covering startup costs to allowing you to hire employees. You could use the funds to buy equipment or technology that helps you work more productively — it all depends on the grant itself.
Olivier Le Moal / Getty
There are many government small business grants available to veterans. It’s just a matter of knowing where to look in order to find the right one for you and your business. Whether you’re seeking small business startup grants for veterans or business grants for disabled veterans, here are some resources to get a start on your search.
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Grants.gov is a large database of all the federal grants available to anyone, including vets. You can search by agency, category or eligibility. Each grant has different eligibility requirements, and only certain types of organizations may apply. It’s important to read those requirements carefully to make sure you qualify.
Another database to spend some time on is GrantWatch. Here, you can find grants from federal, state and local government agencies, as well as foundations and corporations in each state.
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Most states have web portals with resources for veterans living in that state. For example, California’s CalVet lists resources for veterans and service-disabled vets, which may include self-employment grants for service-disabled veterans. You can also find local Veteran Business Outreach Centers (VBOCs) by zipcode here.
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There are small business grants for veterans in a variety of situations, from disabled vets to those starting a brand new business. Requirements will vary, but most require you to be a veteran, reserve or transitioning active duty member of any branch of the U.S. military. Some grants are also open to spouses or children of military members.
Zinkevych / istockphoto
To apply for a grant, first review the eligibility requirements to ensure you meet them. Pay attention as well to deadlines so you don’t waste time filling out paperwork for a grant that’s already closed its window for applications.
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Gather the required paperwork, which might include a business plan, financial statements or mission statement. Next, allot plenty of time to write your grant proposal and/or fill out the application. You may be asked how your business started or what you plan to do with the funds. Answer honestly, but don’t be shy about singing your company’s praise. This is your opportunity to display what is unique about your business.
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Finally, carefully review your application and make sure you included everything required. Proofread your proposal, maybe asking a colleague to provide a second set of eyes. You want your application to be as flawless and engaging as possible.
You may also consider hiring a grant writer. This is someone who fills out grant applications for a living. They will likely be more familiar with the process and what reviewers are looking for in an application.
Prostock-Studio/ istockphoto
Grants are often difficult to get, with so much competition for each of them. You may still have other financing options, many of which are also geared specifically for veterans.
istockphoto / yacobchuk
While you may qualify for any business loan, when applying for small business loans, look for those that offer preference to vets. StreetShares, for example, offers both small business loans and lines of credit at low rates for veterans.
The SBA provides a variety of small business loans for veterans, including the Military Reservist Economic Injury Disaster Loan program, which provides capital to eligible small businesses to cover expenses it couldn’t otherwise cover because an essential employee was “called up” to active duty in the military reserve. There is also the Veteran’s Advantage Guaranteed Loans program, which provides up to $150,000 fee-free loans to veteran-owned businesses.
When evaluating loan options, it’s important to look at interest rates and terms. This includes how long you will be paying back the loan and how much you will spend over the length of that loan.
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Angel investments or venture capital can provide another option for financing. Hivers and Strivers is an angel investment group that funds early-stage startup companies founded and run by graduates of the U.S. Military Academies. In addition to investing capital, the organization also provides useful contacts, industry experience and mentorship.
Ridofranz // istockphoto
If you happen to be a female vet, you may have even more resources at your disposal. There are small business loans for women, as well as small business grants for women, that can help you find the capital you need to grow your business.
Some cater specifically to female vets, like StreetShares Foundation’s Female Founders Veteran Small Business Award. This award gives three women $25,000 in total and provides them with the opportunity to pitch their ideas to investors.
To qualify for StreetShares Foundation’s grant, you must be a veteran, reserve or transitioning active duty member of any of the United States Armed Forces, a spouse of a military member or the child or immediate family member of a military member who died on active duty.
You must be 21 and own at least 51% of the veteran-owned business. The grant is given to qualified applicants who lack financial means to start or grow an early-stage business or non-profit.
vadimguzhva / istockphoto
Beyond grants and loans, there are resources that can help you plan, launch, and grow your veteran-owned business.
The Small Business Administration’s Office of Veterans Business Development provides resources and small business programs as well as training, counseling, and mentorship, as well as information on Federal procurement programs for veterans.Who is eligible for these services?
- Veterans
- Service-disabled veterans
- Reserve component members
- Their dependents or survivors
Here are some other funding options to consider.
AndreyPopov/istock
The federal government has the aim to award at least 3% of all federal contracting dollars to service-disabled veteran businesses each year. The Service-Disabled Veteran-Owned Small Businesses program assists service-disabled veterans in securing those government contracts. Their eligibility criteria is as followings:
- Small business
- At least 51% owned and controlled by one or more service-disabled veterans
- Have one or more service-disabled veterans manage day-to-day operations and make long-term decisions
- Service-connected disability
EvgeniyShkolenko / istockphoto
The Warrior Rising program includes the Warrior Academy, designed to help “vetrepreneurs” at every stage of business growth succeed. It also provides vets with mentoring, assistance in finding funding options, and a community of veteran business owners who offer one another support. Warrior Rising’s process includes:
- Intake and tracking: Phone interview to understand your background and determine where you most need help
- Instruction: Warrior Academy: Self-paced video modules with homework and feedback
- Mentoring: One-on-one coaching in specific areas like marketing or accounting
- Funding opportunities: Assistance helping you find the best grants or loans
- Warrior Community: Connects you with other “vetrepreneurs” in your area
Peppersmint / istockphoto
Patriot Boot Camp provides educational small business programs, mentors, and a community of experts and peers to active duty service members, veterans and their spouses looking to start a business. Programs offered include:
- 3-day bootcamps
- Lunch and learn sessions
- Webinars
Johnrob
Veterans Business Resource Center provides counseling and mentoring services for new veteran business owners, as well as training and webinars to continue their education. Services offered include:
- Marketing plan assistance
- Training and events
- Financial analysis
- Business strategy
- Consulting
- Government contracting assistance
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Another entrepreneurship program, V-WISE IGNITE, targets women veterans looking to start a business. The one-day training event provides resources and support to help them on their path.Who is eligible for these services?
