Existing Federal Economic Assistance Options for Small Businesses Affected by the Coronavirus (COVID-19)


While the existing federal economic assistance option with the U.S. Small Business Administration (“SBA”), called Economic Injury Disaster Loans (“EIDLs”), have existed for some time, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123) increases the amount made available to the SBA to use for EIDLs to $197.2 million.

EIDLs are low-interest federal disaster loans of up to $2 million offered by the SBA to small businesses, as well as private, non-profit organizations in all U.S. states and territories to help alleviate economic injury directly caused by COVID-19. EIDLs may be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be paid due to the impact of COVD-19. See 13 C.F.R. § 123.303(a).

Importantly, loan proceeds may not be used to:
• Refinance existing debt;
• Repay other SBA loans or loans from another federal agency;
• Pay, directly or indirectly, any taxes, fines or penalties;
• Repair physical damage; or
• Pay dividends or other disbursements to owners, partners, officers or stockholders, except for reasonable remuneration directly related to their performance of services for the business.

13 C.F.R. § 123.303(b).

Small businesses that need working capital to help meet their financial obligations should consider applying for an EIDL. For more information on EIDLs, what constitutes an eligible “small business,” and how to apply for EIDLs, please see the full client alert here.

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Steven Masiello

About Steven Masiello

Steven M. Masiello is the chair of the US Government Contracts practice and a leader of the firm's Global Government Contracts and Procurement group. Masiello serves as lead counsel in complex government contract matters across numerous industry segments concerning state, federal, and foreign military funded transactions in the US courts, agency boards and under domestic and international alternative dispute resolution procedures.

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Gale Monahan

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Gale Monahan is a partner in the Firm’s Government Contracts practice where he focuses on government contracts counseling, litigation and internal and government investigations. Gale's counseling practice focuses primarily on cost and pricing, the Cost Accounting Standards (CAS), termination, business systems, domestic preference, and international government contracting issues.

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Randy Nuckolls is a partner Dentons’ Washington, D.C. office and is a member of the Public Policy practice. He has more than thirty years of experience working on federal policy issues. Mr. Nuckolls counsels clients on federal legislative, regulatory, and ethics issues. He assists in planning legislative strategy and providing input to Members of Congress and Congressional committees. Randy provides advice and guidance on regulatory matters before numerous federal agencies.

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Eric Tanenblatt

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Eric Tanenblatt is the Global Chair of Public Policy and Regulation of Dentons, the world's largest law firm. He also leads the firm's US Public Policy Practice, leveraging his three decades of experience at the very highest levels of the federal and state governments.

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Sandra Sok

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Sandra Sok is a member of Dentons’ Government Contracts group where she advises contractors on government contract performance and litigation matters. Sandra received her JD from the University Colorado School of Law. While in law school, she served as a judicial intern to Judge Christine M. Arguello in the U.S. District Court for the District of Colorado, and was the Vice President and Treasurer for the Asian Pacific American Law Students Association.

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