What Are the Terms of an EIDL?

EIDL loans have some of the most favorable terms available for small business financing. Because they are direct SBA loans (not guaranteed loans through banks), the SBA sets standardized terms that are typically better than market rates.

Standard EIDL Terms

Here are the typical terms for SBA disaster loans:

Loan Amounts

EIDL loan amounts are based on economic injury:

• Maximum: Typically $2 million (COVID EIDL reached $2 million after increases)
• Calculation: Based on actual economic injury caused by the disaster
• Working capital needs: Must demonstrate need for the amount requested
• No minimum: Loans can be approved for smaller amounts based on actual need

Payment Structure

EIDL payments are structured as:

• Monthly payments: Equal monthly payments of principal and interest
• Deferment: May include an initial deferment period (COVID EIDL had up to 30 months)
• Interest accrual: Interest accrues during deferment and is capitalized
• Full amortization: Loans fully amortize over the term with no balloon payment

Collateral Requirements

EIDL collateral rules are relatively flexible:

• Under $25,000: No collateral required
• $25,000 - $500,000: General security interest in business assets
• Over $500,000: May require specific collateral including real estate
• COVID exception: COVID EIDL had no collateral required under $500,000

Use of Funds Restrictions

EIDL funds must be used for specific purposes:

• Operating expenses (payroll, rent, utilities)
• Accounts payable that would have been paid absent the disaster
• Working capital needs caused by the disaster

Prohibited Uses

EIDL cannot be used for:

• Paying dividends or distributions to owners
• Refinancing long-term debt
• Expansion of the business
• Making payments on other SBA loans
• Purchasing fixed assets (equipment, real estate)