EIDL Loan Requirements: What Are They?
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What’s the Difference Between the EIDL Grant vs. the EIDL Loan?
Does Your Business Qualify for an EIDL Loan?
Businesses with 500 or fewer employees
Business (or agricultural enterprise) Sole proprietor, with or without employees, or an independent contractor Cooperative Employee Stock Ownership Plan (ESOP) Tribal small business concern Certain private nonprofit organizations that are nongovernmental
Businesses with 500+ employees
Geographical locations
Additional EIDL requirements
Be engaged in illegal activities as defined in federal guidelines Have someone with a 50% or greater ownership who is more than 60 days delinquent on child support payments “present live performances of a prurient sexual nature” or receive more than a minimal amount of revenue through products/services/depictions/displays of such Receive more than one third of gross annual revenue from legal gambling Be in the lobbying industry Be a state, local, or municipal government entity, or a member of Congress
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EIDL Loan Terms
Maximum amounts and loan length
Interest rates
Base rate plus 6.5% for a loan of $50,000 or less Base rate plus 6.0% for a loan of $50,001 to $250,000 Base rate plus 4.5% for a loan of $250,001 to $350,000 Base rate plus 3.0% for a loan of greater than $350,000
Fees
Acceptable uses of EIDL loans
Continuation of health care benefits Rent Utilities Fixed debt payments
Collateral requirements
Calculating Loan Amounts
Pros and Cons of EIDL Loans
Benefits of EIDL loans
Easy Application Process: You can apply online, which can streamline the process. There’s no need to make an appointment or travel to a financial institution to apply. Flexible Loan Amounts: If your application is approved, the SBA will let your business know how much you qualify for. Then you can borrow up to that amount. So, if you get approved for $125,000 but need only $100,000, you can borrow that amount. Long Terms: The loan term is 30 years. No Fees or Prepayment Penalties: If you want to start making your payments right away, you can, without penalty.
Disadvantages of EIDL loans
Not Forgivable: Unlike the PPP loans and the EIDL grant/Advances, these loans are not forgivable and will need to be paid back in full. Limited Uses. Funds can only be used for specific purposes, such as the “continuation of health care benefits, rent, utilities, fixed debt payments.” Credit Scores Matter. Credit scores will be considered and factored into the decision-making process, which could present challenges to some businesses.
Summary of EIDL loan pros and cons
The Takeaway
Frequently Asked Questions
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