How to Calculate Your EIDL Loan Amount

Q: How is the amount of your EIDL loan determined?

Your EIDL loan amount depends on the scope of your business’s economic injury as a result of a specific disaster. For a regular EIDL loan, you’ll need to compare pre-disaster financials to post-disaster financials. The SBA will also evaluate your operating expenses to determine how much you need to keep your business running. For a COVID-19 EIDL loan, your revenue loss is evaluated for up to a 24-month period. The maximum loan amount is now $2 million, which is an increase that was announced in September 2021. If you accepted a lower loan amount than you now qualify for, the SBA will contact you with the opportunity to apply for more funds.

Q: What is the maximum EIDL loan amount you can receive?

The maximum EIDL loan for disasters is $2 million. The maximum COVID-19 EIDL loan is also $2 million (as of September 2021). However, you don’t have to borrow the full amount you’re offered. Weigh your business’s needs with your ability to repay the loan so you don’t take on more debt than you can manage. Both types of EIDL loans require collateral and/or a personal guarantee, so there is some risk involved.

Lauren WardUpdated September 16, 2021

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

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.

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, 2021. Businesses may apply for only one COVID-19 EIDL loan. Applications are due by December 31, 2021, but an EIDL reconsideration request for a denied application may be submitted up to six months after the denial.Recommended: Understanding Different Types of Small Business Loans

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. Recommended: SBA Loan Requirements & Tips for Qualifying

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. Lantern by SoFi can help you find the right small business loan for your business. Compare private lender offers from our network of lending partners by filling out just one application form.

Image credit: iStock/Betul Aktas

Frequently Asked Questions

How is the amount of your EIDL loan determined?

What is the maximum EIDL loan amount you can receive?

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About the Author

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.

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