Skip to main content
What is an SBA Economic Injury Grant and how do you apply?
Business Capital

What is an SBA Economic Injury Grant and how do you apply?

11 min read


The deadline for PPP application submissions has been extended to May 31, 2021. We encourage all those interested in receiving PPP funding to apply as funds are still available for distribution.

Apply for your PPP loan now.

The Small Business Administration (SBA) works tirelessly to strengthen small businesses. As part of the CARES Act response to COVID-19, the SBA offered Economic Injury Disaster Loans (EIDL) and “grants” which were funded within a few business days. This EIDL Advance was quickly exhausted in July of 2020. 

However, on December 27th of last year, the Coronavirus Relief Bill provided an additional $20 billion in funds specifically for the Economic Injury Disaster Loan program. This time around, the grants are designed specifically for low-income areas and businesses that have been particularly hard-hit by the pandemic.

What is an Economic Injury Grant?

An Economic Injury Grant is a free cash advance for businesses provided by the SBA’s Economic Injury Disaster Loan program.

When businesses, sole proprietors, independent contractors, or nonprofit organizations apply for financial assistance through an Economic Injury Disaster Loan, they can receive an emergency grant of up to $10,000 within a few business days which will not need to be repaid. The money is essentially an advance, but has come to be termed a “grant” due to the lack of repayment necessary. 

The Coronavirus Relief Bill provided another round of EIDL grants, but limited their funding maximum to $1,000 per employee and then supplemented funds received from an Economic Injury Disaster Loan to bring their total up to $10,000 for eligible small businesses. For example, if your business received an EIDL for $6,000, you can receive a grant for $4,000 for a grand total of $10,000 from the EIDL program.

Who is eligible for an Economic Injury Grant?

At the current time, EIDL Advances are unavailable due to exhausted funds, but Targeted EIDL Advances are still being supplied to businesses who have previously applied for EIDL Advances and were unable to receive their full requested amount (or who did not receive advances at all due to lack of funds). 

Targeted EIDL Advances are by invitation only and are designed for low-income areas showing a serious reduction in profits. 

The Small Business Administration is relaxing requirements for many of their loan programs during the COVID-19 crisis to allow more businesses to take advantage of the money appropriated by the CARES Act and Coronavirus Relief Bill.

However, there are still certain eligibility qualifications that must be met for an Economic Injury Grant. The Coronavirus Relief Bill specified that EIDL grants go to low-income areas and businesses that have demonstrated economic hardship due to the pandemic. 

Economic Injury Grant Eligibility Requirements

  • Fewer than 300 employees
  • In operation before 1/30/2020
  • Includes nonprofit organizations, veterans organizations, sole proprietorships, independent contractors 
  • No outstanding child support obligations
  • No unresolved judgements on federal debts
  • Located in a low-income area
  • Demonstrated 30% reduction in gross revenue for one quarter of 2020 compared to the same quarter in 2019

You may notice that credit score is not listed—so don’t worry if your credit isn’t stellar. You may be required to explain any red flags on your credit report, but still may qualify.

Want to learn more about Economic Injury Disaster Loans? Download our guide.

Terms & Conditions

All that is required for an Economic Injury Grant is an eligible application for an Economic Injury Disaster Loan. The qualifications for submitting an EIDL application are few, so it’s in many businesses best interests to apply. 

If your application is approved for an EIDL, you can expect up to $10,000 with a fixed interest rate of 3.75% (2.75% for nonprofits) and a 30 year term. Interest will be deferred for six months. If you receive the grant, it is expected that no repayment will be required so long as funds are used for payroll and business-specific purposes.

How much money can you get?

You can receive an Economic Injury Grant for up to $10,000. Economic Injury Disaster Loans can be up to $2 million.

Originally it was assumed that every business would receive an immediate $10,000 for disaster assistance but after a week or so of operations it’s been shown that businesses cannot expect the full $10,000. The grant is based on need and on the application submitted. 

If you are in need of quick access to cash, but don’t need an expansive loan, then the Economic Injury Grant might be the best option for your financial situation.

How can I use an Economic Injury Grant?

Money received from an Economic Injury Grant has certain specifications that will best impact small businesses and the economy. Before applying for this assistance, you may want to consider exactly how you could use the grant and subsequent loan if you are approved.

Economic Injury Grant Funds
CAN be used for: CANNOT be used for: 
Payroll Paying long term debt
Fixed debts Expansion
Accounts payable Replacing profits
Bills Debt consolidation

Terms of use

Payroll includes salaries, wages, health care benefits and premiums, bonuses, retirement, and other benefits.
Fixed debts and bill payments include any payments necessary in your operating expenses, such as utilities, payments to vendors, loans on equipment or vehicles, subscriptions to programs for business function, etc.
Mortgage payments can be covered with Economic Injury Grant funds, but long term debts such as tax or credit judgements, consumer debt, student loans, or personal loans cannot be covered.

The general rule of thumb is that the Economic Injury Grants and Loans are intended to cover costs you would have naturally been able to cover if not for the economic slowdown caused by COVID-19, and the goal is employee retention. You’ll need to carefully monitor your expenditures with these funds, so consider using a free expense tracking solution.

How to apply for an Economic Injury Grant

When can I apply?

As mentioned above, only Targeted EIDL Advances are available, and are being distributed directly by the SBA. For Economic Injury Disaster Loans or PPP loans, businesses can apply anytime through the SBA’s online application portal. Around $20 billion has been designated for the SBA Economic Injury program by the Coronavirus Relief Bill, and these grants and loans are very attractive so we recommend applying now.

Tips for applying

  • Assemble necessary documents beforehand:
    • 2019 tax return (or most recent)
    • Profit & loss statements year-to-date for 2020
    • Employee Identification Number (EIN) or Social Security Number (SSN)
    • Documentation & justification for any credit issues
  • Submit your bank account information for direct deposit
  • Re-apply if your first application failed to provide bank account or other relevant information
  • Address credit issues and continue to monitor your business credit score

Alternative emergency loans

There are many other options for small businesses, independent contractors, sole proprietorships, and nonprofits when it comes to emergency funding during COVID-19. You may find that another source of relief is a better fit for your business.

Paycheck Protection Program 

The SBA Paycheck Protection Program, also known as the PPP loan program created by the CARES Act, provides small businesses with a short term loan to cover payroll costs that can be 100% forgiven. Small businesses can borrow 2.5 months of payroll costs up to $10 million for first time borrowers.

Emergency bank loans

Banks and other financial institutions can offer emergency loans that fund in days, and even with the click of a button (but may feature higher rates and other limits).

All businesses are adapting to the new economic climate created by COVID-19, and Divvy is dedicated to helping you weather the storm. For more COVID-19 business resources visit our COVID-19 Relief Hub.

Leave a Reply

Close Menu