Emergency Economic Injury Disaster Loans & Emergency Economic Injury Grants

< Previous	Table of Contents	Next >

---

Emergency Economic Disaster Loans (Emergency Loans) are available to small businesses and non-profits who have suffered substantial economic injury. Emergency Loans are lower interest rate loans of up to $2 million, with principal and interest deferment at the Administration’s discretion, that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. Emergency Loans are available for eligible businesses and organizations in operation since January 31, 2010.

As with the Payroll Protection Program, interpretation and administration of this program has been chaotic and contentious. There was a lack of available funds, which made the two million dollar number, at least as reported in the press, much less for most businesses. The SBA was overwhelmed and businesses felt they could not get the assistance they needed to successfully apply. The introduction of the much larger PPP in the weeks after this program added to complexity chaos and demand for limited resources to administrate. A complete description of the details of the program and its implementation are beyond the scope of this Guide; any business seeking this relief must talk with a financial professional and act very proactively to have much of a chance to gain in the short term. But here are the fundamentals of the law.

The following business and organizations are eligible for and Emergency Loan:

• Businesses and organizations with fewer than 500 employees.
• Sole proprietorships, with or without employees.
• Independent contractors.
• Cooperatives and employee owned businesses.
• Tribal small businesses.
• Most private non-profits of any size.

Emergency Economic Injury Grants (Emergency Grants) are available to those businesses and organizations eligible for Emergency Loans and who have been in operation since January 31, 2020. Even if applicants are later not approved for the Emergency Loan they will not be required to repay any Emergency Grant advance payment.

The grant must be used as follows:

• Providing paid sick leave to employees unable to work for COVID-19
• Maintaining payroll to retain employment during business interruption
• Meeting increased costs to obtain materials unavailable due to interruption in supply chains
• Paying rent or mortgage
• Repaying obligations that cannot be met due to revenue loss.

If a company accepts certain emergency direct lending relief under CARES, the company must agree to certain limitations on the compensation (including salary, bonuses, equity, and other financial benefits) paid to its officers and employees that remain in effect until one year after the loan or loan guarantee ceases.

Emergency Loans and Emergency Grants are available to businesses who have applied for or received PPP loans. If a PPP loan is received or an Emergency Loan is refinanced into a PPP loan, any advance amount received under the Emergency Grant would be subtracted from the amount forgiven in the PPP.

Businesses cannot use the Emergency Loan for the same purpose as the PPP loan.

Businesses can apply for the Emergency Loan at https://www.sba.gov/local-assistance/find/.

SEE ALSO

• Other sections in this book

---

< Paycheck Protection Program	Table of Contents	Employee Retention Credit >