As of December 31, 2021, the Economic Injury Disaster Loan (EIDL) program available through the US Small Business Administration (SBA) ended.
While the EIDL business grants, along with the Payroll Protection Program and the Employee Retention Credit, offered an important opportunity for funding small businesses, don’t despair if you missed the chance to apply.
There are EIDL alternative grants available if you want business help for your small business. Read on for EIDL grant alternatives if you were turned down or missed the application deadline.
1. SBA 7(A) Loans
The SBA 7(A) loan is one of the Small Business Administration’s most popular business loans. This SBA loan can get used for a variety of business purposes, including:
- Business expansion
- Working capital
- Real estate purchasing
A business can borrow up to $5 million with the 7(A) loan. While the SBA doesn’t issue the loan, they back it, making it easier to get funding from your lender.
Lending criteria are based on several factors, including:
- What does the business do to receive its income
- Credit history
- Where the business operates
In order for backing from the SBA, you must meet their criteria. Some of the requirements are:
- Operate for profit
- Meet SBA small business criteria
- Do business in the US
- Invested some of your own equity in the business
- Show a need for the loan
Before applying, you should know you must not be delinquent with any financial obligations to the US government.
2. SBA 504 Loans
The SBA 504 loan is another EIDL alternative option backed by the SBA. It does, however, have a more specific purpose for use than the 7(A) loan.
This loan offers fixed financing that a business should use to invest in major fixed assets to promote business growth and job creation. In most cases, the SBA 504 loans are available for up to $5 million.
Remember, the goal of a 504 loan is job creation and business growth. So, the 504 funds can be used for things like:
- New buildings or facilities
- Machinery and equipment that helps to grow the business
- Existing land or buildings
The loan can help with the modernization of your business land, utilities, parking lots or landscaping, or existing facilities.
You need to know that a 504 loan cannot be used towards inventory or working capital. You aren’t allowed to repay, refinance or consolidate debts using these funds.
3. SBA Microloans
If your small business continues to struggle with cash flow issues coming out of the pandemic, the SBA microloan might be a good choice.
This is a smaller loan amount than the previous options. In fact, the average microloan is only $13,000. You can borrow up to $50,000 from this type of loan. Money from this loan can get used for:
- Building inventory
- Business supplies
- Business machinery and equipment
- Working capital
- Business fixtures
One caveat to the microloan program is that it can’t get used to pay off debt already held by the business. It also can’t get used to purchase real estate.
Eligibility for microloans will depend on the lender who funds the loan. Remember, the SBA backs the loans. Be prepared for most lenders to want some collateral, as well as the personal guarantee of the business owner.
You can visit the SBA website for SBA-approved lenders for all SBA loans. Since the loans come from those lenders, they establish their own criteria for approval, not the SBA.
4. Main Street Lending Program
The Main Street Lending Program was created in March 2020 as the pandemic peaked. While it shares similarities with the PPP and EIDL programs, it was created by the US Federal Reserve.
It has the same goals as those programs, to provide some financial assistance to small businesses hit by the impact of the Covid pandemic. It does, however, have its own separate criteria for legibility.
Like other SBA loans, the Federal Reserve doesn’t fund the loan; they simply back it through your private lenders.
5. Community Development Financial Institutions
Community Development Financial Institutions or CDFIs are another funding resource for businesses. The financial institutions that support CDFIs must be not-for-profit.
They work to support businesses run in financially disadvantaged areas or with economically disadvantaged populations. The good news about a CDFI loan is that it’s typically less strenuous and comes with a lower interest.
In addition to their goal of serving women and minority populations, they also work to support startups and incubator businesses that might otherwise face a struggle to get financing for the business.
6. Online Lenders
Another EIDL alternative you might consider is an online lender if none of these options work for you and your small business. There are many options in the online lending world.
Not all loan terms are identical, so read the fine print carefully. Most online lenders are likely to be less stringent with lending criteria than a traditional bank. The terms for the loan, however, might not be as good.
During the pandemic’s peak, many online lenders became skittish about business lending knowing the struggles many small businesses were facing.
As the US moves out of the worst of the pandemic and businesses recover, online lending is more available for small businesses again.
7. Express Bridge Loan Pilot Program
Pilot programs as part of the SBA are temporary programs. The Express Bridge Loan program was intended to help deliver expedited SBA-guaranteed financing.
This was made available while a business sought other financing options to help them through a financial crunch.
The Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. To qualify, businesses must meet the following criteria:
- Must have been in business for at least 3 months;
- An existing SBA servicing lender must be willing to process and decide upon your loan;
- Your business must be located in an area that has been impacted by an declared disaster;
- You must be able to demonstrate economic injury as a result of the declared disaster;
- You must need funds immediately in order to continue operating during the declared disaster period; and
- You must have exhausted all other financing options before applying for the bridge loan program.
Availability for pilot programs at the SBA varies, so it’s best to check their website for the current status of a program like this one.
Take Advantage of These EIDL Grant Alternatives
EIDL grant alternatives help those small businesses through the tough times that a small business might continue to face coming out of the pandemic. If they weren’t able to take advantage of other funding programs, these might work to support the small business.
Another EIDL alternative to take into consideration for small businesses is taking advantage of employee retention tax credits. Contact us to learn more about ERTC and if it could help your business.