Economic Injury Disaster Loan EIDL Self-Employed and Independent Contractors 30 year term
Self-Employed and Independent Contractors 30 year term 3.75 percent SBA Disaster Loan.

By Murray Wennerlund published 11-1-2022 updated 11-1-2022

EIDL Detailed: Self-Employed / Independent Contractor.

Economic Injury Disaster Loan (EIDL):

  • Low-interest (3.75% / 2.75% NFP)

  • long-term 5 to 30 years.

  • loans for working capital.

  • must have suffered substantial economic injury as a result of the COVID-19 pandemic.

Tax Information: 1040 Schedule C

Payroll Type: Cash Draw

Federal Assistance: Declared Disaster Assistance

Payroll Costs: Net earnings from self-employment

Loan Type: SBA 7(b) EIDL Disaster Loan

Duplication of Benefits (DOB): 7(b) yes EIDL

Covered Period: January 31, 2020 and ending on December 31, 2020

Who's Eligible: Any individual who operates under a sole proprietorship, with or without employees, or as an independent contractor.

Eligible entities: Small business, private nonprofit organizations, and small agricultural cooperatives.

Credit Elsewhere: Waived all except must have been in business before January 31, 2020. (Does not effect most of you, no worries at this point.)

Approval and ability to repay for small dollar loans: With respect to a loan made under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) in response to COVID–19 during the covered period, the Administrator may

  1. approve an applicant based solely on the credit score of the applicant and shall not require an applicant to submit a tax return or a tax return transcript for such approval or

  2. use alternative appropriate methods to determine an applicant’s ability to repay.

NOTE: Your ability to repay the loan is the only focus point you need to have at this time. You should be calculating loans for 15 to 30 years to reduce your monthly overhead. You also should put together a financial plan that can show your ability to repay. Forecast earnings, reduced spending, lower inventory etc.

Emergency grant: (Advance) $1,000 minimum per independent contractor operating as owners. (Names on the 1040 Schedule C)

  • Reported by members: "... $1000 deposit into my account... self employed and put 0 for employees..."

Usage of Emergency grant: (Advance)

  1. paid sick leave when you are unable to work due to the direct effect of the COVID–19

  2. maintaining earnings draw, payroll during business disruptions or substantial slowdowns

  3. Increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains

  4. rent or mortgage payments and

  5. repaying obligations that cannot be met due to revenue losses. (fixed debt)

Emergency grant repayment: (Advance) not required up to the amount of the advance only.

Emergency grant reduced in PPP unemployment grant: If you merge your EIDL (7b) into a PPP (7a) unemployment forgive loan the amount of your PPP will be reduced in the amount of your EIDL Emergency Grant.

First Payment: 12 months from disbursements of funds. This may be 2 6 month payment deferrals bundled.

Usage of Economic Injury Disaster Loan (EIDL):

These are working capital loans that may be used to pay,

  • fixed debts,

  • payroll,

  • accounts payable,

  • other bills that could have been paid had the disaster not occurred.

Usage Notes: Economic Injury Disaster Loans help owners stay afloat during the declared disaster and ready to hit the ground running when allowed to return to work. This loan, (EIDL) is not to be used to pay for retooling or for business expansion. You are advised to seek other funding for expansion and retooling to meet current market demands.

Research / Experience regarding ability to repay loan.

Credit History / Scores: noted 350 on up approved for $15,000 without checks for ability to repay. You must be very careful with loans that place you at risk of default. Talk to your loan officer about a 30 year payment plan.

EIDL Processing order:

Start to Finish Economic Injury Disaster Loan process as reported by members of the SBA Disaster Recovery Loans Facebook Group:

  1. Application submitted. (Old or Streamline)

  2. Requested business tax filings

  3. Received login portal information

  4. Created portal login.

  5. Presented loan offer once signed on.

  6. Selected the amount offered and the terms of the loan.

  7. Authentication process secret question.

  8. Loan status shows Pending

  9. Screen shows amount as confirmed based on borrowers selection.

  10. Confirmed ID shows completed.

  11. Loan accepted SBA obligates funds processes documents to send borrower to sign. (added time delay varies.)

  12. Documents signed electronically or by postal mail and returned.

  13. SBA orders the disbursement of funds.

  14. Deposit to your account on file.


Note: You must contact the SBA loan officer to arrange for draws of your funds if you are looking only to draw what is needed when you need it one month ahead of time.