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CARES Act Modifications to the SBA’s Economic Injury Disaster Loan Program 

On March 27, 2020, the Federal government passed into law an approximately $2 TRILLION stimulus package, known as the CARES Act, to confront the devastating economic impact of the coronavirus on our society.  The proposed legislation covers many sectors of the economy, and includes modifications to the SBA’s Economic Injury Disaster Loan Program, which should improve access and affordability of the disaster assistance which can be tapped by small businesses.  The key points are summarized below.  

Economic Injury Disaster Loans – CARES Act Modifications – Key Points

  • $50 Billion program
  • Eligible businesses located in a federally declared Disaster Area (all of Illinois):

a.Business, Cooperative, ESOP, or Tribal business which has no more than 500 employees;

b.Sole proprietor;

c.Independent contractor;

d.Cooperative no more than 500 employees;

e.Loans available to all non-profits, including 501(c )(6)s.

  • Still must qualify under SBA’s normal eligibility standards for industry size or revenue limits (see NAICS codes)
  • Loan Terms: 

a.Up to $2 million, depending on need and underwriting;

b.Term of up to 30 years for repayment;

c.Interest rates of 3.75% per annum for small businesses and 2.75% per annum for non-profits;

d.Loans in excess of $25,000 may require collateral (but collateral requirements likely will be relaxed)

e.Use of proceeds- Working capital, payroll, other expenses which could have been paid had disaster not occurred but NOT intended to replace lost profits or finance business expansion

  • Loans below $200,000 can be approved without a personal guarantee.
  • No requirement that cannot obtain credit elsewhere, or to be in business for one year
  • Advance Grant Available

a. Loan applicants can receive $10,000 grant which is not required to be repaid.

b. Can be advanced within 3 days of application for EIDL loan, even if EIDL is not obtained, or if applicant obtains loan under Paycheck Protection Program.  

c. If the applicant does obtain loan under Paycheck Protection Program, the amount of advance will be deducted from the forgivable amount of the loan under that program.

d.The advance may be used to pay the following allowable costs:

i.providing paid sick leave to employees unable to work due to the direct effect of the COVID–19

ii.maintaining payroll to retain employees during business disruptions or substantial slowdowns

iii.meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains

iv.making rent or mortgage payments

v.repaying obligations that cannot be met due to revenue losses.

Application can be made online by following this link:  https://disasterloan.sba.gov/ela/Information/ApplyOnline

However, due to traffic, it seems that wait times are lengthy.  To get an idea of what information is needed for the application, or to apply by mail, see documents below.

ELA0-Schedule Of Liabilities
SBA Form 2202 Instructions
ELA0-Personal Financial Statement
ELA0-Request for Transcript of Tax Return
ELA0-Loan Application
ELA0-Monthly Sales Figures
EIDL Supporting Information (P-019)
ELA0-Fee Disclosure Form and Compensation Agreement