Consulting Services • Published 4/16/2020 SBA Economic Injury Disaster Loan Amount Calculations

Last updated on 4/16/2020

Economic Injury Disaster Loans (EIDLs) are working capital loans available to small businesses and non-profit organizations to help meet their ordinary and necessary financial obligations and assist them through the disaster recovery period. Under the recently-passed CARES Act, the EIDL terms have been modified and loan amounts determined by the SBA may be evaluated on a case-by-case or modified basis to expedite the process.  

Related Article: CARES Act Economic Injury Disaster Loans

Summary of Loan Amount Calculations:

It is our understanding that the Small Business Administration (SBA) may be evaluating loan amounts on a case-by-case basis and may rely on a modified version of historical calculation terms outlined in the SBA's Standard Operating Procedures Manual. In general, the SBA has applied a multi-phase approach in determining EIDL amounts that have been historically based on the following terms (subject to change by further guidance issued by the SBA):

• Phase I – Based on a 4x multiple of historical Monthly Average Gross Profits (limited to $300,000).
• Phase II – Based on trend adjusted lost gross profits over the injury period (limited to the amount essential to the continued viability of the business). Trend adjusted calculations may include an analysis of historical monthly financials and key operating metrics.

It should be noted that the EIDL amount may be offset by other recoveries from grants, business interruption insurance, and other loans used for the same purpose (i.e., Paycheck Protection Program).

Application Process:

For the purposes of the COVID-19 EIDL claims, the SBA has released an expedited application form, requesting the following information for most businesses in order to determine the loan amount for Phase I (as applicable):

• Operating Losses: Gross Revenues and Costs of Goods Sold for the last 12 months as of January 31, 2020
• Rental Losses (Residential and Commercial Properties Only): Lost rents due to the disaster
• Most Non-Profits: Cost of Operations for the last 12 months as of January 31, 2020

While we have not observed specific guidance from the SBA on loan amount determinations, these EIDLs have been communicated as providing “six months of working capital” to businesses impacted by COVID-19. This suggests that the SBA may be increasing the gross profit “multiplier” from 4x to 6x – however, the SBA has not released anything definitive on adjusted loan amount determination factors. Additionally, the SBA will make a maximum loan determination amount under Phase I, and may request additional documentation in order to complete this request and/or to determine additional loan amounts that may be available under Phase II.

For more information regarding COVID-19 EIDL applications, visit the SBA Economic Injury Disaster Loan Emergency Advance page.