- National Guard and Reserve components
- Active duty women service members of any military branch, including National Guard and Reserve components
- Women spouses/same-sex life partners of above (including widowed spouses/partners)
DepositPhotos.com
The U.S. Department of Veterans Affairs has a program, Veteran Readiness and Employment (VR&E) Self-Employment Track, that provides assistance to veterans with service-connected disabilities or employment barriers. The program assists in creating a business plan, analyzing your business concept, and providing you with the resources you need to succeed. Who is eligible for these services?
- Service member or veteran with an employment barrier or handicap
- Service-connected disability makes it hard for you to prepare for, obtain and maintain suitable employment
qingwa / istockphoto
Boots to Business (B2B) is a program created by the SBA and Office of Veterans Business Development, and it provides courses to help vets become successful business owners.Who is eligible for these services?
- Transitioning service members (including National Guard and Reserve)
- Their spouses on military installations worldwide
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The Entrepreneurship Bootcamp for Veterans (EBV) program is offered free of charge to post-9/11 veterans and their families. It targets businesses in early-growth mode, providing entrepreneurship and business management training. Programs available include:
- EBV Accelerate: A bootcamp-style program that provides insight and education on financial, management, marketing, and strategic planning challenges established businesses encounter.
- EBV Program: cutting edge, experiential training in entrepreneurship and business management for companies in early growth mode.
- EBV-Families Program: Provides the same training to family of qualified veterans.
istockphoto/Ridofranz
If you are interested in bidding on government contracts, explore the Vets First Verification Program. Run through the Office of Small & Disadvantaged Business Utilization (OSDBU), this program gives vets priority when bidding on federal and state government contracts, as well as better access to capital and tax relief.Who is eligible for these services?
- Veteran owns 51% or more of the company
- Veteran has full control over the day-to-day management, decision-making, and strategic policy of the business
- Veteran has managerial experience
- Veteran is the highest-paid person in the company
- Veteran works in the business full time
- Veteran holds the highest officer position in the company
DepositPhotos.com
Small business grants for veterans provide a unique opportunity: access to capital free of charge that can help you realize your entrepreneurial dreams. Realize that the grant process may be slow, so it’s important to start your homework early to find the grants that you qualify for. In general, you can apply for and accept multiple grants.
You can also combine multiple financing options to launch or expand your business. This can mean a combination of grants and loans, and possibly investors as well. It’s a good idea to evaluate all funding sources to find what works best for you.
Learn more:
This article originally appeared on LanternCredit.comand was syndicated by MediaFeed.org.
Lantern by SoFi:
This Lantern website is owned by SoFi Lending Corp., a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612; NMLS number 1121636. (www.nmlsconsumeraccess.org)
All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each provider’s discretion. There is no guarantee you will be approved or qualify for the advertised rates, fees, or terms presented. The actual terms you may receive depends on the things like benefits requested, your credit score, usage, history and other factors.
*Check your rate: To check the rates and terms you qualify for, Lantern conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender(s) you choose will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
All loan terms, including interest rate, and Annual Percentage Rate (APR), and monthly payments shown on this website are from lenders and are estimates based upon the limited information you provided and are for information purposes only. Estimated APR includes all applicable fees as required under the Truth in Lending Act. The actual loan terms you receive, including APR, will depend on the lender you select, their underwriting criteria, and your personal financial factors.
The loan terms and rates presented are provided by the lenders and not by SoFi Lending Corp. or Lantern. Please review each lender’s Terms and Conditions for additional details.
Personal Loan:
SoFi Lending Corp. (“SoFi”) operates this Personal Loan product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers.
The lenders/partners receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page.
Student Loan Refinance:
SoFi Lending Corp. (“SoFi”) operates this Student Loan Refinance product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lender’s receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website.
More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and Disclosures, Terms of Service, and Privacy Policy.
Student loan refinance loans offered through Lantern are private loans and do not have the debt forgiveness or repayment options that the federal loan program offers, or that may become available, including Income Based Repayment or Income Contingent Repayment or Pay as you Earn (PAYE).
Notice: Recent legislative changes have suspended all federal student loan payments and waived interest charges on federally held loans until 09/30/21. Please carefully consider these changes before refinancing federally held loans, as in doing so you will no longer qualify for these changes or other future benefits applicable to federally held loans.
Auto Loan Refinance:
Automobile refinancing loan information presented on this Lantern website is from MotoRefi. Auto loan refinance information presented on this Lantern site is indicative and subject to you fulfilling the lender’s requirements, including: you must meet the lender’s credit standards, the loan amount must be at least $10,000, and the vehicle is no more than 10 years old with odometer reading of no more than 125,000 miles. Loan rates and terms as presented on this Lantern site are subject to change when you reach the lender and may depend on your creditworthiness. Additional terms and conditions may apply and all terms may vary by your state of residence.
Secured Lending Disclosure:
Terms, conditions, state restrictions, and minimum loan amounts apply. Before you apply for a secured loan, we encourage you to carefully consider whether this loan type is the right choice for you. If you can’t make your payments on a secured personal loan, you could end up losing the assets you provided for collateral. Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on the ability to meet underwriting requirements (including, but not limited to, a responsible credit history, sufficient income after monthly expenses, and availability of collateral) that will vary by lender.
Life Insurance:
Information about insurance is provided on Lantern by SoFi Life Insurance Agency, LLC.
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Featured Image Credit: designer491 / iStock.
