By AgChoice Farm Credit

SBA’s Economic Injury Disaster Loan (EIDL) program is now open to production agriculture. EIDL offers loans up to $2 million to cover working capital at a rate of 3.75% for businesses on a 30-year term. Payments on EIDL loans are deferred for one year and eligible applicants may also receive an emergency grant of up to $10,000 within three days of application. Emergency grants do not need to be repaid, and applicants do not need to have an approved EIDL loan to receive the grant.

While the EIDL loans seem attractive, they might not be a fit for every farm. Before signing for an EIDL loan, first talk with your lender or financial advisor.

Items Your Farm Should Consider:

  • EIDL paperwork includes language about needing to obtain SBA concurrence before seeking a future advance on a senior secured credit line. It is unclear to what extent this will be enforced, but it may cause issues for farms if they have credit lines with other lenders besides SBA.
  • Pledging collateral to SBA may impact your current lender’s ability to lend additional funds in the future.
  • SBA consent is needed prior to any ownership transfers, so if your farm is planning an upcoming farm transition, it may be impeded.
  • There are other impacts on EIDL if your farm received a SBA Paycheck Protection Program (PPP) loan. The amount of your EIDL grant would be subtracted from the PPP forgiveness amount. You will also not be able to use EIDL proceeds for payroll, mortgage interest, utilities or rent since that is the intended purpose for PPP.

SBA EIDL is a program that may be useful for some farms, but there are implications that should be considered first. Remember to consult with your lender or financial advisor to discuss if the program fits with your individual situation.